Falling oil prices could impact Saskatchewan budget

Oil prices fell off a cliff earlier this month — and that's something that could impact the Saskatchewan budget if the cost of crude stays low.

In the spring, the finance department said it was expecting to rake in $1.6 billion in oil revenues in 2014-15.

However,that was based on oil prices averaging $94.25 (US) a barrel.

That's roughly where West Texas Intermediate Crude was last month, but since then prices have tumbled, bottoming out at around $82 a barrel earlier this week.

Prices recovered to about $84 on Thursday, but it still represents a potential problem for Saskatchewan's bottom line.

Every dollar oil falls represents a loss of about $18 million to the treasury.

The impact is cushioned by the fact that the Canadian dollar often falls when oil prices do. Every cent the dollar drops adds about $30 million to the coffers.

However, there are more general problems caused by low oil prices. Oil production in Saskatchewan has been spurred by high oil prices, so a downturn in prices will hit the economy, at least in the oil patch.

Meanwhile, low oil prices might be bad for the government, but they're good for drivers.

Gasoline prices dipped this week to levels not seen for many months. You could get a litre of gas for as little as $1.08 in Regina, while in Saskatoon, it was $1.11 a litre at some outlets.