Gasoline prices fall after oil takes huge tumble

Drivers might be the only ones benefiting from oil prices dropping dramatically on Monday — with one analyst saying it's not clear when it will rebound. 

As of early Monday, Suncor had lost more than 25 per cent of its value and Cenovus was down by almost half.

At the heart of the sell-off is concern over a global economy reacting poorly to the coronavirus outbreak and a battle between two energy heavyweights, Russia and Saudi Arabia.

On Friday, OPEC tried to get Russia to agree to production caps in order to stabilize oil prices. When Russia refused, Saudi Arabia opened the taps, increased supply and thus contributed to the price crash. 

Gas prices down across country

Allison Mac, a petroleum analyst with Gas Buddy, says gasoline prices in Calgary and across the country are down. 

"Specifically in Calgary, prices have gone down. It's gone down more than three cents per litre versus last week, which is very not typical during this time of year — as we're heading into spring, as we're heading into summer," she said.

Mac says because of the uncertainty surrounding COVID-19, it's not clear when prices could rebound. 

"If we're going to put a silver lining to this, the market has been crashing, but drivers get to enjoy the low prices," she said.

"If people want to take the road trip that they've been looking forward to, this is definitely the time to do it. There's no fear of the disease."

Chantal Doucet, a Calgary motorist, says that while the gas prices are good news for her, it's also a sign of tough times.

"Unfortunately, it's a symptom of something bigger. The province has been hurting, the city has been hurting, and 87.5¢ is pretty low," she said.

Another analyst, Roger McKnight with En-Pro International, says the price of gas in Canada follows the U.S., and in Calgary's case, it's aligned with Minneapolis — along with the rest of the Prairie provinces.

He explains that when coronavirus hit, it affected the demand and price of crude — which in turn decreased the price of gasoline and diesel. 

"This is very unpredictable. You can fix the price of oil if it is oil in the ground. You can't fix something that's floating in the air that you can't track down and you don't know how to stop it," he said.

In addition to that, Saudi Arabia kicking off the all-out price war in the oil market sent the price of crude tumbling more than 25 per cent.

McKnight expects that by Wednesday, gasoline across the country will be down by seven cents per litre.

"The caveman rule of thumb is that for every dollar a barrel the price of any crude moves, it works out to about six tenths of a cent," he said.