Industry Committee on June 13th, 2007

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

So it would be unfair for the Department of National Resources to compare Canada-U.S. prices without making that important caveat, that there are dozens of specifications in the United States.

[Jane Savage]

I see what you mean. Yes, there are. We call them boutique fuels.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Let me ask if boutique fuels should cause a price increase, which should suggest why the prices in Canada ought to be much lower.

I'm concerned about data collection information. I was surprised when you said that MJ Ervin was still posting information on behalf of the Canadian government. This committee has spent a considerable amount of time suggesting that there ought to be a more transparent body, not an organization that derives most of its money from funds from major refiners and oil companies in Canada. Does it concern you that the information being supplied may not be as accurate or may not be as transparent as one would see? Do you not believe that the Canadian government itself should be involved in providing its own benchmarks, as opposed to the industry itself--that is, the eyes and ears of the Canadian industry?

[Jane Savage]

Yes, I do. I think that's important. I think transparency is incredibly important. MJ Ervin is truly the only source right now, so I have no way of knowing if it's good or not good. But from a philosophical point of view, yes.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

That makes sense. I certainly wouldn't see that in other industries.

The other day, Mr. Carrie asked a question about why there were shortages of certain types of gasoline. I saw the same on my way up from Pickering. At several Esso stations they were out of premium and mid-grade. Is there any reason why that happened, in your view? Is it due to specifications? Is it due to an outage we don't know about? Is it an inventory problem? Is it from trying to implement the new Ontario regulations with respect to ethanol?

[Jane Savage]

There are some issues with the implementation of the ethanol mandate in Ontario. It's to do with a specification called read vapour pressure, RVP, which is a measure of the volatility of the gasoline. Mid-grade cannot be blended on-site with non-ethanolized premium without exceeding the RVP. Whether that's the reason for the shortage, I can't comment.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

My question is for Ms. Marcotte and Mr. Blouin.

I heard today that the major oil companies' price will be 64.6¢ in Montreal tomorrow morning. Mr. Quintal may also like to comment on this, but the price on the U.S. Stock Exchange was $215.53. At a rate of exchange of $1.0661, I arrive at about 60.7¢ a litre in the U.S., which means it will be 3.9¢ higher in Montreal and 5.2¢ higher in Toronto.

How does one go about explaining to consumers that the price of products supplied here in Canada, which is determined by the market, is higher and that it is the same in every region of the country, without exception? How is it that the refineries' prices can be the same in Montreal, Toronto and Ottawa tomorrow morning? Is there no competition between these cities?

Mr. Crevier, are you able to answer that question?

[Pierre Crevier]

It's simply because the rack prices…

[Robert Vincent, Bloc, Shefford, QC]

Mr. Chairman, on a point of order.

[The Chair, Conservative, James Rajotte]

Excuse me.

Mr. Vincent has a point of order.

[Robert Vincent, Bloc, Shefford, QC]

Mr. Chairman, it is already 5:05 p.m. and we still have a second item on our agenda. Since we have to go and vote at 5:30 p.m., I think we should move immediately to the second item on our agenda, because we have barely a half-hour to address those two topics—that is, piracy and intellectual property. If not, we will never be able to get through them. Also, if we want to draft our report as we said we would, we will need to take the remaining 25 minutes to finalize it, because we have two or three small sections to deal with still.

So, that is my proposal. That is the point of order I wanted to raise, Mr. Chairman. We will see what other Committee members are inclined to do.

[The Chair, Conservative, James Rajotte]

Mr. McTeague has one minute left.

I have Monsieur Arthur. I wanted to ask questions. I don't need to ask questions, if that's the will of the committee, but I would like to get Mr. McTeague and Mr. Arthur. Is it the will of the committee to move to counterfeiting after Monsieur Arthur's questioning?

[Robert Vincent, Bloc, Shefford, QC]

Mr. Chairman, I would like my point of order to be put to a vote. I asked to change the agenda so that we move immediately to the second item.

I understand your role, but the Committee is master of its agenda. It therefore has the right to take a position on my proposal. I can always make a motion and table it with the Committee; I can make a recommendation. I can do that in any number of ways.

But if we limit ourselves to that and we finish tomorrow or Thursday, then it will be done with.

[The Chair, Conservative, James Rajotte]

Monsieur Vincent, you cannot move a motion on a point of order. You raised a point of order on an issue, which I was then seeking the will of the committee on, that after Mr. McTeague has finished and the witnesses have an opportunity to respond, and after Monsieur Arthur has five minutes to ask questions, if it is the will of the committee, we would at that time move to discussion of counterfeiting. So you cannot move a motion on a point of order.

You raised an issue on a point of order, which I, as the chair, was seeking to address, saying that after Monsieur Arthur, we could then move to counterfeiting. I think, as the chair, that's the best way I can handle this.

Is that the will of the committee?

Mr. Carrie.

[Colin Carrie, Conservative, Oshawa, ON]

I think we have enough time that if any member who hasn't asked questions would like to--for example, Mr. Arthur and you, Mr. Chair--there would be five or ten minutes. We're still at a quarter after.

I believe the votes are at 6 o'clock instead of 5:30, aren't they?

[The Chair, Conservative, James Rajotte]

My understanding is that they're at 5:45.

[Colin Carrie, Conservative, Oshawa, ON]

So we should have time.

[The Chair, Conservative, James Rajotte]

Okay, well, I'm going to finish with Mr. McTeague. He's put a question on the floor. I'm going to allow the witnesses to answer. Then we'll allow Monsieur Arthur. I will defer my questions, and we'll go to counterfeit after Monsieur Arthur.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Mr. Chairman, I believe it's Mr. Crevier's or Mr. Blouin's turn to respond.

[Pierre Crevier]

If rack prices are not identical from one city to the next in Canada, the reason for that is simply that they are not in any way connected to a refinery's production costs. They are simply based on replacement cost—in other words, the highest price a refiner in a given region can fetch for the product being sold to the independents.

In Montreal, the price is lower than in Toronto, because the product comes into Montreal by boat. In Toronto, the product has to be imported by truck from the United States or from Montreal. Rack prices in Western Canada are probably even higher than in Toronto, because it costs the independents more to ship the product there. So, it has absolutely nothing to do with production costs which, as you say, should be equivalent across the country.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

That's it for me, Mr. Chairman.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. McTeague.

Mr. Arthur.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

Merci, monsieur le président.

If you'd accept, I would be quite ready to split my time with you. I know that you have a very interesting question, Mr. Chair, so I will use only two and a half minutes.

Ms. Marcotte, at the present time, how much refined product is being imported into the Quebec market by your members?

[Pierre Crevier]

It's the equivalent of almost a billion litres annually.

[André Arthur, Independent, Portneuf—Jacques-Cartier, QC]

And what percentage of the total volume sold in Quebec does that represent, Mr. Crevier?