PEI

Double hit to world oil prices drops price of fuel on P.E.I.

Two forces came together to prompt a big drop in gas, diesel and heating oil prices overnight Monday.

Gas price lowest since February of 2019

The price of home heating oil fell more than seven per cent overnight. (CBC)

Two forces came together to prompt a big drop in gas, diesel and heating oil prices overnight Monday.

P.E.I.'s Island Regulatory and Appeals Commission normally reviews the price of petroleum products weekly, making changes Friday morning. Tuesday's was the first unscheduled change since IRAC moved to weekly reviews.

Regular self-serve gas is down 6.9 cents per litre to a minimum of $1.028, the lowest price since February of 2019.

The minimum price for diesel fell to $1.063 per litre, also down 6.9 cents.

The maximum price for heating oil is down 6.3 cents to $0.793.

Propane prices are unchanged.

Allison MacEwen, director of regulatory services for IRAC, said a general slowdown in the global economy due to the COVID-19 virus has been putting downward pressure on crude oil prices for about six weeks. An unexpected event on the weekend pushed them down even further.

Saudi Arabia and Russia have been working together to restrict production, matching supply to demand, for four or five years. Talks to continue that relationship broke down on Saturday.

"In reaction to that, Saudi Arabia, and then subsequently Russia, announced not only were they not going to agree to reduce production, but they were going to do the exact opposite," MacEwen said.

"They were going to slash their export prices and increase production, thus making a global supply surplus situation all that much worse."

It is impossible to predict where prices could go from here, he said. Government stimulus packages could increase demand, and it is also possible Russia and Saudi Arabia will get together to control production again. In another scenario, speculators could buy up the cheap oil in the hopes of selling it at a higher price down the road.

But he said if none of those things happen, further price drops are likely.

More from CBC P.E.I.

With files from Angela Walker

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