Gas prices have dropped dramatically in the Greater Toronto Area as of midnight.

Dan McTeague, president of Canadians for Affordable Energy, a non-profit organization based in Toronto, predicted earlier this week that prices would drop as much as 10 cents on Wednesday, saying the price at the pump was expected to fall to 92.9 cents a litre in the GTA.

McTeague said many stations may offer gas priced at 85.9 cents a litre. He predicted the drop would occur across Ontario.

While the gas price drop may seem like good news for consumers, it's actually a bad economic sign, McTeague told CBC Toronto on Tuesday.

"It's not good news, no," McTeague said.

"I mean, it's short-term good news for those who, compared to say a week ago in Toronto, were buying gasoline for 115.9 cents now being able to buy it for 92.9 cents, saving anywhere from $5 to $15 a tankful depending on the size of the tank," he added.

"But that good news is easily displaced by the totality of a slowdown in economic activity in the energy sector and the devaluation, not just of the Canadian dollar, but more importantly, all of our resource and assets."

Low prices due to 'far more serious problem'

The gas price drop is a direct result of a weekend spat between Saudi Arabia and Russia, McTeague added. Saudi Arabia pledged on the weekend to increase its output of oil in response to a refusal by Russia to roll back production.

Factors that have contributed to the situation include rail blockades in Canada and the economic impact of the novel coronavirus outbreak, he added.

Dan McTeague, president of Canadians for Affordable Energy, a non-profit organization based in Toronto, predicted earlier this week that prices would drop as much as 10 cents on Wednesday, saying the price at the pump was expected to fall to 92.9 cents a litre in the GTA. (CBC)

The gas price drop is coming at a time when the Canadian dollar is losing its purchasing power, he said. That could mean Canada is headed for an economic slowdown, he added.

"We've come to these low prices because of a far more serious problem," he said.

McTeague said he agrees with John Manley, former deputy prime minister and currently a senior adviser at Bennett Jones LLP, who said in an interview with BNN Bloomberg on Friday that he thinks the federal government may need to reconsider its budget strategy.

Manley said an economic update by federal Finance Minister Bill Morneau would be appropriate, given that the coronavirus outbreak is negatively affecting the economy and its full impacts are not yet known.

McTeague said low gas prices are expected to continue until at least April.