VANCOUVER (NEWS 1130) — The price at the pumps has been on a steady decline since the start of the pandemic and one expert says it isn’t likely to go back up any time soon.
A decrease in demand due to COVID-19 restrictions, a dust-up between Russia and Saudi Arabia, and the prospect of recession have all conspired to drive gas prices down.
Werner Antweiler, an economics professor at UBC’s Sauder School of Business says this isn’t likely to be a short-term trend.
“Demand is way, way down and if there’s no demand, of course prices will go down,” he says.
“Any motorist who needs to fill up their tanks with gasoline and diesel fuel, they will be in a very, very good position for the rest of the year. There’s no sign on the horizon to indicate that prices are going to increase,” added Antweiler.
With oil prices recently falling below zero dollars a barrel for the first time in history, oil producers are still pumping out oil — opting to slow production rather than stop it completely.
But oil reserve tanks are quickly filling up.
“In probably a week or two, even the biggest storage tanks are going to be full. And if that happens, then the hard decisions have to be made. The producers have to cut production and that is very painful financially because stopping and restarting production is especially expensive,” he explains.
While low prices are welcomed by drivers who need to fill up, the plunging price of oil could be disastrous for people working in Canada’s oil and gas sector.
“The shutting down of individual fields will be a very painful decision that is still to come,” says Antweiler.
“I think it will become worse before it gets better again. This is one of the worst scenarios anyone could have envisioned for the oil industry in Canada,” he warns.