What will cheaper crude oil prices mean for you at the pump?
Posted August 21, 2015 3:22 pm.
This article is more than 5 years old.
VANCOUVER (NEWS 1130) – The price of crude oil has dropped below $40 US a barrel for the first time since 2009, which could mean a cheaper price for you at the pump, but we might have to wait months to see those savings.
It could be until October or November before that saving is passed onto drivers, according to Professor Werner Antweiler with UBC’s Sauder School of Business, who says based on the low price of crude, we’re overpaying at the pump.
“Right now we’re actually seeing the difference at the very high end,” says Antweiler. “So the price is close to $1.30 and the price should be closer to $1.13, so it’s a pretty large price gap.”
Antweiler says that gap can be explained by a number of things including refining and transportation costs.
“We see oil prices dropping and that price should be passed onto consumers,” says Antweiler. “Of course there is always a delay, and that delay is in part due to inventory, and in part also due to the available refining capacity. There’s a seasonal effect too — in September we often see the shut down of refineries for maintenance.”
Given Saudi Arabia and the US are producing plenty of oil, Antweiler expects an extended period of low crude prices.
