Gas prices plummet toward $1 a litre across Canada

WATCH: Oil prices were already crashing when OPEC sent them into a further plunge, on Thursday. Because crude is so critical to Canada, all of this has a big impact on us, both good and bad. Eric Sorensen reports.

The price of oil is falling off a cliff — and taking Canadian retail gas prices with it.

Many areas around the country are poised to see a two-cent drop in gas prices, at minimum, by Sunday, according to expert estimates. And further declines are expected.

Plunging gas prices stem from a growing glut of oil flooding the global market place, driving crude prices down toward $70 (U.S.) per barrel — a decline of more than 35 per cent since June.

OPEC, the largest group of oil-producing countries in the world, said Thursday it won’t scale back production to help stabilize the worldwide price drop, a move that sent crude spiraling lower.

“This may bottom out or it may not. But it’s clear it will be under $70 (U.S.),” Dan McTeague, senior analyst at gasbuddy.com, an online gas price tracking service, said.

MORE: Will lower gas prices stoke higher holiday shopping? Not likely

Below $70

In fact, OPEC’s decision sent U.S. oil contracts for January crashing through the US$70 threshold Thursday afternoon, declining more than 6 per cent or US$4.58 to US$69.13. The last time oil prices were trading at that level was September 2009.

Wholesale gas prices in the United States fell by more than 11 U.S. cents a gallon (or nearly 3 U.S. cents a litre) on Thursday, according to McTeague. That means gas prices at the retail level are poised to retreat, too, and fast.

Some experts, such as analysts from DNB Bank in Norway, suggested OPEC’s refusal to meaningfully cut oil production will see benchmark oil prices slip toward the US$60/barrel range “before Christmas,” according to a report.

That would put further pressure on gas prices across Canada, which have already trended sharply lower since hitting their June peak:

MORE: Oil’s crash threatens to derail booming Alberta — and Canada too 

Uneven price drops

Pump prices throughout Ontario could fall to $1/litre or lower, McTeague said by phone. The exception will be in Toronto where retail sellers could seek to maintain bigger mark ups, he said.

In Alberta and other Prairie provinces where gas is already the cheapest in the country, prices could dip into the low-90 cent range or even below that level.

“Expect a big drop, but how far or how low depends on where you are in the country,” McTeague said.

In British Columbia, Quebec and Atlantic Canada, where regulation and higher taxes generally serve to inflate gas prices compared to elsewhere, prices will also fall but not as quickly, according to McTeague.

“They’re going to have to wait another week for them to drop,” he predicted.