Environment committee  Certainly in our engagement with Environment and Climate Change Canada, our main issue was around the feasibility of the target and the stringency of the reduction that would be imposed on our sector. Our view was in keeping with the principle of a challenging but feasible target, one that would be challenging for the industry but would also mitigate much of the inequity that the patchwork consists of today.

Environment committee  Let me first say that refineries and refinery operators have not been sitting still over the last number of years in terms of the continuous improvements they've made to their operations in areas of energy intensity. This is fundamentally an energy-intensive industry, and while there are some process emissions, much of the industry's emissions issue is associated with combustion.

Environment committee  Good afternoon, Mr. Chairman, ladies and gentlemen. Thank you very much for inviting us to appear before your committee today. My name is Peter Boag, and I am the president of the Canadian Fuels Association. With me is my colleague Carol Montreuil, who is the vice-president of our eastern Canada division and our policy leader on the carbon pricing file.

Finance committee  I think the term we would use is access to tidewater, and tidewater means you have access to big ships that facilitate trade in market waters.

Finance committee  I'm not an expert on that, so I would be hazarding a guess and I'm not going to do that.

Finance committee  In fact, the most significant aspect on refining margins is actually the crude price differential, in that eastern Canadian refineries are still largely dependent on imported Brent benchmarked crude where western refineries have 100% access to a lower-priced WTI benchmark crude.

Finance committee  First of all, I don't have shareholders. We're a not-for-profit association representing the interests of members. Certainly selection of a crude biorefiner is driven by a number of factors including quality, availability, price, and what the market demand for products is, because your product slate is in part influenced by the crude you refine.

Finance committee  The answer is none. The last new greenfield refinery built in Canada was built more than 25 years ago. We have a bitumen refinery being built today north of Edmonton that is considered a refinery, not an upgrader, because it will actually produce the finished products. But the number of refineries is one side of the equation.

Finance committee  Our installed capacity, on a name plate basis, is about two million barrels a day, and Canadian demand is about 1.6 million barrels a day. So about 25% of Canadian refinery production is exported, largely to the United States.

Finance committee  Certainly the supply situation in Canada is going to remain strong, because we are in a market that, in terms of the demand for refined products not only in Canada but in North America, is flat to declining. That is a function of our mature demographics, our very mature transportation systems, rapidly expanding vehicle fuel-efficiency requirements, as well as the increased market penetration of alternative fuels.

Finance committee  Market diversification is certainly a potential opportunity, but the issue is whether you can be ultimately competitive. Can you actually access those markets, and then, can you be competitive in those markets while at the same time making an adequate return on investment? There's a lot of economic and commercial risk associated with opening up new export opportunities for finished products.

Finance committee  As I indicated in my opening remarks, over the long term retail fuel prices do in fact generally track price movements in crude. Certainly, as we've seen over the last two and a half years, while there has been volatility in the price of crude oil there has been relative stability in refiner margins and retail margins.

Finance committee  Most recently, the drop in oil prices that came after the 2008 financial crisis would certainly be another example of the kind of drop that we've seen over the last six months.

Finance committee  It is difficult for me to talk about this specifically in any great detail, but I think we all saw the impacts on the economy in terms of a slowdown and job loss. Canada was relatively well insulated compared to other economies around the world. We were very well positioned fiscally as a nation.

Finance committee  Thank you, Mr. Chairman. Members of the committee, good morning, it's my pleasure to be here today. I represent the refining sector, which is an integral component of Canada's petroleum value chain. Refineries are the manufacturing intermediary between crude oil and refined products.