Saskatchewan's low fuel prices expected to be short-lived: analyst

Fuel prices across Saskatchewan are hovering around a two-year low, but the break at the pumps is expected to be short-lived.

Energy analyst and President of Canadians for Affordable Gas Prices Dan McTeague says a rapid shift is fast approaching.

"The market is highly volatile," McTeague said. "And I've never seen it like this in my 30-plus years of doing this."

After weeks of a cooling market and lowered prices at the pump, United States Federal reserve chair Jerome Powelll announced Wednesday the key interest rate will remain unchanged and will likely drop three times over the next year.

That announcement suddenly sparked confidence in the market, signaling increased demand among low levels of supply, which in turn, will drive up the price of oil, according to McTeague.

"Headlines are what drives energy prices," McTeague said. "It does mean that this is probably the sweet spot as far as gas prices are concerned and diesel prices are concerned."

The average price of a litre of gasoline on Saskatoon Thursday was just under $1.30, down from around $1.42 10 days earlier. In Regina, the average price of gasoline was $135.99, down roughly five cents since Dec. 7.

McTeague says the price discrepancy between Saskatchewan's two largest cities is an anomaly in Canada.

"You don't see that many places within other provinces across the country. It's one of those main exceptions where that seven to eight cent difference is an eye-popper," McTeague said.

Keith Willoughby, the dean of the Edwards School of Business at the University of Saskatchewan, says while consumers are feeling festive at the sight of lower fuel costs, low diesel prices could be a sign of trouble for the transportation industry.

"A reduction in diesel prices could be a sign of what's been called a freight recession," he said. " Maybe there's less items that trucking companies are having to move and the demand is dropping."

"That could indicate real challenges in that industry."

Talon Deslauriers is a local trucker who has been feeling the pinch of a slowed economy and reduced freight rates over the last year.

"I feel that every day," he said. "We're just hemorrhaging money and not getting as much as we should."

As the holidays quickly approach, McTeague and Willoughby are advising drivers to enjoy the fuel price reprieve while they can.

"Given the volatility, you never know when you're gonna get dealt a different deck of cards," Willoughby said.