As consumers celebrated low prices at the pumps this week, economists fretted over a new report that suggests prolonged low oil prices could cost Alberta more than $1 billion.
On Friday, GasBuddy.com, a website that compiles gas prices from around North America, listed the average price of gas in Canada as about $1.21 per litre. That is almost 20 cents less than this year's high of $1.39 per litre, but comparable to one year ago, when the average price was $1.20 per litre.
But while drivers may hope the prices will stay down, there are worries that the slump could hurt Canada's energy-reliant economy.
The low gas prices follow a dramatic drop in the global crude oil prices point.
On Friday, the price of a barrel of West Texas Intermediate crude oil was just over $83.64 USD. That's about $24, or more than 20 per cent, lower than this year's high of $107.54. West Texas Intermediate oil, a U.S.-made grade of oil, is used as a benchmark for oil pricing.
Brent crude oil, which is also used as a global benchmark, cost $86.31 USD per barrel on Friday morning. The price for Brent oil has also fallen significantly since June, when it cost about $115 per barrel.
Economists say slow growth in global economies and the rise of alternative fuel sources in the West have led to a decreased appetite for oil. Meanwhile, increased oil production in the States has led to extra supply.
The situation has caused concern in oil-producing countries around the world, such as Russia and Iraq. Venezuelan politicians were so alarmed early in the week that they requested an emergency meeting of the Organization of the Petroleum Exporting Countries (OPEC), ahead of the scheduled end-of-November meeting. But no plans for an earlier meeting have materialized.
What does this mean for us?
In Canada, economists and politicians are remaining wary of the impact of low oil prices.
The National Energy Board says almost 10 per cent of Canada's Gross Domestic Product, worth $107.6 billion, came from the energy sector in 2012. But that year, West Texas Intermediate crude oil averaged $94 per barrel.
With today's oil prices about $10 lower per barrel, Finance Minister Joe Oliver said Wednesday that the government is monitoring oil prices. But he said the fall has not affected his confidence in the projected federal surplus and the tax cuts expected to accompany it.
Alberta, Saskatchewan at risk?
Provincially, a recent report by the Bank of Montreal said low oil prices could throw off budgets in "commodity-rich provinces," such as Alberta and Saskatchewan.
The report, titled "Life With $85 Oil," said those provincial budgets count on West Texas Intermediate crude oil prices staying at around $97 per barrel, rather than $83, along with Brent crude oil staying at around $105, rather than $86.
If the dip in prices is sustained, the difference between budget forecasts and reality could have a significant impact, the report said.
It predicted that Alberta could lose more than $1 billion in oil royalties if the low prices persist through the end of this fiscal year. But the report added that the low Canadian dollar could offset the loss by about $500 million.
BMO senior economist Robert Kavcic told CTV's Richard Madan that this would mean net losses in the mid to high hundreds of millions of dollars.
Saskatchewan would "be hit somewhat less hard," the report said, while Newfoundland and Labrador "would have some serious thinking to do."
Alberta Premier Jim Prentice told CTV's Power Play Friday that he is confident the drop in prices is temporary.
"You can't confuse short term commodity cycles with the long term strength and viability of our energy industry in this province and in this country," Prentice said. "We've seen high prices before, we've seen low prices. Certainly this is a low price environment, but we will weather that."
For more on how oil prices will affect the Canadian economy, tune into CTV's Question Period, Sunday at 11 a.m. ET
With files from CTV's Richard Madan and Mercedes Stephenson
Price of gas
Price of crude oil
