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Gas price windfall worth billions to consumers

By David Akin, Postmedia Network

Canadian motorists are saving $40 million every day right now compared to what it cost them to fill up their tanks back in June. (CODIE McLACHLAN/QMI Agency)

Canadian motorists are saving $40 million every day right now compared to what it cost them to fill up their tanks back in June. (CODIE McLACHLAN/QMI Agency)

OTTAWA - Forty million dollars a day.

That's how much Canadian motorists are saving every day right now compared to what it cost them to fill up their tanks back in June.

And if prices stay where they are now for a whole year, Canadian motorists could save more than $14 billion. That's nearly the same amount consumers saved when the GST was cut from 7% to 5%.

Those are the numbers in a QMI Agency analysis of Canadian fuel consumption and prices.

Around the world billions of dollars worth of wealth is moving from producers' pockets to consumers. Some researchers say the world's oil producers have seen their combined global revenue reduced by a staggering $1.5 trillion in just the last five months.

And consumers are the big winners.

Back in June, Canadians were paying, on average, just under $1.40 for a litre of regular unleaded gas. Last week, the national average was $1.12 a litre, according to price-tracking consultancy MJ Ervin and Associates.

There are still wide regional swings. In Edmonton Wednesday, some stations were selling gas for 83 cents a litre. In Montreal it was cheaper but still $1.22. In my neighbourhood in suburban Ottawa, the price dipped below a buck a litre.

"It's unambiguously a positive from a consumer point of view," Craig Alexander, TD Bank's chief economist, told me Thursday.

His shop has calculated that every $10 a barrel drop in the price of West Texas Intermediate crude -- one of the benchmark prices on the world crude market -- is worth about $150 a year to the average Canadian household. TD figures that if the national average price of gas hovers around $1.10 next year, Canadian households would save about $485 for the year.

The Washington Post reported this week that American consumers are saving $630 million a day, a figure that works out $230 billion for the whole year.

All that wealth moving from producer nations to consumer nations is bad for countries like Russia, Saudi Arabia, Iran and Venezuela but it's good for net consumers like the United States, China and Japan.

Canada, of course, is a bit of both. We're one of the world's biggest producers but we're also an importer. Much of the country will see a big benefit from cheap oil.

"What it really does is really shift your regional performance," said Alexander.

There is a danger of slowing investment and job creation in regions and sectors of the economy where the energy business dominates. That would be Alberta, Saskatchewan and Newfoundland and Labrador.

But Ontario and Quebec will see economic growth pick up, Alexander said. As a result, the overall effect on our economy is pretty negligible as Canadian consumers pump their windfall right back into the economy in the form of higher consumption on other things.

But one variable that economists can't plug into their spreadsheets is what these low oil prices will do to the country's political conversation, particularly ahead of the 2015 general election. Governments in Alberta, Saskatchewan, Newfoundland and Labrador rely heavily on oil revenue. Ottawa relies less heavily on oil revenue but it's still significant.

"It makes the election discussion a bit more challenging because the federal government anticipated surpluses and already made announcements about what they would do with them," Alexander said.

Alexander is talking about the Conservative plan to provide parents with more tax breaks and an enriched universal child-care benefit.

"They used up half of the projected surplus. Well, the other half is now in question because of the fall in oil prices. This really leaves very little manoeuvring room for the other parties because pretty much anything the other parties promise ... they aren't going to have any money for new spending."

CHEAPEST FOR GAS:

Edmonton: 91.1 cents

Red Deer, Alta.: 95.9 cents

Winnipeg: 98.5 cents

Lethbridge, Alta: 99.3 cents

Saskatoon, Sask.: 99.4 cents

Lloydminster, Alta: 99.6 cents

Calgary: 99.6 cents

Regina: $1.02.3

Ottawa: $1.03.8

Brandon, Man.: $1.03.9

MOST EXPENSIVE FOR GAS

Yellowknife, N.W.T.: $1.33.9

Fort St. John, B.C.: $1.28.1

Whitehorse, Yukon: $1.27.9

Labrador City, N.L.: $1.27.3

Montreal: $1.23.3

Val D'or, Que.: $1.23.3

Sherbrooke, Que.: $1.21.8

Gander, N.L.: $1.21.4

Trois Rivieres, Que.: $1.21.4

Vancouver: $1.20.7

The national average for 1 litre of regular unleaded is: 112.3

Source: MJ Ervin Associates/Kent Marketing Services weekly national survey. Price per litre of regular unleaded for the week ending Dec. 2, 2014


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