Gas prices drop 12 cents to about $1.79 per litre in most Ontario cities

Gasoline prices have dropped about 12 cents a litre overnight in Ontario and are down across much of Canada after a big dip in the price of oil this week.

GasBuddy is reporting prices are down to about $1.79 in major cities in Ontario from $1.91 on Wednesday, while cities like Vancouver and Montreal saw prices drop around six cents overnight.

Rory Johnston, founder of Commodity Context, says the lower prices at the pump come after crude dropped by about US$10 a barrel to fall below US$100 a barrel on Tuesday.

He says consumers are also seeing lower prices because refining margins, which have shot up on limited processing capacity and high gasoline demand, have dropped about 25 per cent in recent days.

The drop might be temporary as some of the declines were likely from investors unwinding speculative positions, says Johnston, while the fundamental problem of supply shortages remains an issue.

He says he expects continued volatility in prices as investors weigh recession fears against high current demand.