The low cost of gas these days might seem like a welcome change, but the drop in oil prices due to the coronavirus pandemic could be devastating if they stay low for some time, according to an instructor at one American university.
Rob Warren, a Manitoban who teaches market validation and competitive intelligence at the University of North Dakota, told 680 CJOB that the current situation impacts more than just the cost at the pumps.
“You think about oil, not just Manitoba, Alberta, Saskatchewan… but you also have to take a look at the impact oil has on the entire Canadian economy,” he said.
“The fact that we use it in so many things, from plastics to producing the feedstocks that go into fertilizers and things like that… if that particular sector is hit hard, you’re going to see a ripple effect throughout the entire Canadian economy, and that’s bad for everybody.
“You think it’s great that gas is inexpensive right now, but in the long run, that’s going to hurt the standard of living in the country.”
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Warren said he expects the impact of the coronavirus pandemic to have reverberations in the oil industry for a few years, especially when considering major oil consumers like the airline industry.
And oil industry woes don’t just affect Alberta, he says, because if that province’s economy is disrupted, there’s less money for equalization payments to provinces like Manitoba.
In Alberta, experts say the province is facing a large dent in the provincial economy.
Dan McTeague, president of Canadians for Affordable Energy and former MP, said the drop in prices comes from a mixture of decline in demand due to the pandemic and intricacies within the provincial and federal governments.
“The debts that we’ve accumulated until now, compounded by this situation, could leave every Canadian vulnerable,” he said.
“I wouldn’t put all my eggs in one basket when it comes to gas. The damage may be done.”
McTeague said that with the weakening of the Canadian dollar, low gas prices now won’t be as beneficial when it comes to the cost of other purchases in the future.
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