A welcome break at the pumps
Local gas prices hover at or below $1/L for the first time in about a calendar year; experts suggest the reprieve won’t last long
The price of gas at the pumps dropped below a dollar a litre at at least one station in Medicine Hat on Tuesday.
Costco led the way with gas for its members at 97.9 cents per litre. A couple others were following closely behind with Fas Gas Plus on Carry Drive and Mobil at Superstore both selling for 100.9.
Just six months ago residents were paying 1.32 per litre, and a year ago it was 1.03 per litre.
The reason for the significant price drop now can be summed up in one word, says Dan McTeague, senior petroleum analyst with GasBuddy Organization Inc. “Crude.” Gas Buddy is a tech company that operates apps and websites providing real-time fuel prices at more than 140,000 gas stations in the U.S, Canada, and Australia.
“The price of crude oil has really taken nothing short of a beating,” said McTeague.
There are two benchmarks for crude, WTI (West Texas Intermediate) used for America and Brent Crude worldwide. Both of them lost about $25 value in the past three months, said McTeague.
There may be a measure of competition that influenced prices locally but the biggest impact has been the price of oil, he explained.
On Tuesday Gas Buddy was reporting gas in the Edmonton area for less than 90 cents per litre and in Calgary several gas stations were selling for 92.9 cents per litre.
In December 2016, a month before the carbon tax came into effect, gas was 87 cents per litre at pumps in Medicine Hat. At the time there were some who thought gas was unlikely to fall below a dollar ever again.
“Never say never but I think that tends to be the exception rather than the rule,” said McTeague. “Governments have helped themselves to an ever increasing amount of tax. It’s obscured and prevented prices from dropping except in unusual circumstances like the one we are seeing.”
McTeague calls the collapse in oil prices an historical pattern that is rarely seen. In 2014 a similar situation occurred when OPEC and Saudi Arabia flooded the world market with oil and then again in 2008 after the global financial crisis.
The current low prices may not last long. Later this week OPEC could cut production and that would affect the price of crude, said McTeague.
“Take advantage of it while you can,” said McTeague. “Good prices are sometimes fleeting.”