Industry Committee on June 22nd, 2011

[Dan McTeague]

Was it five minutes? Sorry.

[The Chair, Conservative, David Sweet]

We did give you—

[Dan McTeague]

Mr. Lake, thank you for that.

[The Chair, Conservative, David Sweet]

—more time than was scheduled.

[Dan McTeague]

Old habits are hard to break.

[The Chair, Conservative, David Sweet]

We're on to Mr. Julian for five minutes or until the bells ring.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you very much, Mr. Chair.

I'll be splitting with Mr. Thibeault.

I'd like to come back to Mr. McTeague. This industry committee has already looked at the issue of gas prices, produced a report that very clearly recommended a petroleum monitoring agency, and you're aware of the details around that proposal. It's something the NDP has been championing for some time for all the people who are concerned about these excessive cost rises in the retail gas market and what it means for ordinary families.

Before I turn things over to Mr. Thibeault, I want to ask Mr. McTeague why the previous government refused and why the current government refuses to implement something that the industry committee has already suggested would be one tool that would help struggling families.

I'll turn things over to Mr. Thibeault, because I believe he has a couple of questions as well.

[Glenn Thibeault, NDP, Sudbury, ON]

I would like to give Mr. McTeague the opportunity to answer the question I asked earlier.

I also have a question for Mr. Huffaker. You mentioned in your opening statement $100 billion in revenue, $50 billion in revenue in this area. The Conservative government continues to put forward a $2 billion subsidy to the oil companies. If that subsidy were to end, would that have any indication on changing the fluctuation in gas prices?

Those would be my two questions. Thank you.

[Dan McTeague]

Mr. Julian, the issue of the petroleum price monitoring agency, which included as part of its emphasis the idea of a weekly petroleum monitoring report, in fact originated from me and my party, and we implemented that in late 2005. Unfortunately, as you know, the government fell a few months later, prior to implementation, and the new government did not agree with that and the agency was killed.

The purpose for which that was created and why I struggled with this in 2002, long before the derivatives issue began to appear and create the kind of volatility that has been well expressed by others, was simply because there was never any agreement on what the problem was. So I thought we would let the facts speak for themselves, as the Americans do every week. It's not perfect, but at least every drop of petroleum energy is accounted for in that country. It's broken up; Americans treat energy very differently than we do. They divide it into PADDs, Petroleum Administration for Defense Districts, because they see it as a strategic commodity.

I'm suggesting that we should catch up with the times. If Natural Resources Canada is spending taxpayers' money to provide Americans information about Canada, ought we not to divert a little of that tax money so that Canadians know how the supply and demand picture looks in this country?

I haven't changed my position in nine years. I don't plan to, either.

[Tom Huffaker]

Mr. Thibeault, thank you for your question.

As I said, the turnover, the revenue of the industry, is about $100 billion per year. The investment rate is about $50 billion per year. Obviously that fluctuates some with things like prices.

You asked a question about subsidies. I think we probably have a fairly fundamental disagreement in view there. We do not view the industry as subsidized. Jack Mintz, probably Canada's leading independent academic authority on fiscal regimes, has looked at this very carefully and says that probably the all-in tax burden on the oil and gas industry is a little bit heavier than it is on the average industry in Canada.

We take the view that every industry has a fiscal regime; those fiscal regimes vary somewhat because of the nature of the industry. On occasion ours seems to be characterized as a subsidy regime, rather than a fiscal regime. Again, it's our view that it is a fiscal regime. We have deduction rates; we have rates at which we recover costs, as other industries do. In our view, that does not make it a subsidy.

[Brian Masse, NDP, Windsor West, ON]

I'll follow that up.

With all due respect, taxpayers are actually giving you tax credits. So how can you not define that as a subsidy? Right now your industry is receiving much more lucrative subsidies than other industries that don't have those tax regimes. In fact, data from 2008 suggest that you paid an overall rate of 10.5%, where small business paid, for example, 16.5%.

It's hard for taxpayers to get their minds around this, because the reality is that the subsidies are there. Even the government said that at some point they would end the subsidies. So when taxpayers' money goes back into your pockets, why is that not a subsidy?

[Tom Huffaker]

As I said, every industry has a regime under which it deducts and recovers costs. In the oil sands area, as you know, in the most recent budget one of those provisions--characterized by some as a subsidy--was removed. As I said, it doesn't look as if the overall burden on our industry is particularly lighter than it is on others. And of course you also need to remember there's a huge reinvestment rate and a great many companies are not turning a profit yet, in particular among the smaller sectors of the industry.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Huffaker. That was five minutes.

Now we'll move on to the Conservative side. We'll go until the bells ring.

Madam Gallant.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you, Mr. Chairman.

We have in this country an organization called the Tides Foundation, Tides Canada. The funding is transferred from the United States, and it funds special interest groups that campaign against the oil sands. If they were to have success in closing down activity and production in the oil sands, how would that impact the price of gasoline at the pumps?

[Tom Huffaker]

There's certainly a correlation between supply and price, ultimately. But as we've all discussed before, this is set in global markets. It's an 80-million-plus barrels a day market. So it takes a certain amount of movement to have an impact on that.

Your question goes to the activities of Tides, or the activities of the ENGO community. In our free societies in North America, people have the right to engage in advocating their positions. Political and regulatory systems in North America will resolve how these come out. Obviously we would like to see further development.

To the extent your question goes to pipeline issues, we are supportive of creating greater access to markets for Canadian products.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Huffaker.

We agreed that when the bells summoned us to the House we would discontinue, so the meeting is adjourned.

Again, thank you very much.