It’s been a cheaper ride for drivers this week with the price of gasoline dipping to below 80 cents a litre in Red Deer for the first time in a while.
Some wonder why it didn’t go down faster, sooner, given the continual drop in the price of crude oil.
On Tuesday morning, local drivers looking for the best deal would have found the lowest reported price for regular gas at 73.9 cents per litre. It was the second-lowest price for gasoline in Alberta.
The lowest price for regular gas in Alberta on Tuesday was 71.9 cents per litre in Edmonton, St. Albert and Sherwood Park. The highest in Alberta was northwest of Edmonton, in Villeneuve, where regular gas was 106.9 cents per litre.
GasBuddy.com, a website that provides up-to-date information on retail gas prices in Canada and the United States, showed that local prices were down 3.6 cents a litre from last week’s average of 83.1 cents.
Dan McTeague, the senior petroleum analyst in Canada for GasBuddy.com, has an explanation why prices haven’t gone down sooner.
Based in Toronto, he was a Member of Parliament for 18 years and once chaired a federal task force on gasoline pricing.
McTeague also has his own website, Tomorrows Gas Price Today, where he predicts gasoline prices for the coming week. On Sunday, he did predict Red Deer’s prices would go down this week.
Gasoline dropped in price because the wholesale price has dropped 10 cents a litre or more, he said. More U.S. refineries that had been shut down for maintenance are back online, so the supply has increased.
While the news is good for consumers, it’s not so much so for gas stations, said McTeague.
There’s very little room to manoeuvre when retailers have to pay about 73 cents per litre themselves, pay fees to credit card companies, plus cover the cost of overhead.
“If I were a retailer today, selling gasoline in Red Deer, I’d be very concerned about prices going even lower because at that point I can’t afford to operate my gas station,” McTeague said.
Wholesale pricing for gasoline is based on what is happening in the United States. Crude oil and wholesale gasoline are traded in U.S. dollars.
“As crude (oil) drops … it’s devaluation has really brought the Canadian loonie in for the ride. They’re joined at the hip and as a result, you know I’m looking at 143 pennies to buy one U.S. dollar. This time last year it was 118 to buy that same dollar.”
Unfortunately for Canadians, while markets are showing a decrease in the price of gasoline in the U.S., it’s being erased by the decline in the value of the Canadian dollar, McTeague.
That’s partly why gasoline prices haven’t dropped sooner here.
“We are very much subject to what happens in the world markets. And that world market has been very favourable as it often is this time of year to motorists. … The break that we can’t catch, what I consider the double whammy, crude drops and brings the value of the Canadian dollar down and destroys our purchasing power on every litre of gas.”
Despite the lower gas prices, McTeague said many people are actually saying it really isn’t cheap.
“I don’t have a job. I’ve lost my investments or whatever the case might be, and the price isn’t what it is in the States. We’re losing our competitive advantage and of course the cost of living goes up.”
barr@www.reddeeradvocate.com