The price of crude oil has taken a hard, fast fall in recent weeks, and prices at the pumps have begun to reflect that slide - a fact that could hurt the economy in the long run.
On Thursday, crude for a brief period sunk as low as US$49.91 per barrel -- a massive drop from July, when crude prices hovered around the $150 mark.
Gas prices, which were as high as $1.45 per litre in September in Toronto, were wavering around the 87-cent mark on Thursday in the same city.
According to analysts, crude traders Thursday were spooked by falling stock prices, tight credit and a steady stream of bad economic news -- and were slashing per-barrel prices in expectation of reduced global demand as economic woes worsen.
And while the lower gasoline prices come as a welcome break for drivers, the long-term effect could be harmful to the economy, one expert said.
"In the long run it hurts the consumers that it's helping right now," said oil and gas analyst David Doig, from Calgary.
He said major oil companies Petro Canada and Shell are among many that have cut capital expenditure projects as a response to the lower prices and falling demand.
That's a response to a short term problem that will cause greater troubles later when demand bounces back, Doig said.
"They're not developing the reserves that we'll need when the demand comes back. It's basically estimated we'll need another 64 million barrels a day, which is the size of Kuwait, by 2030," Doig said, citing a report from the International Energy Agency.
The mid-November report suggested the world's demand will have grown by 2030 to the point where vast new sources will have to be found to support the world's needs.
Under-investment in oil exploration projects, similar to the ones currently being shelved by Petro Canada and Shell, could cause an "oil-supply crunch" by as early as 2015 as output from existing oil fields slows, the IEA said.
"The gap now evident between what is currently being built and what will be needed to keep pace with demand is set to widen sharply after 2010."
Doig said the Organization of Petroleum Exporting Countries (OPEC) has reduced its output in order to meet lower demand, but can always crank its output back up.
The larger problem, he said, is that new oil sources aren't coming online at the necessary pace -- which will eventually intensify the supply and demand tension.
"The big worry is that companies outside of OPEC are not going to be exploring because of the low prices and we could see in a few years prices back up to $150, $200 and maybe even more per barrel for oil," Doig said.
Doig commended the province of Alberta, which recently revised its regulations to try encouraging deep-well exploration for oil.
