Consumers at St. Albert gas stations were in for a pleasant surprise on Tuesday, as some gas prices dropped to as little as 94.9 cents.
Brian Rodwell, who was passing through the city from Saskatchewan, said he wished prices would remain this way.
“It should be that low all the time. That would be perfect,” he said. “It was way too high before.”
St. Albert resident Tom Lee could only agree. He expects the price will go back up though.
A similar drop in gas prices occurred around the same time last year. On Nov. 15, 2013 fuel prices dropped to about 99 cents.
While consumers may have welcomed the reduced hits to their wallets, economists said prices are likely to go back up again.
If they didn’t, it could have a negative impact on the Alberta economy, said John Rose, chief economist with the city of Edmonton.
“If these lower oil prices persist into 2015, we could see a few projects fall by the wayside and that would have longer term implications for the Alberta economy,” he said.
Rose said that fuel prices are largely regulated by OPEC, the Organization of the Petroleum Exporting Countries.
The organization has a meeting in late November at which Saudi Arabia is expected to announce whether it will reduce its oil shipments. If they do, international oil prices will go back up, said Rose.
“The prices we receive for the oil we produce are significantly influenced by production levels in Saudi Arabia,” he said.
It would be preferable for Saudi Arabia to reduce their shipments, he added. If they didn’t, North American fuel prices could continue to remain low, he said.
And with almost 25 per cent of the provincial revenue coming from non-renewable resource royalties, lower prices would affect provincial dollars, likely leading to cuts in spending for other programs, such as post secondary-education or health care institutions, he said.
Rose said that oil prices have dropped significantly across the United States and Canada since the middle of summer.
But at this time of the year, prices are also affected by changes in temperature, he said. In late October and November weather conditions deteriorate and fewer people drive. That puts a downward pressure on gasoline prices, he said.
“But in the background we also have lower oil prices and it’s always hard to tell what percentage of a shift in prices can be attributed to seasonal factors and a shift in oil prices,” he said.
Another factor that affects the cost of oil in Alberta is its ability to move large amounts of its product out of the province, he added. If Alberta can’t move its oil, investment may leave the province, he said.
“We’ve been able to dodge that bullet up until now but the pipeline system is at capacity,” he said. “Sooner or later we need to get additional pipelines approved and if we don’t that’s going to put a cap on production levels here in Alberta.”
Gail Rokosh, who fuelled up at a St. Albert gas station on Tuesday, said she is certainly concerned how continued low prices may affect the economy and the oil and gas industry’s ability to grow.
But as a consumer, she also hopes the prices will stay this way, she said.
“It’s nice for the consumer,” she said. “That’s what I am looking at today when I am at the gas station.”