Debates of Sept. 26th, 2005
House of Commons Hansard #125 of the 38th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was oil.
- Question Period
- Business of the House
- Message from the Senate
- Criminal Code
- Thunder Bay Border Cats
- Gasoline Prices
- Orleans Rebels
- Simon Wiesenthal
- Hurricane Katrina
- Emergency Preparedness
- Simon Wiesenthal
- Gérin-Lajoie Doctrine
- Simon Wiesenthal
- Internet in Schools
- Canadian Broadcasting Corporation
- Terry Fox's Marathon of Hope
- Anthony Gordon, Leo Johnston, Brock Myrol and Peter Schiemann
- Gasoline Prices
- Chuck Cadman
- Élie Fallu
- Member for Chilliwack—Fraser Canyon
- Gasoline Prices
- Softwood Lumber
- Gasoline Prices
- Service Canada
- Official Languages
- Technology Partnerships Canada
- International Aid
- Canadian Broadcasting Corporation
- Income Trusts
- Softwood Lumber
- Canadian Broadcasting Corporation
- National Defence
- Automobile Industry
- Older Workers
- Child Care
- Presence in Gallery
- Hon. James Jerome
- Business of Supply
- Report of Chief Electoral Officer
- Government Response to Petitions
- Committees of the House
- Criminal Code
- Spirit Drinks Trade Act
- Questions on the Order Paper
- Question No. 153
- Question No. 156
- Question No. 161
- Question No. 163
- Question No. 164
- Question No. 167
- Question No. 169
- Question No. 170
- Question No. 173
- Questions Passed as Orders for Returns
- Question No. 122
- Question No. 123
- Question No. 151
- Question No. 157
- Question No. 158
- Question No. 159
- Question No. 160
- Question No. 162
- Question No. 165
- Question No. 166
- Question No. 168
- Question No. 171
- Question No. 172
- Request for Emergency Debate
- Criminal Code
- Business of the House
- Criminal Code
- Gasoline Prices
Larry Bagnell Parliamentary Secretary to the Minister of Natural Resources
Mr. Speaker, I thank the member for his comments. I am glad he mentioned that some of the solutions are public transit and alternative fuels. I hope that some of the members who speak later tonight will outline the amounts, but as the member must know, the government has already put hundreds and hundreds of millions of dollars into public transit for that very reason.
We have also put all sorts of research money and support into various types of alternate fuels, such as ethanol, and the recent budget had a huge increase for wind energy, with the alternative renewable energy. Natural Resources Canada has been doing excellent work in that area and is continuing to expand year after year, as was contained in the green plan.
The member suggested the oversight committee would have stopped this disaster, but this is a worldwide increase, partly because of speculation, partly because of the loss of a huge amount of refining capacity in Texas. The gulf coast area produces an amount virtually equal to Canada's total refining ability. If world prices change like that, exactly how would an oversight body in Canada work? I am not saying it is not a good idea, but if that oversight body just publishes the information and makes it transparent, how would that actually stop a world crisis like this?
I have another question. How would these industries the member is talking about be at a competitive disadvantage when all of their competitors have increased prices, whether that is in Canada, the United States or anywhere else in the world? They all have the increased price, so how would there be a competitive disadvantage for these industries?
Marc Boulianne Mégantic—L'Érable, QC
Mr. Speaker, the monitoring agency would play a very significant role in that respect.
At present, the government is providing information, but we can see that the information on the market, competition, price hikes and oil refining profits overlooks certain aspects and is incomplete. For instance, this may be information received from groups not altogether objective, contracted by large oil companies.
So, we are suggesting that a monitoring committee review the figures to determine what happened, whether profits were generated and why. This committee would carry out a comprehensive analysis of everything concerning oil energy.
I do not agree with the hon. member who cannot see how this can influence the crisis. We are convinced that, on the basis of this research, the testimonies, the figures and everything having to do with global competition—Canada could make this information available to the public—solutions could be developed using this information.
Yves Lessard Chambly—Borduas, QC
Mr. Speaker, first, I wish to congratulate my colleague from Mégantic—L'Érable on the quality of his remarks, and the same goes for the Bloc member who spoke before him.
I would like him to tell me something about the work of the committee. While I realize that what was said in committee cannot be disclosed, I would appreciate at least knowing what direction was given to the committee's work, given especially how the oil companies have justified their oil refining profits. Are there any sensible answers available to allow us, for one thing, to look at the possibility of acting in that respect?
I have a second question. Does anyone understand why there was such reluctance on the part of the Canadian government to call the Standing Committee on Industry, Natural Resources, Science and Technology? The Bloc, and our colleague from Montmagny—L'Islet—Kamouraska—Rivière-du-Loup in particular, had to put up quite a fight.
Marc Boulianne Mégantic—L'Érable, QC
Mr. Speaker, as for the debates in the Standing Committee on Industry, Natural Resources, Science and Technology, it was a given that the profits, initially, were excessive. We posed this question to representatives of the Competition Bureau, and they made the distinction between excessive profits and illegal profits.
Here are a few figures. In 2004, for example, after-tax profits of the five major oil companies in Quebec and Ontario, Petro-Canada, Shell, Husky, Suncor and Esso, were $7.2 billion and were expected to hit $9 billion in 2005. This is an important reason. Also, since 2002, net profits have risen by over 100%. The attached tables illustrate this.
What is also remarkable is that while profits are increasing, there is a parallel increase in refinery margins, as the table illustrates. Refining generates a more than excessive profit. This is where we had thought to intervene. The government could intervene with regard to these margins.
Why does the government not intervene? We saw why on numerous occasions: it is working for the oil companies.
David Emerson Minister of Industry
Mr. Speaker, I will be sharing my time with my hon. colleague, the newly minted Minister of Natural Resources.
On behalf of the government, I am very pleased to respond to the motion before the House. There are few occasions when one gets an opportunity to debate an issue with such direct and obvious consequences for Canadians. The price of energy, the price of oil, home heating oil and gasoline is something that all of us deal with in our daily lives. It is something we have seen and felt in terms of prices at the pump in our communities.
We see it through the whole chain of energy prices. The price of electricity is affected by the price of oil and natural gas and coal. All of these are energy products. There is a complete chain of prices affected by some of the gyrations we have seen in recent months to world energy prices and it has effects throughout our economy. It has effects clearly in our ridings where people driving to work face substantial increases in the cost of commuting to work, in the expense of earning a living. We see it as well in commercial areas. In my province of British Columbia the price of oil and fuel was a fundamental cause behind the dispute at the port of Vancouver this summer. That dispute had major implications not just for British Columbians but for all Canadians as we saw shipments and containers held up at the port.
We can all see there are specific ways in which the price of gas and oil does affect Canadians and the economy in a number of ways. It is important to bear in mind the underlying causes of the current price situation we are facing, whether we are talking about the price of gas, diesel, heating oil, propane, natural gas or any of the other energy products that are part of the energy chain. We all recognize that there is no silver bullet. There is no magic solution that is going to quickly realign international supply and demand and bring prices back down very quickly.
Let me touch on some of the fundamentals of the supply and demand for gas and oil. Clearly, oil is a globally traded commodity. There has been strong demand around the world but it is combined more than ever before with uncertainties about the supply of oil, the reserves and various other shorter term disruptions to supply.
If we go back to January 2002, the world price of crude oil was about $20 U.S. per barrel. Today it is more than $60 per barrel. On a Canadian average basis the retail price of gasoline was 73.2¢ per litre in 2003. Over the first eight months of 2005, it averaged 89.4¢ per litre and of course today it is over $1 a litre.
We hear a lot about the tax issue as one of the drivers of the price of gas and oil, but the reality is that of the 16.2¢ per litre increase between 2003 and the first part of this year, 14.9¢ per litre was crude oil costs. That means that less than a penny, or .8¢ per litre was accounted for by federal taxes. Just half a cent was made up of provincial taxes on average.
If we look at the rise in gasoline prices and we recognize that it has been driven by international market conditions, we should look at those market conditions. Clearly the impact of recent hurricanes on the American oil and gas sector in the Gulf of Mexico was a major factor, but it was a temporary factor.
There are other longer term factors. In fact, the Prime Minister pointed out one of them recently. When he spoke to senior public servants on September 20, he mentioned the major forces shaping the future for Canada and this government's agenda. One of those was the rise of nations such as China and India as global economic powers. He stated:
Consider that in 2004, as measured by purchasing power parity, the United States accounted for about 20% of the global economy with less than 5% of the world's population. Together, China and India also accounted for almost 20% of the world's economy, but with 40% of its population -- so it's clear where the growth potential lies.
It is not just potential. It is happening now as we speak.
It takes a lot of energy to run the factories of China and to get products to markets overseas. It takes a lot of energy to power the growth of emerging consumer societies with a rapidly expanding middle class and populations that strive to achieve the kind of standards that we have in North America. They see energy use as a critical part of achieving those increased living standards.
Since 2001 China and India's demand for oil has grown by more than 2.3 million barrels and that is per day. This accounts for nearly 36% of world oil demand growth during this period. In 2001 China and India accounted for 9% of world oil demand. Today they account for 11% of that demand. It is a trend that will likely continue. That is on top of the growing demand for energy from the traditional high demand industrial economies like Canada, the United States and Europe.
These are some of the fundamental drivers of the rising demand for oil. It drives the demand for natural gas and the products that are made from gas as well, but supply issues are also important. World crude oil production capacity is still exceeding demand, but the gap between supply and demand has been closing in recent years.
The OPEC countries used to have spare crude oil production capacity of between four million and six million barrels per day. They could bring this spare capacity into production in less than 30 days and take the edge off price spikes as a result. Estimates today are that spare capacity is now down to less than two million barrels per day.
Not only is demand rising and supply not keeping pace, but there are other factors. There are a lot of steps in the supply chain between crude oil coming out of the ground and gasoline going into our cars' gas tanks or heating oil going into the tanks in our basements.
Consider the capacity for petroleum refining as an example. Today the refinery capacity all around the world is operating virtually full out. Here in North America both American and Canadian refiners are operating at 97% utilization rates, which for all intents and purposes is operating full out at full capacity. As the demand for petroleum products continues to grow, the refining system's inability to keep pace is going to lead to continued upward pressure on prices.
Why not build more refineries? An important part of the answer has been that these are big and extremely expensive investments. Until quite recently the profit margins in refining were simply not good enough to attract more investment into the refining business. The bottom line is that the refining business is going to have to become more profitable to attract the kind of investment that will be required to increase refining capacity and deal with that weak link in the supply chain.
Many hon. members may ask what the world market has to do with Canada. Are we not self-sufficient in oil and gas? The reality is that we may be, but we represent only 3% of the world's crude supply and that really means we are a price taker. We cannot affect the world price.
Hon. members will have suggestions tonight as to what we should do about this situation. I want to talk a bit about price monitoring. I am very comfortable working with my colleague, the Minister of Natural Resources, to develop a more transparent, authoritative mechanism for analyzing and keeping track of energy, oil and gas prices in Canada. I am very happy to hear members' suggestions and comments about that. I think it is something that we should consider. Our citizens and consumers and businesses have the need for good information and if we need to create a new mechanism to do that, let us do it.
With respect to competition, I have said many times that there have been at least five investigations in the last 15 years into the competitive conduct in the gas and oil business. No anti-competitive behaviour has been found.
Clearly, I believe that Bill C-19 which is before the House would help us with administrative monetary penalties. I am open to suggestions from hon. members as to further amendments that we could make to the Competition Act, such as giving the Competition Bureau the power to initiate its own investigations without reacting to a complaint. I am open to other suggestions as to what we might do with the Competition Act that could be helpful in dealing with this situation on behalf of Canadians.
James Rajotte Edmonton—Leduc, AB
Mr. Speaker, I would like to pose two questions to the Minister of Industry.
First, there have been some members of this House who seem to imply there is some collusion going on in component parts of the gasoline prices in this country. I would like him to answer very directly, does his department or any other federal department or agency have any evidence whatsoever of any collusion at any level, whether it is at the rack level, whether it is at the crude level or whether it is at the retail level?
Second, I would like to ask the minister why he has not proposed or his government is not willing to accept some reduction in taxes so that we can give immediate relief to consumers. The most variable aspect of the price of gasoline that we can actually affect as parliamentarians is the taxes on gasoline. It is about 42% component cost right now. Why will the government not reduce the taxes on gasoline?
David Emerson Vancouver Kingsway, BC
Mr. Speaker, on the matter of anti-competitive conduct, it is not really a matter of whether people in my department believe there is evidence of anti-competitive conduct. I do not think we have any evidence of that. The issue is really whether the Competition Bureau, which is a legal body charged with undertaking those investigations to a high standard of professionalism, has found any evidence of anti-competitive conduct, and the answer is no.
We can all rail about price gouging and some kind of rhetorically satisfying allegations about pricing behaviour, but the bottom line is that after repeated investigations, there has been no evidence of anti-competitive conduct at the retail or wholesale ends of the market.
On the matter of taxation, I believe that this government is committed, and we will be moving forward in the weeks and months ahead, to deal with the issue of the competitiveness of the Canadian economy. The price of energy is a factor that has to be considered. There are many other factors. The exchange rate is another factor.
We have to worry about Canadians who are disadvantaged and hurt by some of the transitional spikes in energy prices or other impacts that negatively affect Canadians who may not be able to handle those burdens. We should deal with that, but I am not prepared to stand today and say that a micro movement in a gasoline tax would solve the real problem that Canadians have. It would take a more fundamental approach than that.
Paul Crête Rivière-Du-Loup—Montmagny, QC
Mr. Speaker, I see that the minister is open to the fact that Bill C-19 amending the Competition Act is insufficient and that he is prepared to broaden the mandate with regard to investigations. That is a request the Bloc has been making for many years. The same is true for the need for reliable information. We currently do not have impartial information. Some people do very good work in the private sector, but it does not have the same sense of fairness that a governmental source of information would.
I agree with him on the matter of taxes, except for the tax to fight the deficit, which should disappear since it no longer bears any relevance to reality. For the rest, that is not really the problem.
I would like to hear what the hon. member has to say about profit margins in refining. This seems like a major topic for investigation. We now realize that over the past year, and the past few months, the price of crude has not necessarily increased. It is truly the refiner's margin that has increased significantly.
Are there no measures we could come up with to increase this refining capacity in such a way for there truly to be greater competition and no more jolts in the price like we have been experiencing lately? Is there any way to get a more in-depth investigation from the competition commissioner, more information and a true action plan from the government? So far, no concrete action plan has been proposed. We learn about things fact by fact, like in tonight's debate.
I think it is high time for the Prime Minister to come forward with a specific action plan that clearly shows that the government has decided to act and deal with this problem head on. I would like to know what the minister has to say about this issue of profit margins in refining.
David Emerson Vancouver Kingsway, BC
Mr. Speaker, I appreciate the member's interest in the refinery part of the supply chain. As I said in my remarks, the refining segment of the supply chain has been under extreme pressure over the years because we do not have enough supply capacity in the refining segment to support significant increases that are needed in a short price-spike situation such as we have today. We do not have enough refining capacity.
He asks why we do not have enough, that there must be a conspiracy out there because all of a sudden the refiners are making a lot of money. They are making a lot of money now because they have not made enough money in the past to invest new capital into refining capacity that would correct the problem and not put us in the situation where the extraordinary profits may be realized right now.
In order to invest hundreds of billions into refining capacity, investors will demand a long term, sustainable, reasonable rate of return for putting money in that business. It is very capital intensive. It is regulatory and burdensome. There are not many communities that are keen to have refineries next door. If we start to undermine profitability in the refinery business, we simply will end up with a worse shortage as we go forward.
However, if there is evidence that there is collusion or anti-competitive behaviour in the refining sector, I am with the member 100%. Let us go after it, let us attack it and let us deal with it.
John McCallum Minister of National Revenue
Mr. Speaker, I am pleased to have this opportunity today to discuss Canadian oil markets and the recent changes in the international situation which have resulted in major increases in the price of petroleum products in Canada.
The Government of Canada understands the difficulties Canadians are currently facing due to rising energy prices. Energy matters more to Canada than to any other advanced economy in the world. The products produced by these sectors generate $60 billion in exports and are an important source of our international trade balance. More than 230,000 Canadians work in the energy sector in well paid, highly skilled jobs often in remote regions of the country. As such, energy plays a crucial role in supporting a high living standard for Canadians.
Partly of course this is a matter of our geography and climate, but the cost of the energy supplies that Canadians purchase has an important impact on their economic well-being. Consequently, increases in energy prices naturally attract a good deal of attention.
Since January 2002, world prices for crude oil have more than tripled, from $20 US to over $60 US a barrel, which corresponds to over 30 cents a litre in Canada.
In recent weeks all Canadians have been conscious of increases in the price of gasoline. Much of this increase has been weather related. It has been due to the damage caused by Katrina and concerns that Rita could cause even more damage in the refining sector. This has caused a rather anomalous situation where gasoline prices have increased much more rapidly than crude oil prices. However, if we take a step back and look at longer term trends, it is clear that gasoline prices have moved almost lock step with crude oil prices.
As an example, the average price of gasoline country-wide was 73.2¢ in 2003. So far in 2005 it has averaged 84.9¢ a litre, an increase of just over 16¢. In other words, the increase in gasoline prices over the longer term is fundamentally due to an increase in the price of crude oil.
There are a number of reasons behind this large increase in crude oil prices.
The situation was exacerbated by the unprecedented demand for oil products in less developed countries, China and India in particular. Since 2001, the demand in these countries has increased by over 2.3 million barrels a day. This represents close to 36% of the world increase in demand over that same period. China and India now account for 11% of the world demand.
At the same time as OPEC's spare capacity was falling, there were growing concerns in the market about political instability in a number of important oil producers. That led to an increase in the risk premium on crude oil. In other words, people were willing to pay higher prices to ensure supply in the future and that risk premium may have been exacerbated by an increase in activity by non-commercial traders or speculators. They represented 3.5% of the crude oil futures market in 2003, but over 20% by the summer of 2004. A number of international factors over which Canada has no control have combined forces to produce this very high world price of oil.
I am sure it is of interest to members of the House and to Canadians what the federal government can do in the face of these large price increases. First, as my colleague, the Minister of Industry, has said, we are working very actively on a monitoring process to improve transparency.
In terms of the immediate challenges following Katrina's impact on oil prices, the Government of Canada also has been working closely with its international partners to ensure that Canada and other countries have access to adequate supplies of oil at prices that are as reasonable as possible.
The government also is actively looking at measures it can take domestically to protect Canadians who are particularly vulnerable to increasing oil prices. Here I note that the Minister of Finance and the Prime Minister have said that the government is looking at ways to assist Canadians and I am sure that an announcement about these deliberations will be forthcoming in the not too distant future.
In addition, the federal government can help Canadians become more efficient in the ways that they use energy and to develop fuels that can substitute and compete with petroleum. This is an area that is of great importance to my own department. Essentially this is a matter of supply and demand, concepts with which I have some familiarity given my background. This is important in the medium term where we will work to increase the supply of non-oil sources of energy, while at the same time reduce the demand for oil through measures to improve energy efficiency. It is in those two areas, by both reducing demand and increasing supply, that we will move to reduce the dependence of Canada on oil. This will not bring relief tomorrow, but over the medium term these are measures which will produce significant benefits for Canadians, including an improvement in the quality of our environment.
We have begun this process and we are making progress. In transportation, we have many programs in place aimed at raising awareness among drivers about how they can make smart choices.
In my own riding of Markham, the town council, led by Mayor Don Cousens, recently passed a bylaw limiting idling time to three minutes. We may think this is not a big deal or huge thing, but if every municipality in the greater Toronto area and across the country were to adopt measures such as this, one would save a lot of gas and one also would improve the environment.
We are also working to diversify our sources of fuel. We have announced $118 million from the ethanol expansion program for the construction of new ethanol plants and this will greatly increase the availability of this renewable fuel. In addition to measures regarding wind energy announced by the Prime Minister last weekend in Prince Edward Island and measures regarding clean coal, all these I believe are vital in the medium term.
We also are supporting Canadians in their effort to make their homes more energy efficient. We have information available to give advice on how to do this. We also have a retrofit incentive that will help Canadians cover the cost of making energy efficiency upgrades. Through our program EnerGuide, evaluators go to people's homes, do a thorough assessment of energy use and make recommendations for improvements. A grant is then based on the measurable improvements that the homeowner makes. This program has been highly successful, which is why it was quadrupled in budget 2005.
We are also working with industry to make their own operations more energy efficient through the Canadian industry program for energy conservation. Since 1990, CIPEC companies associated with this program have collectively reduced greenhouse gas emissions by more than 25 megatonnes from what they otherwise would have been. They have saved billions of dollars in energy costs as a result.
The government itself is also doing its bit through our federal house in order program. We have set a target to reduce emissions from our own operations by about one-third and we are well on our way to achieving that target.
In conclusion, the government recognizes the challenges faced by many Canadians as a result of the increases in energy prices. The government has been active on many fronts to help ease supply disruptions, support energy efficiency, and facilitate the development of alternative fuels. We will continue to work on a plan to deal with the rising cost of energy.
John Duncan Vancouver Island North, BC
Mr. Speaker, I listened to the two ministers speak and I was also a part of the committee that went all day last Thursday on fuel prices. The Liberal line that we are getting today is so very different from the Liberal line we got on Thursday.
For example, the Minister of Industry spent considerable time defending the refineries and the refinery margin in a way that makes some common sense. We do need more refinery capacity. Billion dollar investments take a long time to build and we need investor confidence to achieve that, but what we witnessed on Thursday was Liberals attacking the refining sector, accusing it of gouging, and doing everything it could to remove any onus or responsibility from the government to address the issue of fuel pricing through the one thing it can control, which is the taxation regime.
The Liberals were taking every opportunity to slag the industry, particularly the refining sector, to accuse the industry of price gouging, and to start panic in the consumers by bringing a high profile to a few stations across the country that had decided to push the envelope on pricing. They brought a magnifying glass to that which helped create a consumer panic which I witnessed when I left committee at 10 p.m. There were lineups in Ottawa of people trying to buy 99¢ or $1.09 a litre gasoline.
What is it that leads the Liberal members to have so many different messages which are actually doing a great disfavour to the Canadian general cause?
John McCallum Markham—Unionville, ON
Mr. Speaker, I am only recently into this position so naturally I was not at that industry committee meeting, but I gather I might be receiving an invitation to appear. I can tell members that I will be very happy to do so and to offer my views on this subject.
When it comes to refineries, the industry minister just made comments about the need for sustainable return. In my remarks I mentioned that in the longer term, even though there were distortions because of the hurricanes, the world price of oil tends to move in lockstep with the price of gas.
I am not making accusations in my comments but, as both the Minister of Industry and I did say in our remarks, we do believe that there is a need for better monitoring of those prices, so Canadians can be assured of these facts and a need for greater transparency in terms of information regarding prices. This is something that we are working on at this time.
Regarding the rush to buy gas, perhaps the hon. member exaggerates a little the importance of his industry committee. My impression was that the panic had more to do with hurricane Rita and fears of what that might do to the oil refining capacity in the southern United States, which would be a large fraction of total oil produced in the U.S., than it did with anything that happened at the industry committee.
Paule Brunelle Trois-Rivières, QC
Mr. Speaker, minister after minister tell us about the multiple causes of these gas price hikes. It is certain that we do have an opportunity to intervene into some of its causes, but not others, admittedly. It seems to me, however, that at no time should the presence of those causes rationalize the government's inaction.
The minister presents us with some solutions, such as investing in the fuel economy and mass transit, or creating a monitoring office. These are certainly worthwhile solutions and are what we in the Bloc Québécois are calling for.
Action is, moreover, urgent and necessary. I wonder to what extent the government is going to not just justify its inaction but rather provide us with an action plan indicating the specific points at which there will be intervention, thereby avoiding public panic.
John McCallum Markham—Unionville, ON
Mr. Speaker, I am pleased that the hon. member at least recognized that to a very significant degree, the world price of oil is beyond the Government of Canada's control. We are a country of more than 30 million inhabitants in a world of billions and we have no influence over the storms in the United States, the political situation in the Middle East, or the growing demand in China and India. These are truly significant factors that explain why the price of oil has increased quite significantly on a global scale.
That being said, it is inaccurate to say that the government has done nothing. I have mentioned the fact that the Minister of Finance has said he would help low-income Canadians heat their homes in the winter. We have talked about a monitoring system. In the medium term, my department has set up programs for increasing supply and reducing demand. We are committed to discussing a large number of possibilities in order to improve the situation. There is not any inaction whatsoever.
In the meantime, as the hon. member said herself, we must realize that the world price of oil is not under Canada's control.
September 26th, 2005 / 7:35 p.m.
Randy White Abbotsford, BC
Mr. Speaker, I will be splitting my time with our industry critic from Edmonton—Leduc, and if I should finish earlier, I would hope that you would give him my additional time as well.
One of the problems is that people are listening to what is being discussed but in some cases they do not understand. I am going to point out some of the things that they will likely not understand.
I first want to give people in Canada an idea of what gas prices are like. Gas prices yesterday in Williams Lake were $1.09 per litre; in Edmonton, they were 92.9¢; in Bedford, Nova Scotia, they were $1.11. In fact, the difference between one city to another in one case was 19¢ a litre. We can trace some of this difference right back to speculation, which I want to talk a little about.
In Marystown, Newfoundland for instance, on September 1 at 5:52 p.m. the price per litre was $1.25. At 5:55 a.m. the price was $1.16. That is 0.09¢ in that rapid amount of time. When someone comes up to that pump, they do not understand this price fluctuation and, quite frankly, some of the reasoning given by our Liberal members over there does not make sense at all to many people. In my own town, for instance, we watched how on September 5 at 3:54 p.m. in the afternoon it was 90¢ a litre and at 3:56 p.m. at one pump it was $1.00 a litre. It goes like that.
We can stand here and give all the excuses we want but tell the person who is earning that kind of money, trying to earn a living out there and watching the price go like that at the pump.
Forty per cent of the cost of a litre pays federal, provincial and municipal taxes, including the GST. Thirty-eight per cent of the cost pays for the crude oil, 17% is the refiner's margin and 5% is the retail margin. So clearly, 40% of the cost of a litre is taxes. That is pretty well known. It is on every sticker at every gas station.
In fact, I went to a gas station in my community and I talked to the owner. I asked him how much money he was making. He said it was the same, he got the same amount. In fact, he gave me one of his invoices from the oil company and the price before taxes per litre was 0.67266¢. That is 67¢ a litre. Then it shows provincial fuel tax, 14.5¢; federal excise tax, 10¢; and goods and services, 6.4¢. It raised the price of that fuel per litre from 67.2¢ to 91.7¢. Then of course the owner adds on his margin and it goes to 98¢, and that is what we see at the pumps.
The minister said there is no magic bullet for this, and perhaps to some extent he is right. He talked about supply and demand in economic terms, and I suppose to that extent he is right. But then he said hurricane Rita was at fault. Now, it happens that the dates that I read out were not necessarily dates that hurricane Rita caused the problem. It was panic marketing that caused the problem and whoever is out there, whether it is industry, or media, or politicians, or whoever it is at the pumps, this is really not purely supply and demand. This is called panic marketing, and the people who gain from this, quite frankly gain 40%, are in the House of Commons.
I listened today to some answers in question period. Basically they said, “Well, gee, we are not making that much. After all, the money is going to a good use”. I think hospital equipment was named; it was also said that it is going back to the municipalities for infrastructure. Yes, the municipalities are getting some income for infrastructure. However, the government is recovering a great deal of that just by price fluctuations and increases and a percentage on the increase of the take.
The problem here is that government, on that rare occasion of being in a position of trying to keep the price of goods and services low, is highly motivated, like industry is, to make the best profit. That is not the role of government in pure economic theory. We can read any book there is. I am a cost accountant by profession and I have read many. In pure economic theory the role of government is not to have a bottom line profit margin, but that is what is happening here. It is difficult indeed to convince anybody in this country that this government is not benefiting from a price fluctuation, and in fact an increase in price, because the government is.
What do we do? We have called for some reduction in taxes, but the motivation to do so is not there on the other side. How are we going to get a grasp on a government that has an insatiable appetite for revenue so that it can spend that revenue for whatever purposes it has?
It does not matter which government it is. I am not finding fault just with this government; it just happens to be the Liberal government in power. For any government to be in a position to profit from industry profit is wrong. I think that is an economic theory which we have to deal with in this House.
I asked for this debate some weeks ago because of the growing concern across the country, with the support of my colleagues. I asked for some things to be covered here tonight. I would like to hear from members opposite the answers to the following questions.
Who is really profiting from the increases and by how much? Because, quite frankly, we are dealing with a sad case of denial here.
What forecasts and consumer protection are related to the increases? Can we forecast what is going to happen? Is there anybody brave enough to stand up and say that we will not have these price fluctuations up to $1.30, $1.40 and $1.50 or, if they do, the following will take place and we will kick in the following formula?
What is the proper role of and action for the House of Commons? I think that when the government members speak they have to identify that. People across this country are looking to the government for some direction. It cannot just be saying “it's not our fault” or “they're getting money for infrastructure”. It has to be something more concrete to the consumer.
What are the ramifications of cutting the federal tax on fuels? The government must tell Canadians about it. People want to know.
Last, what is the impact on various businesses and industries?
I think we have to get out of this rut we are in, where we are asking the consumer to pay more and more at the pumps. We have to get into a situation in this country where government is not motivated for high pricing structures in any industry, but more importantly in gas.