12/19/2014 08:44 EST | Updated 02/18/2015 05:59 EST

Average gasoline price dips to 99 cents and falling

For the first time in 4½ years the average cost of gasoline in Canada has dropped below $1 a litre.

The actual prices vary by market, from $1.05 in Vancouver to 76.9 cents in Edmonton to 98.9 cents in St. John's, according to the Gas Buddy website. But the average on Thursday was 99 cents a litre.

Gas price analyst Dan McTeague, founder of Gas Buddy and Tomorrowsgaspricetoday, believes that price will keep dropping into early 2015.

Oil prices have been dropping, from a high of $105 US a barrel in July to $56 US today, because of an oversupply of crude powered in part by the U.S. shale oil boom. In November, oil cartel OPEC decided not to cut back its production of 30 million barrels of oil per day, despite signs that world demand for oil is slowing amid an economic downturn.

Oil price war

McTeague believes OPEC and U.S. producers are grandstanding in an effort to keep their market share.

"The end is not in sight. OPEC believes that the American producers will somehow turn the tap off at $50-$60 a barrel – we're already near that level," he told CBC News.

"Reports this morning from the largest oil producer in the U.S., Exxon, says they can drive prices down to $20 if they have to. So this war to the death is not over," he added.

Oil prices bounced a little higher today, up $2.41 to $56.52 for the West Texas Intermediate contract in New York.

Although it takes time for lower oil prices to result in lower prices at the pump, that means gas prices could keep falling into January and February.

"It absolutely means that consumers can expect that in the New Year these prices will go lower unless there is some disruption or someone decides to call it a day," McTeague said.

Money in your pocket

The difference in gasoline prices across Canada are caused by differences in the tax regime in each province.

Just a few months ago, Canadians were paying an average of $1.30 to $1.35 a litre for gas. That's a significant savings.

"If you think about a consumer of gas using an average 80 litres a week, you're saving about $30 a week plus," McTeague says.

The result could be both a decline in the cost of living in Canada as lower fuel costs are reflected in the price of goods and a burst of new consumer spending.

"The collective effect of prices being this low – the average Canadian family could see savings of between $1,500 and $2,000 a year," he said.

"I think it's going to stimulate obviously significant retail activity," he added.

So while Canada's economy could be hurt by falling exports and reductions in the energy sector, there is a chance that consumers will help boost GDP with additional spending.