Dalglish said: "Realistically they need to get 11 more points than Rangers before the end of the season.
"To do that they have got to give themselves the best possible chance and that is to win the two Old Firm games as well as a lot of others.
"Obviously everyone is envious of Walter (Smith) and the position that Rangers are in.
"They are 10 points clear, there are two Old Firm games to come, one on the 28th of February which is really important for Celtic.
"But certainly Rangers are in the driving seat.
"They have done fantastically well to get that far in front and I'm sure Celtic are hugely disappointed with the number of points they are behind.
"But they are where they are because of what they have done."