House of Commons Hansard #149 of the 39th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was price.

Topics

Foreign Takeover of Canadian Industries
Request for Emergency Debate
Routine Proceedings

May 8th, 2007 / 10:10 a.m.

Liberal

The Speaker Peter Milliken

The Chair has received an application for an emergency debate from the hon. member for Toronto—Danforth. I will be pleased to hear his submissions on this point now.

Foreign Takeover of Canadian Industries
Request for Emergency Debate
Routine Proceedings

10:10 a.m.

NDP

Jack Layton Toronto—Danforth, ON

Mr. Speaker, as per Standing Order 52, the New Democratic Party requests that the House of Commons hold an emergency debate today on the foreign takeover of Canadian industries. The issue is of immediate importance to the national economy and the well-being of working people across Canada. We hope that you will look favourably on this request.

Canada is losing its economic gems. Canadian interests, whether small, medium or large, are being taken over by foreign interests. Alcan seems to be next on the list, going for $33 billion. Yesterday, Van Houtte was sold to American interests for $600 million. Such transactions may please shareholders, but all this does not bode well for Canada's economy, and thus for the families of Canadian workers. It is urgent that we have a debate here, in this House, to take up this issue of the utmost importance, I would even say of vital strategic importance, as the livelihoods of families are at stake.

We do not have in place the kinds of protections, the kinds of regulations and the kind of decision making that would allow us to ensure that whenever there is a foreign takeover of a Canadian business, Canadian jobs are put as a priority, that investment in the country is put as a priority.

In fact, it is to the contrary. I have visited plants where foreign takeovers have simply resulted in contracts that would otherwise have been performed by the workers in those plants who, in some cases, have been there for many years being shipped elsewhere to other companies that the multinational owns, either in the United States or far beyond across the seas where the jobs get created. Gradually industry in Canada is winding down to the point where we have a crisis of 250,000 jobs lost in our manufacturing sector.

At some point we have to recognize that we are in an urgent situation and that the House of Commons needs to debate the best possible ideas about how this crisis can be addressed.

Mr. Speaker, I hope that you will look favourably on this request for an emergency debate.

Speaker's Ruling
Request for Emergency Debate
Routine Proceedings

10:15 a.m.

Liberal

The Speaker Peter Milliken

The Chair has considered the matter. The hon. member of course sent his notice, and I have heard his submissions here in the House today.

As he says, at some point this must be addressed as a subject for debate in the House, but I am not sure that, based on everything I have heard, the request meets the exigencies of the Standing Orders at this moment. Accordingly, for the moment, I will decline the request and will see what develops.

Opposition motion—Gasoline Prices
Business of Supply
Government Orders

10:15 a.m.

Bloc

Pierre Paquette Joliette, QC

moved:

That, in the opinion of the House, the government should move an amendment to the Competition Act so that the Commissioner of Competition have the power to initiate investigations of the price of gas and the role of refining margins in the determination of the said price.

Mr. Speaker, I believe that this debate affects all Canadians. Directly or indirectly, we are all gas consumers. The vehicles we use, whether cars or buses, run on gas or petroleum products. Consumers are also affected indirectly because what we buy is often transported by truck. This is therefore an extremely important debate.

As was mentioned, the motion asks:

That, in the opinion of the House, the government should move an amendment to the Competition Act so that the Commissioner of Competition have the power to initiate investigations of the price of gas and the role of refining margins in the determination of the said price.

The government is fond of saying that prices at the pump are determined by market forces.

Mr. Speaker, before I go on, I would like to say that I will be sharing my time with the member for Trois-Rivières. I believe that you already guessed as much.

The government and the big oil companies have often said that the price consumers pay is determined solely by market forces, which in turn are affected by international economic factors more than anything else.

This is a simplistic argument. Everyone knows that international events play a role in determining gas prices at the pump, but other factors also come into play. Moreover, if countries everywhere, and especially industrialized nations, were to exercise more self-discipline in terms of supply and use, we could easily exert greater control over this factor.

It is a poor, incomplete argument that lets the government shirk its responsibility to ensure that consumers and the public get their money's worth.

A second thing often mentioned is taxes. It is often the industry that brings this up. I remember hearing Carol Montreuil say during an interview on TVA on May 3 that the average profit per litre was around 2¢, while the government takes close to 40¢ per litre in taxes.

Obviously there are a number of issues raised in the statement of Mr. Montreuil, who, I would remind the House, is a spokesperson for the Canadian Petroleum Products Institute. First, the 2¢ he is referring to probably represents the retailer's margin. This margin usually varies between 3.5¢ and 6¢ per litre.

We can see that this is not a very big part of the significant variations that have been seen in the price of gas. I doubt that this 2¢ refers to the refining margins, which are much more problematic. This is why the motion specifically identifies the role of refining margins in determining the price at the pump as a factor that could explain this variation. I will come back to this later. However, what is interesting about the role of taxes is that someone who has been closely following the evolution of the gasoline market, especially in Quebec, in the greater Montreal area, sent me the calculations he did after hearing Mr. Montreuil's comments. I want to share them because I think they bring up an interesting question. There is no answer, but the question reflects the relevance of our motion.

He says:

Take the federal government, for example. There is the 10¢ excise tax and the 6% GST, which adds up to an average revenue of 16¢ per litre.

That is 16¢ per litre in federal taxes.

Approximately 30 billion litres are sold in Canada, netting the federal government $4.8 billion.

That means $4.8 billion in federal gas tax revenues. I will go on.

Taken together, Shell Canada and Esso recorded profits of $4.74 billion.

That is about the same amount collected in federal gas taxes. Combined profits of $4.74 billion is exactly what the federal government brings in. He asks the following question.

How can the government amass $4.8 billion by collecting 16¢ on every litre sold in Canada—

He noted that Shell Canada, with its 45% share of the refining industry, refines 1.8 million barrels a day and makes just two cents per litre but generates the same amount of revenue as the federal government. Something does not add up here if the federal government makes $4.8 billion with its 16¢ per litre while the two oil companies I mentioned, Shell and Esso, who make up 45% of the refining market, make as much as the federal government two cents per litre at a time.

So they ask themselves the question. Are they in fact perhaps making more than 2¢ per litre? That is the question we are seeking to answer in our motion. We want to find ways to get answers to the questions that people are asking themselves, that we are asking ourselves—extremely legitimate questions.

The major problem is that the Competition Act is not as stringent as it needs to be for the investigations that the commissioner might conduct to produce results. On the government side, they will tell us that there have been six investigations and that no one has ever been able to prove collusion. We are not saying there is collusion; we simply want the Competition Bureau to have the means to carry out these investigations, and that is what we are proposing in this motion.

Obviously, this is not the only solution, nor the only partial solution, that is needed. There will be others, and I know that the member for Trois-Rivières will be amending my motion shortly to include the petroleum monitoring agency and also to move to amend the act to decriminalize the anti-competitive pricing practices. That is, that the criminal offences attached to investigations into price-fixing—in particular, gasoline pricing, but it would apply to all prices—be eliminated, and be made civil issues instead.

I would like to come back to the refinery margins. As I said, the retailer's margin is 3.5¢ to 6¢ per litre. We think that this margin is relatively reasonable, and it has been stable over time. On the other hand, refinery margins have risen from an average of 6¢ or 7¢, which they were from 1998 to 2003, to the present average of 26¢ per litre.

How can we explain the refinery margin having risen so high, when the average in recent years, in the late 1990s and early part of this century, ranged back and forth between 6¢ and 8¢? According to the Association québécoise des indépendants du pétrole, at a 6¢ per litre profit to refineries, the oil companies are already making very attractive profits.

In the current situation, the five biggest oil companies control 90% of the refining market and are making excess profits of about 20¢ a litre. That amounts to $10 for every 50-litre fill-up we get. That means that wealth is being transferred from the public, from consumers, to the oil industry, which is already heavily favoured by this government, in terms of the tax system and the environment. We will have an opportunity to come back to this. As a result, we wonder about the reason for this excessive 26¢ margin. Obviously I am talking about an average for the 2006-07 year.

Recently, I heard Mr. Montreuil say again that in February the refinery margin was 0¢. Of course, he chose the worst month. However, based on the average, which is the indicator of the real situation, the margin is 26¢. Last year, it was about 19¢ or 20¢. So it has risen steadily. In our view, not only do we have to ask questions, but we must also be in a position to get some answers.

Obviously, refining operations are distributed regionally, as we have heard. For example, in the Montreal area, Petro-Canada and Shell do the refining. In the Quebec City area, it is Ultramar. In New Brunswick, Irving does it and in Nova Scotia, I believe it is Esso. Refining is currently experiencing an undercapacity. Is that intentional or not? These questions must be asked. Why is it that oil companies do not have any reserves and when disaster strikes, for instance, the price increases, but comes back down very little? Also, why is it that they cannot seem to plan ahead for the construction holidays, even though they always occur at the same time every year? These things can be anticipated, although, as we all know, a few days before the construction holidays or any other holiday, the price goes up.

The Competition Act therefore needs to be amended, first of all, to give the commissioner the authority to launch investigations, as needed. The commissioner must also be able to request that documents be submitted as evidence, which is currently not the case. The Competition Bureau needs to have real powers in order to properly complete the necessary investigations and to provide us with answers to our entirely legitimate questions.

Once again, I would like to say that we have no evidence of collusion. That is a fact. Perhaps there is no collusion at all. It would be in the best interests of the major oil companies, I think, for the Competition Act to be more rigorous in order to bring greater transparency to the situation and, by answering our questions, to dispel any doubts.

I therefore urge all members here in this House to vote in favour of this Bloc Québécois motion.

Opposition motion—Gasoline Prices
Business of Supply
Government Orders

10:25 a.m.

NDP

Catherine Bell Vancouver Island North, BC

Mr. Speaker, I come from a rural area. Many people in my riding have been asking me about rising gas prices. They see the price of a barrel of oil go up, and the price of gas at the pump goes up right away. We are paying almost $1.30 a litre for gas in my area. However, when the price of a barrel of oil goes down, nothing happens at the pumps.

People in my riding are outraged. Could the member tell me what other steps the government could take to make sure the consumer is protected at the gas pumps?

Opposition motion—Gasoline Prices
Business of Supply
Government Orders

10:25 a.m.

Bloc

Pierre Paquette Joliette, QC

Mr. Speaker, that is a very good question. It is as interesting as the hon. member for Roberval—Lac-Saint-Jean.

Everyone agrees on the Competition Act. The government says that the price at the pump is the responsibility of the provinces and Quebec, but that is just another excuse. Profits are not made at the pump; they are made at the refinery.

We want to know why the refining margin has gone, as I have already mentioned, from 8¢ or 9¢ to 26¢ in the past few years.

As I said, price setting needs to be transferred from the criminal section of the Competition Act—where it is now—to the civil part of the act because the burden of proof is lower in a civil case.

Furthermore, as far as the Competition Act is concerned, a petroleum monitoring agency needs to be created in order to monitor what is going on and to be able to provide information to the public. Consumers would know exactly what is happening and under what conditions things are happening. It seems to me that with these two items, we would have the means to discipline the major oil companies in relation to setting the price at the pump.

Obviously this would not solve all the problems. The real solution to this problem is to cut our dependence on oil and gas, which is what we should be doing in Canada and Quebec.

Opposition motion—Gasoline Prices
Business of Supply
Government Orders

10:25 a.m.

Liberal

Dan McTeague Pickering—Scarborough East, ON

Mr. Speaker, I want to thank the hon. member for bringing forward this motion and the two amendments. A number of the proposed recommendations were presented by my party in 1998.

If possible, I would like the hon. member to explain the net impact this has had not just in the regions in Quebec, but in every region in Canada and North America. So many refineries have closed. In fact, of the 44 refiners that existed in 1986, when the Conservative government pointed out the shortcomings in the competition legislation, there are just 13 remaining.

What is the true impact? The hon. member indicated that there is a refining margin of 26¢. Clearly this has an impact. Could he explain this further? Going from 44 refiners to 13 is a fundamental source of the problem.

Opposition motion—Gasoline Prices
Business of Supply
Government Orders

10:30 a.m.

Bloc

Pierre Paquette Joliette, QC

Mr. Speaker, I thank the member for his question. One has to wonder why Canadian oil companies—and U.S. companies, too—have closed so many refineries.

I understand very well that they wanted to streamline operations in order to increase productivity. When supply more or less matches demand and there are extraordinary circumstances—an international event, or hurricane Katrina, or an ice storm—they do not have the necessary reserves to absorb the rise in prices and so prices skyrocket. I do not understand why the oil companies do not have these reserves that would enable them to weather the storm.

Perhaps the federal government should force them to establish such reserves—or perhaps the government should do so itself—to avoid this type of situation. One has to wonder if this is what the oil companies were hoping for. It may not necessarily be collusion but not producing enough at the refinery creates an artificial shortage or artificial pressure on prices. We must take a closer look. The purpose of the motion is to shed light on the issue and to find the means to decrease the supply-side pressure toward price increases, while ensuring the availability of gas when needed.

I will close by saying that heavy demand during periods such as the Easter and Christmas holidays and the construction holidays are not unpredictable. These events occur at the same time every year. How is it that prices magically increase?

Opposition motion—Gasoline Prices
Business of Supply
Government Orders

10:30 a.m.

Bloc

Paule Brunelle Trois-Rivières, QC

Mr. Speaker, I am very pleased to rise today to speak to this motion, because the price of gas affects our entire economy, the entire population and, above all, many workers, who, in order to earn a living, must constantly contend with very high gas prices. The price is skyrocketing, the refining margin is three times too high and oil company profits are truly obscene. The price at the regular pump was $1.15, on average, last week in Quebec City, and $1.17 in Trois-Rivières on May 7. The average refining margin reached a record high at 23¢. That is three times too high, as the hon. member for Joliette was saying, when we know that a profit of 5¢ to 7¢ is enough for the oil companies to earn a reasonable profit on refining.

The price of petroleum products could remain high over the summer, especially since the cost of crude oil continues to rise. Who is pocketing the profits in the end? It is the oil companies, of which there are only six major companies. There are six major oil companies in Canada, and together, they earned a record profit of nearly $12 billion in 2006, an increase of 25% over 2005. It was unbelievable, but that record profit of 2005 was 70% higher than in 2004. It is becoming apparent that the oil and gas sector really needs to be controlled. The entire economy is threatened by the increase in the cost of this very strategic resource. We in the Bloc Québécois believe it is possible, at least in part, to avoid increases in prices for gasoline and other petroleum products.

Clearly the rising price of petroleum products has many consequences in our day-to-day lives. For example, in the case of taxis—to give just one example—they cannot change their fares every day according to the gas prices. With vacations coming up, how will our low- and middle-income families cope with this rise in the cost of gas? It increases the cost of all goods, since obviously the rise in transportation costs will be passed on to consumers through increased product prices. In my riding, the Kruger company, in an industry that is already in trouble, will have more problems transporting its wood chips. We think of our truck drivers, whose incomes are constantly dropping. They will have to put in longer hours to make ends meet, and that will lead to higher risks of accidents. Their profits are already very low and they will have something to say about this to the members of this House.

And certainly the increases in the price of gasoline are very harmful to the government, which itself is a very large consumer of gas.

Four main factors explain this rise: the price of crude oil, of course; the refining margin; taxes; and the retail margin.

When we talk about the retail margin, this is the difference between the price paid by retailers to buy their gas and the price they sell it for. Taxes, even though we often find them high, barely fluctuate and in our opinion do not explain the variations in the price of gas since most of these taxes are fixed. Certainly the price of crude oil is set internationally. It is hard to do anything to control this price, but there remain certain factors on which we can have an influence. While supply can still meet demand, it nevertheless has an effect on the rise in prices. Increasingly we see that oil prices are negotiated on the stock market. They are very sensitive to speculation, like any other commodity.

Professor Antoine Ayoub was talking in this connection about the new players, that is the pension funds, that have got into the oil speculation market and that have more influence on the market. We see that, by basing themselves on a number of uncertainties, which my colleague from Joliette talked about, such as the Iraq invasion and the resumption of Iraqi exports, which are always threatening to become problematic, they manage to make the price rise artificially by about US$15 per barrel.

This brings us to the key point of this motion, which has to do with refining.

In North America, companies have significantly streamlined refining activities since 1990. Obviously, to cut costs, they have closed a number of refineries, thus increasing use of their production capacity.

The gap between supply and demand has narrowed, with the result that the smallest climatic or technical problem upsets the balance between these two factors and leads to an increase in prices. The smallest increase in demand for gas sends prices up, as we can see on long weekends and holidays, as though refineries had no way of anticipating this. Why could they not have built up reserves? Any businessperson knows that during peak times, there should be a little more merchandise to sell, to be sure to meet the needs of customers. This remains very hard to understand.

If the government had not stubbornly refused to follow up on the recommendation to create a petroleum monitoring agency, it would have been better able to understand the market and see the crisis coming. We think a petroleum monitoring agency could prevent this situation by sounding the alarm, and propose solutions.

The Bloc Québécois is suggesting that the Competition Act be given more teeth to examine the role of refining margins in the determination of prices. A reasonable refining margin is in the range of 4¢ to 7¢ per litre, as mentioned earlier. In March and April it was more than 15¢ per litre. Last week, it was about 23¢ per litre, four times the reasonable margin. The industry must be disciplined, the Competition Act must be strengthened, the Competition Bureau must be able to investigate and must have real powers of investigation, which it does not have right now, and a petroleum monitoring agency should be established.

Furthermore, this was a recommendation made by the Standing Committee on Industry, Science and Technology in November 2003. We wonder what the government is waiting for to take action.

As I only have one minute left, I will move the following amendment. I move, seconded by the member for Argenteuil—Papineau—Mirabel, the following amendment:

That the motion be amended by adding after the words “said prices” the following:

and that the government also move to amend the Act to decriminalize the anti-competitive pricing practices and treat them as reviewable under the abuse of dominance provision and furthermore, the government should create a petroleum monitoring agency such as the one proposed by the Bloc Quebecois and recommended in the Fifth Report of the Standing Committee on Industry, Science and Technology presented in this House on November 7, 2003”.

Opposition motion—Gasoline Prices
Business of Supply
Government Orders

10:40 a.m.

NDP

The Deputy Speaker Bill Blaikie

I assume that the hon. member has the consent of the mover to put this amendment forward.

Opposition motion—Gasoline Prices
Business of Supply
Government Orders

10:40 a.m.

Bloc

Pierre Paquette Joliette, QC

Naturally.

Opposition motion—Gasoline Prices
Business of Supply
Government Orders

10:40 a.m.

NDP

The Deputy Speaker Bill Blaikie

The amendment moved by the hon. member for Trois-Rivières is therefore in order.

The debate is on the amendment. The hon. member for Victoria.

Opposition motion—Gasoline Prices
Business of Supply
Government Orders

10:40 a.m.

NDP

Denise Savoie Victoria, BC

Mr. Speaker, I thank my colleague for her comments this morning.

It is clear that the taxpayers have to be protected against sudden prices increases, especially given the financial results of oil companies for the first quarter of this year: Imperial Oil, $774 million, and EnCana, $497 million. Taxpayers do need protection, because the big oil companies are making incredibly big profits.

At the same time, it is clear to us, in this House, that the consumption of petroleum products in this country has to be curbed.

What strategy could my colleague suggest to the government to protect in the long term the Canadian people, and the environment also? For the time being, it is clear that the Conservative government is prepared to do neither; it does not want to protect the taxpayers, and it is not prepared to act to reduce greenhouse gas emissions in absolute terms.

Opposition motion—Gasoline Prices
Business of Supply
Government Orders

10:40 a.m.

Bloc

Paule Brunelle Trois-Rivières, QC

Mr. Speaker, I thank the hon. member for her question. She is, of course, giving me the opportunity to talk about an issue that I care about, namely the environment. Obviously, we have to try to reduce our dependency on oil. In order to do so, any measure that would provide more energy efficient vehicles would be welcome. We know that some technological advances have been made in Quebec regarding the electric vehicle. So, if there was less pressure from the automobile industry, we could use this type of vehicles. That would solve part of the problem. It would be one option.

The issue is particularly problematic in Quebec, because we must import all of our oil. Therefore, it is really important to rely on alternative energies and reduce our energy consumption. We must also promote public awareness and continue to educate the public, so that we can truly have a clean environment. In this regard, the Conservative government is definitely showing a lot of flaws and no real political will.

However, one thing that we notice and that is encouraging is that the public is developing what could be called a “green” attitude. Public pressure will certainly come into play and appropriate solutions will be found.

Opposition motion—Gasoline Prices
Business of Supply
Government Orders

10:45 a.m.

Bloc

Louise Thibault Rimouski-Neigette—Témiscouata—Les Basques, QC

Mr. Speaker, the hon. member for Trois-Rivières has provided concrete examples of the problems experienced by people in various areas. I wonder if she could comment on the whole issue of location, and particularly the regions, where many people live off industries such as agriculture and forestry. Until affordable renewable energies are found, people living in regions will remain very dependent on gas, fuel and oil. I am not saying that we are worse off than others, because everyone is affected.

It is the same thing with the tourism industry, which is hurt by these drastic increases. As the member for Joliette mentioned, every year, of course, these increases always seem to coincide with the summer holidays. Last year, we talked about this issue in June, and this year we are doing so in May.

I wonder if the hon. member could comment on the whole issue of location.