County business owners aren’t that worried about the price of oil headed into 2015, and some say they might benefit from it.
Gasoline prices dipped into the mid-70s late last week in Edmonton as world oil prices continued their months-long fall.
National gasoline prices have dropped by about 40 cents per litre since their peak on June 24, reports Natural Resources Canada, making them lower now than any time since 2011.
Statistics Canada reports that gas prices have fallen for five months in a row, contributing to a slight drop in the rate of inflation (two per cent last month, compared to 2.4 in October).
While the provincial government is warning of billion-dollar shortfalls in its budget, many county businesses said they are weathering, even prospering, from the cheap fuel prices.
There’s still a relative shortage of diesel fuel that has kept diesel prices high even as oil falls, said Doug Bertsch, vice-president of regulatory affairs for North West Redwater Partnership.
“That’s a good thing for our type of business,” he said, as it should encourage more companies to refine their cheap oil into pricey diesel.
The Sturgeon Refinery itself was still on track for its 2017 opening, with some of the first modules already arriving on site this winter, Bertsch said.
Diesel prices have dropped about 24 cents since their peak back in February – a significant drop, but still within the price range seen in the last three years, reports Natural Resources Canada.
Locally, the price of purple diesel is about 10 cents lower now than it was last spring, reports St. Albert area farmer Robert Tappauf. (Diesel used in farm equipment is dyed purple.)
“If it was this price over harvest time when your combines are running 15 hours a day, it’s quite a bit,” he said of the benefit. It’s not as significant now, as there isn’t a lot of fuel being used in the winter except for transport, but the savings are still there.
“It’s a great benefit to the farmer.”
It’s a minus if you’re selling crops for biofuels, though, said Larry Martin, agricultural economist with Larry Martin and Associates in Ontario.
“As oil prices have come down, ethanol has become way less attractive.”
Price margins on crops for ethanol are now very tight, and this has likely contributed to a drop in the price of corn, Martin said. But since it’s more expensive to stop and restart an ethanol plant than to keep it running, most producers are still buying.
Lower transportation costs should lead to lower food prices, but probably won’t, Martin said.
“Retail prices don’t change nearly as much as farm prices,” he explains, as retailers believe shoppers dislike rapid change. Given that transportation is a relatively small part of the price of food, any changes that do occur will likely be negligible.
Energy is a big part of the Alberta economy and you can’t help but hope that we’ll see a recovery in prices soon, stated county commissioner Peter Tarnawsky in an email.
Still, the slowdown in the oil sector could net the county more and more competitive tenders for construction projects as more workers get freed up, and lower fuel and gravel prices could lower the county’s operating costs.
“While we are concerned at the macro level, we are trying to see the silver lining.”
