Evidence of meeting #43 for Natural Resources in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was winter.
A recording is available from Parliament.
12:05 p.m.
General Manager, Canadian Propane Association
It's because that order came through at the end of the winter, around March. We were already through the tough part of the winter, December, January, and February, so it didn't.
The reason it's a concern is because 50% of our product is transported by rail. Also, they move fewer cars in the winter due to safety and what have you. I'm not saying don't prioritize grain. I'm asking, don't prioritize anything. I hope that CN and CP can work it out. I'm not asking for propane to be prioritized. I'm—
12:05 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
You do realize, though, why that might not go over so well with the western Canadian grain industry, being fairly cyclical and not quite able to store...many small players in it. It might not go over so well with a bunch of western Canadian grain-growing MPs—
December 9th, 2014 / 12:05 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
—when it wasn't a problem in the year that it was fairly tough. Just a remark....
As far as the regionalization of issues and problems and things like that go, there are various demand levels. One of our earlier witnesses said 2% of Ontario uses propane. Regionally where it tends to be the distribution of propane, how is it distributed throughout Canada? Does there tend to be more greater residential usage in some areas—I'm assuming so in eastern Canada—and more commercial usage in areas where there's more petrochemical plants?
Could you expand on this? I think that would then give us some idea of where the problems could be and how you can deal with them in the future.
12:05 p.m.
General Manager, Canadian Propane Association
It's produced in the west, transported primarily by rail to the east, stored in Sarnia for this part of the country, and then transported typically by truck within Ontario and Quebec.
It's primarily rural home heating so if you're not on a natural gas pipeline then you would use oil, hydro, or propane to heat your home.
12:05 p.m.
Conservative
12:05 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
So where in the rest of the country does it tend to be used? Petrochemical plants, that's one thing.
Then with places like Pennsylvania and other areas that weren't that many years ago big natural gas producing areas and the U.S. producing more propane, is propane going to start to be shipped in from rail from the U.S. and not from western Canada into places like Sarnia? Are we going to see that begin to change the market going forward?
12:05 p.m.
General Manager, Canadian Propane Association
I'm not in a position to answer that question.
12:05 p.m.
Conservative
12:10 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
So no idea of where future propane shipments are likely to come from...?
12:10 p.m.
General Manager, Canadian Propane Association
We make enough for our own demand and enough for export. I can't imagine why we would buy from—
12:10 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
Well, it's because we do that with other products too. Electricity is exported and shipped north-south.
12:10 p.m.
General Manager, Canadian Propane Association
I know, but again I'm not in a position to speculate.
12:10 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
Okay. That's not yours.
Now with pricing...as you go forward, do a lot of the commercial clients tend to do price hedging and things like that? Is that a potential in the market for ways to deal with costs going forward? Should maybe companies or consumers engage in some form of price hedging to protect themselves against spikes like this in the future?
12:10 p.m.
President and Chief Executive Officer, Budget Propane 1998 Inc., and Chair of the Board of Directors, Canadian Propane Association
The association does not engage in commercial activities so we could not recommend or know what the market forces will be. We only do lobbying, training, and emergency response. So as far as the market forces go, that is way beyond our scope there.
12:10 p.m.
Conservative
Bradley Trost Conservative Saskatoon—Humboldt, SK
Okay, and that would go for the witness on the other side as well.
I guess, Mr. Chair, at that point if it's mostly about safety and training, I'll pass on the rest of my question time.
12:10 p.m.
Conservative
The Chair Conservative Leon Benoit
Does anyone on that side want to take the last two minutes of Mr. Trost's time.
Ms. Crockatt, go ahead, please.
12:10 p.m.
Conservative
Joan Crockatt Conservative Calgary Centre, AB
I just had one question. I'm wondering whether or not the industry allows consumers to basically hedge their bets as a follow up on where Mr. Trost was going. In the electricity industry in several provinces, you can sort of buy essentially futures. You can sign up at a certain price or you can go with the fluctuations in the market.
Monsieur Deslauriers, is that correct?
12:10 p.m.
Director General, Association québécoise du propane
Let me give you an answer that echoes what Mr. Marchand said earlier.
We know how our distributors work. They sign contracts with one, two or several clients so that prices and volume are guaranteed for the year, the way they must also deal with their suppliers.
Let me give you an example. They may have signed contracts with Sarnia and will make sure the amount is adequate. They do the same thing with consumers directly.
However, the association's role is not to check the economic commitments of distributors and wholesalers.
12:10 p.m.
Conservative
Joan Crockatt Conservative Calgary Centre, AB
May I just ask you then how confident you are in percentage terms that we are not going to face a situation where we will have a repeat of the very high prices last year.
12:10 p.m.
Director General, Association québécoise du propane
Right now, oil prices are dropping and our distributors have been stocking up. We don't think we will have to go through that again. Actually, as I said earlier, it would be very surprising if this “cocktail”, this set of circumstances, occurred again at the same time.
12:10 p.m.
Conservative
12:10 p.m.
Director General, Association québécoise du propane
I am estimating that there is an 80% probability that it will not happen again this year, but I'm not a good psychic.
Let's say that everything has been looking very good for the winter to date.