Gasoline at the pump was under 77 cents per litre as of Wednesday afternoon, January 21.
With the price of crude oil falling to $48 a barrel Monday, January 19, there’s a definite upside to the low prices.
Drumheller & District Chamber of Commerce president John Shoff said the Canadian Chamber of Commerce has done studies on the economic impact of low fuel prices, and they’re estimating about $1,300 in savings per family for the year based on current oil rates.
“So that’s a pretty good amount of disposable income, essentially that gets injected back into the local economy, that goes back directly to local businesses, with people purchasing things that they may not have purchased,” Shoff said, adding this money that the families would have previously put toward their fuel costs.
Shoff said the majority of oil and gas businesses in Drumheller are maintenance, not drilling and exploration, so tend to be somewhat insulated from the recent oil price drop.
A downside of low oil and gas prices would be less funding available from the Government of Alberta for the Town of Drumheller. Mayor Terry said his concern would be a further burden that the Town’s taxpayers would have to carry.
“Anything they do as far as a rollback would impact the Town,” said the Mayor. “The downloading by the provincial government - we’ve all seen it over the years, how many extra things have been pushed back to the municipal level, to the taxpayers at a municipal level. And it’s enough-we’ve reached a saturation point.”
The Mayor says the provincial government has certain responsibilities, and their dumping down to the municipalities can’t continue.
A positive outcome for the town after the provincial budget is tabled, expected later in March, is the current funding levels are maintained, said the Mayor.
“The best case scenario would be at least the status quo. On our municipal sustainability funding, nothing adjusted there. And of course, we got our full funding for our flood mitigation. And no other programs or services were downloaded to the municipal level.”
This projection of crude oil prices chart from the Bank of Canada shows a steady climb in oil prices. The Bank of Canada says oil extraction now accounts for about 3 per cent of Canada’s gross domestic product (GDP), and crude oil accounts for about 14 per cent of exports. The information was presented at a speech to the Madison International Trade Association (MITA) of Madison, Wisconsin on January 13, 2015.
When the question was posed on the possibility of the Town having to dip into its reserve fund, the Mayor said he thinks it’s a bit of a stretch that would happen, saying any negative effects from the provincial budget would likely be reflected in Drumheller’s 2016 municipal budget. He said the Town’s 2015 budget is close to Council approval. Town Council is hoping for a 2 per cent tax hike with no service cuts.
Don Wilson, president of Donald J. Wilson Services Ltd. in Drumheller, has 35 1/2 years experience in the oil and gas industry, and said he’s seen a drop in oil prices like this twice in his career, with the prices taking 6 months to a year to come back.
“It’ll never come back to where it was, but then, we never thought we’d have $110 oil, either.”
Wilson estimates it’s been 20 years since gasoline prices have been this low.
He said he can’t see any reason the oil price would stay depressed, and expects the price will start rising again in spring.
