The pain oil producers feel with oil prices hovering just above $80 a barrel is a bonus for consumers filling up at the gas pump.

Gasoline prices are at a five-year low in Canada, leaving more money in consumers’ pockets.

Prices have dropped to the $1.11 a litre level in some parts of Ontario, as low as $1.03 in Edmonton, $1.25 in Vancouver and $1.22 in St. John`s, a sharp price drop from the early summer. The Canadian average was about $1.23, according to Roger McKnight, an analyst with En-Pro International,

The price will fall even lower in most parts of Canada over the coming weeks, said Dan McTeague, who analyzes oil and gas prices at tomorrowsgaspricetoday.com.

McKnight agrees. "I could see it [crude] going down another $6 a barrel for WTI and that would translate into another three cents per litre [at the pumps] within the next 30 days," he said.

McTeague said years of speculation drove world oil prices to $147 US a barrel in 2008 and $115 US this June at the time when ISIS seemed to be threatening supply in Syria.

But now there is a worldwide glut of oil.

Supply high, demand low

"The reality is now setting in that crude has no floor, and as any other commodity, when the supply is high and the demand is low, prices have nowhere to go but down," he told CBC News.

The shale oil boom in the U.S. has resulted in strong supply in North America and Saudi Arabia signalled last week that it would continue to pump oil and sell it at $80 a barrel, rather than manage its supply. That's a 30 per cent drop since June.

And waning international growth has led to a drop in demand for crude.

West Texas Intermediate, the main oil contract traded in New York, is selling at $81.78 US a barrel today, and Western Canada Select, the price paid to many Canadian producers, is at $68.98 US. 

Finance Minister Joe Oliver acknowledged the hit against Canadian producers, who may soon have to cut back on investment in new production.

"There will be implications for some companies, on the other hand, Canadian consumers can benefit from lower prices," he said in a news conference Tuesday.

A hit on Canadian economy

McTeague warned that falling gas prices will ultimately hurt Canada`s economy, affecting job creation and government revenues.

"Canada's economy is heavily tethered to the success and the economic viability of the petroleum industry," he said.

"If they take a hit … and they have … of some 30 per cent of anticipated revenues, there's going to be consequences on the economic side."

There are conflicting reports about how low crude oil might go, with Calgary-based analyst First Energy predicting it could drop another 15 per cent.

"If OPEC shows a complete lack of unity and focus, then another down leg for crude oil prices may be in store which could see a technical flush for prices into the mid-$60s US per barrel by the end of this year," a report from First Energy forecasts.

But winter demand may put a floor on crude prices.

"With winter demand picking up, we think selling pressures will ease and build a floor for crude oil prices that may be in the high $70s to $80 US per barrel for Brent; that means WTI will be priced to as low as $75 per barrel," the report says.

But there`s a flip side to lower gas prices. Airfares might drop as fuel prices fall. The cost of transporting food products will be lower, which could help offset a lower Canadian dollar that pushes up the price of food.

And Canadians could eventually save on both filling up the gas tank and heating their homes this winter, leaving them more cash for holiday shopping and buying big-ticket items. They also could pay down debt faster, lowering the high household debt that has worried economists.

With files from The Canadian Press