Evidence of meeting #2 for Subcommittee on Oil and Gas and Other Energy Prices in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was oil.
A recording is available from Parliament.
2:25 p.m.
Conservative
2:25 p.m.
NDP
Peggy Nash NDP Parkdale—High Park, ON
On the issue of the dollar, Mr. Diwan, if I understood you correctly, you were saying that the price of oil went up and that the dollar went down. Here our dollar was going up, and it seemed to be pushing us more into a commodity-driven economy as opposed to a value-added economy, which is very troubling to many of us.
Mr. Sprott, you made the point about yes to high prices, because there is a limited supply in the market. Oil is a non-renewable resource. These high prices are going into private pockets and it is skewing production. You end up with incredibly inefficient production such as the tar sands. If there are going to be higher prices, it would be better to invest some of that money in more sustainable alternatives. This is a comment on that. I think it might benefit the greatest number of people.
I want to get back, Ms. Russell, to your point about speed bumps. A few people have referred to speed bumps along the road of paper speculation. I'd like to know what power we have in Canada to take action on apparently damaging speculation. What are our abilities under NAFTA to control prices? What are our abilities internationally? Do we have the power to introduce those speed bumps here in Canada, or are we at the mercy of other countries when it comes to regulatory control of investment in the important commodities we rely on?
2:25 p.m.
Professor, School of Public Policy and Administration, Carleton University
To the extent that we regulate our own domestic financial markets, we have the capacity to put in whatever speed bumps we might like. The difficulty is that the financial market players in Canada will ask why they should do business in Canada if they can go elsewhere and not face that same speed bump. They will pressure the government not to put in such speed bumps, and it will become difficult to do so.
If we can't persuade other countries that it's in our collective interest to put in these speed bumps in our various domestic markets, we have a problem. We're in effect saying that we can't control the speculative excesses. Then we're forced to adopt a more interventionist approach to try to handle the fallout from speculation.
2:25 p.m.
NDP
Peggy Nash NDP Parkdale—High Park, ON
To all of you, what public policy do you recommend that this committee should advise, given the issues we've been talking about here this afternoon? If there's time, I'd like to hear from each of you.
2:30 p.m.
President, Masters Capital Management
I was just going to mention that while it may seem that some of this is out of your hands, as some of it has to do with the legislative actions of other countries, one weapon that has proven effective, in my opinion, is moral suasion. I think that when politicians make the point poignantly and appropriately that we're having issues of speculation that are amplifying the effects on markets, people hearing this message tend to act. I imagine that if many people knew what the Ontario teachers' fund was doing, there would be some hard questions about whether that activity, even if it was only partially driving up the prices for food and energy for folks in Canada, was appropriate.
2:30 p.m.
Partner and Financial Advisor, PFC Energy
It's really a collective action issue. You can regulate the Ontario teachers if you want, but it's not going to actually help the Ontario teachers' pensions, so you're hurting the pensioner here.
The problem is really collection action, because in the U.S. we're saying exactly the same thing: we shouldn't regulate these markets because the British are not regulating them. Canada is saying it's not their problem because of the Americans. There is a forum for this, and it's called the G8. Canada and other countries should put on the agenda how to re-regulate the commodity market, because it's a collective action. You need the United States, Canada, and the Russians to sit down and agree what to do. There is a forum for it. You need leadership. If you're fortunate and reasonable, some countries will accept that leadership.
2:30 p.m.
Chief Executive Officer and Portfolio Manager, Sprott Asset Management
Well, there's nothing you can do. You cannot do anything about the price of oil in the world. We're a small part of world oil. Forget it, it's not going to happen in Canada.
I find it incredibly ironic that we are the one country in the world that benefits the most per capita from the price of oil being where it is. We only have 35 million people and we're going to be producing 3.5 million barrels. This is a bonanza for this country, and everyone participates, whether it's the provinces or the federal government through taxation, the business of discovering oil and doing tar sands plans, or whatever. This is an incredible bonanza for this country. It's not a problem.
I realize that it's a problem for the individual consumer because the gasoline price goes up, but the gasoline price goes up anyway. If the government wants to subsidize gasoline prices, as many other countries do, go right ahead, but that will create massive inefficiencies in terms of consumption.
It's a world problem that we have. Yes, we could go to sustainable energy. That would be the one thing you could do to solve the world's problem. We don't have a problem; the world has a problem.
2:30 p.m.
Conservative
2:30 p.m.
Professor, School of Public Policy and Administration, Carleton University
In terms of learning from speculative bubbles in the past.... When bubbles are inflating, it is always argued that you can't do anything to defy that sort of market, that you can't stand in the way of that sort of tsunami of activity. And then after it bursts, everyone wrings their hands and says, why didn't the people who were in charge of this do something about it?
So what you're faced with is having to take what might not be a popular position right now--well, among some it might be--and to say that we see further than the momentary frenzy of market activity, and to try to do something that's sustainable for the long term rather than just respond to the vicissitudes of price today.
2:30 p.m.
Conservative
2:30 p.m.
Liberal
Mark Eyking Liberal Sydney—Victoria, NS
Thank you, Mr. Chair.
It's been quite a day. We had quite an eye-opener here on how we produce oil in the world and how we pay for it.
My question is to Mr. Sprott.
In your summary here, you have two-thirds of the countries that produce oil on a decline. You repeat it yourself many times that it's a given; there's going to be less oil. It was also alluded to that the Asian demand is not going to curtail any time soon. So wouldn't it be a viable course for any individual or country that relies a lot on oil to start reducing it?
My question is, wouldn't a responsible government show leadership and implement some disincentives for using oil, and also reward the users for alternative sources of energy?
2:35 p.m.
Chief Executive Officer and Portfolio Manager, Sprott Asset Management
That's exactly what I was suggesting here recently in response to Ms. Nash's question. Yes, there are other sustainable options that obviously every government in the world should look at. It's not as critical to Canada as to almost every other country, quite frankly. But yes, I would encourage.... I'm not a big fan of biofuels, but solar or geothermal or other sustainable methodology is exactly what we should be supporting today. But you're really solving the world's problem, because fortunately I don't really think we have a problem as a country today.
2:35 p.m.
Liberal
Mark Eyking Liberal Sydney—Victoria, NS
But we could show leadership for many of these western countries.
2:35 p.m.
Chief Executive Officer and Portfolio Manager, Sprott Asset Management
Absolutely.
2:35 p.m.
Liberal
Mark Eyking Liberal Sydney—Victoria, NS
And there are countries like Denmark and other European countries that have already showed that leadership.
2:35 p.m.
Chief Executive Officer and Portfolio Manager, Sprott Asset Management
Absolutely. There are many countries that realize the problem--particularly countries who've never had hardly any oil production. They sense the problem more than anybody. We probably don't sense it as much because we've always had our own supply of oil and we're oversupplied with oil.
But there is a big problem out there, and yes, anything the government could do to create other sources of energy--as long as they weren't consuming more energy to produce than the output--then yes, we should do that.
2:35 p.m.
Liberal
Mark Eyking Liberal Sydney—Victoria, NS
Similar to the green shift, then. The green shift would help that.
2:35 p.m.
An hon. member
Carbon taxes.
2:35 p.m.
Chief Executive Officer and Portfolio Manager, Sprott Asset Management
Oh, I see, yes.
But, you know, there's one thing I would suggest. For example, the U.K. government came out and said they were going to put a tax on oil companies, and all I could say was, “Please.” It's just less money.... And they have a serious problem in the U.K. now; their production is plunging like crazy. Okay, you're going to tax people or tax the oil companies more. Well, then they're going to have less to spend on--
2:35 p.m.
Liberal
Mark Eyking Liberal Sydney—Victoria, NS
On production.
Are there any other comments from the other witnesses on that? It's a given that there's going to be less production in the world and that if we use a lot of energy we're really going to look at finding alternative sources of energy. Is that a given?
