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Toronto-based Michelle Lewis creates custom Irish dresses and sells almost entirely into the U.S.

The plunging price of oil has not trickled down to Michelle Lewis's custom Irish dress business in Toronto yet, but the dropping dollar is already making a difference.

"The cost of gas doesn't directly affect my shipping," says Ms. Lewis, who is based in Toronto but sells up to 95 per cent of her product in the United States. "I use Canada Post and FedEx and their prices don't fluctuate with gas prices."

Along with many Canadian manufacturers and exporters, she wonders if this will change if lower prices persist. Meanwhile, Ms. Lewis says she is far more affected by the downward shift in Canada's exchange rate, a side effect of lower energy prices. While there are several factors that affect the value of the loonie, since Canada is a net exporter of oil, our dollar tends to be valued lower when oil prices are lower and our country gets lower revenues from our oil exports.

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"I'll use the lower dollar as a marketing strategy," she says. "U.S. customers automatically get $200 or more off their dresses [because of the exchange]." The dresses cost up to $2,000.

She is also turning to Canadian suppliers for the fabrics she uses to make garments, instead of importing cloth as she did when the dollar was higher.

It's unlikely that any Canadian manufacturer or exporter will complain about cheaper energy prices. "If you're not in the oil business or the energy business, the lower they are the better off you are," says Patricia Mohr, a vice-president at Bank of Nova Scotia and a commodities market specialist.

"Though not always," she warns.

For example, Ontario manufacturers and suppliers to Alberta's energy sector could be hit hard if development or production in the oil sands are cut back or halted because of price declines.

"The last time I travelled to Ontario, in the spring, I had someone sitting to the left of me and to the right of me from Canadian Natural Resources Ltd. They were going to Ontario to do deals for components for oil sands production," says Amina Beecroft, president of A2B2 Analytics Inc. and a part-time professor of investments and finance at Mount Royal University in Calgary.

Those deals dry up when the price per barrel hits $55 (U.S.), as it did last week, she adds.

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The big question right now for Canadian manufacturers and exporters is whether the precipitous decline in the prices of West Texas Intermediate (WTI) and Brent crude, grades used as benchmarks in pricing, to below $60 is part of a price war triggered by Saudi Arabia or a more profound and likely longer lasting shift in energy.

If it's a price war, the effect on Canadian firms that do business globally will not last long, because the price war will end; if it's longer term, it's a game-changer. Experts are uncertain and divided.

"It seems very ominous to me. I've seen a lot of booms and busts and this one seems longer term," Dr. Beecroft says.

While she stresses that it's still more of a hunch than a prediction, "I would say that we have more of a structural change in oil prices, which means longer term. It's much like what happened to natural gas prices, where there was a sell-off in 2008 and the prices haven't come back."

Ms. Mohr takes a slightly different view. "While an extended period of lower oil prices [below $80] is expected over the next several years, the percentage gain in WTI prices by late 2015 will likely be double-digit," possibly 25 per cent to $70, she says, in a new report released Dec. 18.

The outlook for bitumen production in Alberta's oil sands will not decline rapidly in 2015, she adds, although those who do business with the oil sands should brace themselves for a 20-per-cent reduction in capital spending in the coming year.

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Whether long-term or short-term, the drop in currency values in oil producing countries seems to affect global exporters more than lower fuel or transportation costs. At the extreme end, a currency drop can be devastating; in Russia, the ruble has collapsed and companies that export into that country have fled.

In the past week alone, Apple Inc. suspended its online sales into Russia, followed by Opel, the European arm of General Motors Co., which suspended shipments of Cadillacs, Opels and Chevrolets to its Russian dealers.

An oil price-related currency drop works differently in Canada. As Ms. Lewis is noticing, it can actually help her business as she reaches into the United States.

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