Saskatchewan drivers are lining up at discount gas stations to take advantage of low prices at the pump this week, but not everyone is thrilled about cheap gas.
On Tuesday GasBuddy.com was reporting gas prices between 71 cents and 77 cents per litre across Saskatoon and Regina. Prices at discount gas stations including Regina Cabs, Regina Messenger and Costco dropped below 70 cents.
“It’s awesome, they could come down some more,” said Sandra as she filled up in east Regina.
“It means a lot you can do a lot more traveling and stuff if our dollar would smarten up too.”
Most people filling up were in a pretty good mood about gas prices.
“Oil is so low right now that it’s expected that gas is going to be that low,” said Brian.
“I’m just filling up my cans so I’ll have it for my snow blowers and snowmobiles and all that kind of stuff, might as well take advantage of cheap gas.”
Karen says it’s great for her because she commutes between Moose Jaw and Regina every day. Paul said it’s nice to see gas prices this low, but it seems to balance out with the high price of meat and vegetables. He expects the price of oil and gas to rebound and go even higher in the next couple of years.
“I’m enjoying them, it gives us a break – we may get cheap gas but we pay at the grocery store but it all works out in the end,” Bob agreed.
“It’s about time! The oil companies have made enough money.”
For people who work in the oil industry, the low gas prices are just the latest sign of hard times.
“I’m mixed about gas prices today, it’s good for the pump, but in the oil and gas sector when you’re working, it’s less work,” said Derrick, who says his work is very slow right now.
“I’m really not a fan quite honestly,” said another woman who didn’t give her name. “I work in the oil industry and this isn’t good for business for me.”
She says she’s lucky because she still has work, but it has definitely slowed down.
Petroleum analyst breaks down price
Roger McKnight is a petroleum analyst with Enpro. He says it’s hard to tell just how low the gas prices could go in the next couple of weeks because nobody knows how far the price of crude oil will fall.
He says gas prices in western Canada are starting to drop because of the discount on Western Canadian Select crude oil.
“Western Canadian Select price is falling through the floor,” McKnight explained. “When people see $30 barrel crude that’s not really the price that’s being incorporated into the pump price in Western Canada, you’re probably using a crude price in the range of $14 to $15 a barrel. With those lower crude costs, eventually that lower cost is being passed on to the pump level which is what you’re seeing in Saskatchewan right about now.”
Crude oil from Alberta and Saskatchewan is discounted compared to the price of West Texas crude oil because it is landlocked without access to the market from pipelines.
McKnight says retailers are making about 15 cents per litre of gas right now, which is pretty high.
“The oil companies are not making any money on the crude and the refining margin – which is the difference between the cost of crude and the wholesale price – is being eroded drastically,” he said. “So they’re going to start relying to make money at the pump and then they’re making it at the pump because the low crude costs can support that sort of number.”
He says if crude oil prices drop further on Western Canadian select, there will be a point when it’s not worth the cost of production at all. If that happens and the supply drops off, then gas prices will likely go up again.