Evidence of meeting #70 for Industry, Science and Technology in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was gasoline.
A recording is available from Parliament.
4:40 p.m.
Vice-President, Business and Communications, Canadian Petroleum Products Institute
The engineer will have to deal with that.
4:40 p.m.
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
I go farther on a gallon of American gas than on a gallon of Canadian gas. Why?
4:40 p.m.
Vice-President, Business and Communications, Canadian Petroleum Products Institute
I find it a bit of a stretch. It would be very tough to simulate. You would have to be driving the same roads with the same wind conditions...the same everything. It would likely be very different. There is a possibility that U.S. gas may be a little heavier and have slightly more energy, and that would be due to the climate. All of our gasolines...you talk about winter gas and summer gas. Winter gas is more volatile. It has more butane in it and it evaporates. But I wouldn't—
4:40 p.m.
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
Talk about the stretch. The same gas refined in Quebec City by Ultramar sold on the U.S. side according to U.S. standards will get you farther than the same gas bought in Quebec according to Canadian standards. Why?
4:40 p.m.
Vice-President, Public and Government Relations, Canadian Petroleum Products Institute
Just on that, sir, the best I can do for you right now—You've given us a comparable example. I will contact Ultramar right after this hearing and we will furnish you with the data.
4:40 p.m.
Vice-President, Public and Government Relations, Canadian Petroleum Products Institute
There are a lot of ideas out there about what you can do with gasoline, about what's true, about how it works in each individual car. The only thing I can say is that it's the quantitative studies, the thorough studies, the testing done under identical weather and road conditions, that are really the only—
4:45 p.m.
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
I'm talking about the same road on the same day.
4:45 p.m.
Vice-President, Public and Government Relations, Canadian Petroleum Products Institute
What day was it, sir?
4:45 p.m.
Independent
André Arthur Independent Portneuf—Jacques-Cartier, QC
We went from Quebec to Montreal on a tank of diesel gas bought in Quebec. We came back at night, on the same road, with a tankful of gas bought in New York and stretched it 10%, easy. Why?
4:45 p.m.
Vice-President, Public and Government Relations, Canadian Petroleum Products Institute
I don't know the answer to that question—if in fact it's even true—but we'll get you that information.
4:45 p.m.
Vice-President, Business and Communications, Canadian Petroleum Products Institute
Most of the consumption is due to wind resistance. You'd have to know what the wind conditions were.
I ride a bicycle, and let me tell you, when you're going with the wind, it's a breeze. When you're going against the wind, it's no fun at all. Your engine is—
4:45 p.m.
Conservative
The Chair Conservative James Rajotte
Okay, thank you, Mr. Baily.
Merci, Monsieur Arthur.
Monsieur Vincent.
4:45 p.m.
Bloc
Robert Vincent Bloc Shefford, QC
Thank you.
It all ties in together. People think that since gasoline has gone past the $1 a litre mark, you can keep the price at over $1. Even if there is a drop in the price of crude, you just have to increase the refining margin and keep prices stable.
Is that the way you work?
June 18th, 2007 / 4:45 p.m.
Vice-President, Public and Government Relations, Canadian Petroleum Products Institute
I'm sorry, I didn't catch all of that, sir.
4:45 p.m.
Bloc
Robert Vincent Bloc Shefford, QC
No problem.
Gas prices have reached $1 a litre; that was the psychological barrier for everyone, the line that must not be crossed. Now that the price has gone past $1, you can play with it, and we see prices of $1.06, $1.09, $1.15. So every time the price of a barrel of oil goes down, the refining margin goes up, and the price remains stable.
Is that how price stability is maintained?
4:45 p.m.
Vice-President, Public and Government Relations, Canadian Petroleum Products Institute
No, that is not how it's done. And I'm going to impute that you're referring to the study done by the Canadian Centre for Policy Alternatives, who talked about a psychological barrier. We reject that study. We reject the methodology outright. It is, to be perfectly blunt, an extremely left-leaning excuse for price regulation and for which there is no justification whatsoever.
The reality of the matter is that Canadians are some of the most price-sensitive consumers of gasoline in the world. They'll make a U-turn on 0.1¢ a litre. It is in the interest of suppliers to keep their costs down, because they cannot control the wholesale price.
So there is no psychological barrier, sir. This is not, for us at least, a manipulation of psychological activities. At the end of the day, though, I remind you that these products are sold, for all intents and purposes, worldwide, and used by motorists worldwide. As long as demand is going up at a pace that is in excess of the rate of increase in supply—in this case, the North American market—you're going to see the price go up.
I wish it were more complicated, because then I might have a different job and make more money on it, but it's just not as complicated as you're implying.
4:45 p.m.
Bloc
Robert Vincent Bloc Shefford, QC
I have two final questions to ask you.
If you want to buy a car, you visit various dealerships, hoping to get a better price. Why is there no competition for the company retailers or convenient store owners that sell gas? In New Brunswick, Irving refines oil for everyone. In Halifax, Esso does the same thing. In Quebec City, it is Ultramar. Why is the price the same for everyone?
We are all looking for the same thing. Where is the competition? The companies are not competing amongst themselves like car dealerships do, with the same vehicle being sold at different prices depending on the dealership. Why is that the case?
My second question is this. Based on your experience, can you tell us when the next increase in gas prices will take place?
4:50 p.m.
Vice-President, Public and Government Relations, Canadian Petroleum Products Institute
I fully expect that over the course of the day there have been many price increases and decreases, depending on where you are in the country.
I've been in this job since November, and I just recently discovered that, for example, in British Columbia the price that you see outside is not necessarily the price that you actually pay when you arrive at the gas station. It's a different marketing reality in Vancouver from what it is in Montreal and in Toronto.
The fact of the matter is that there is an element to this that is local market dynamics, where the number of gas stations on a given corner in fact does matter. Those are decisions taken by individual business people in the context of everything they're selling when you drive into that gas station.
4:50 p.m.
Bloc
Robert Vincent Bloc Shefford, QC
Do you believe there will be an increase of 3¢, 4¢, or 5¢ on Friday, just before the holiday weekend in Quebec? No?
4:50 p.m.
Vice-President, Public and Government Relations, Canadian Petroleum Products Institute
It may or may not, but what I would suggest is that Mr. McTeague has developed some mechanisms to determine where prices go. I think the other important indicator that I've learned is that if you actually take a look at the data releases by the energy information agency in the United States shortly after the announcements come out on inventory levels, you see price movements fluctuate after that.
4:50 p.m.
Bloc
Robert Vincent Bloc Shefford, QC
We base ourselves more on when the long weekends and holidays are in order to figure out whether gas prices will be going up.
4:50 p.m.
Vice-President, Business and Communications, Canadian Petroleum Products Institute
The Conference Board of Canada carried out a study a few years ago. In fact, this is the only statistical analysis that has been carried out regarding increases. There was actually no correlation found between long weekends and higher gas prices. They found that there was no link.
4:50 p.m.
C. Dane Baily
As consumers, we are much more sensitive to gas prices. We travel a lot, so it is natural to think that prices tend to be higher before long weekends. But statistically, it is not true.