Mr. Chair and members of the committee, I would like to thank you for inviting us here this morning.
My name is Keith Newman, and I am the director of research for the union. We have some notes, but we will provide the committee with a translation later. Once again, thank you.
The Communications, Energy and Paperworkers Union would like to thank the committee. We represent 120,000 workers in Canada, including 30,000 in the energy sector: in offshore oil and gas extraction at Suncor and in oil refineries, gas plants, petrochemical plants, and gas distribution all across Canada. We are vitally concerned with the provision of fossil fuels to Canadians in ways that are safe, environmentally sound, and that provide—and this will be the focus, I believe, today of what we have to say—a secure supply to Canadians in an uncertain world.
In recent years, with respect to refining, there have been two major refinery closures in Ontario and Quebec that have pushed us into a position of dependency on foreign suppliers for refined petroleum products, gasoline in particular. Many people in eastern Canada now depend on the goodwill of strangers to drive their cars and trucks.
At the start of 2005, Petro-Canada shut its Oakville refinery in the Toronto area. Annual production of refined petroleum products in Ontario dropped by nearly 20%, forcing Ontario into a position of dependency on other regions. Prior to the closure, Ontario's production of refined products was in balance; that is, domestic consumption was equal to production. After the shutdown, the balance was lost and Ontario had to rely on surplus production in Quebec and foreign countries to make up its shortfall of about five million cubic metres yearly of refined product.
The refinery closure also cost 350 highly skilled, well-paid workers their jobs. That was only part of the impact. Thousands of additional jobs were lost by contractors and suppliers, and people in the community lost out because the spending of these other workers was lost.
While the shortfall in Ontario's production could be made up by excess capacity in Quebec about equal to Ontario's deficit, Ontario was still in a precarious position. In 2007, a fire broke out at the Imperial Oil Nanticoke refinery near Hamilton, and southern Ontario faced a gasoline shortage for several weeks as a result. It was widely understood the tight supply in the province was the main cause of the shortage. Not only did Imperial Oil have to close 100 gas stations, one-quarter of its total, but Petro-Canada also closed 30 stations and imposed rationing at another 80. Shell, too, had to close five stations, and gasoline prices rose 10¢ to 15¢ a litre during the time of the shortage.
Since October 2010, about a year ago, the situation has grown worse. On October 1, 2010, Shell Canada closed its refinery in Montreal, now forcing the Quebec-Ontario region as a whole into a situation of dependency on foreign supply. Prior to the closure, Quebec produced about five million cubic metres of refined products above its consumption and was able to supply Ontario's deficit. With the recent closure, Quebec is barely self-sufficient. Again, when the Shell refinery shut, hundreds of workers were thrown out of highly skilled, well-paying jobs, and many additional direct and indirect jobs were lost.
Based on a study by the Institut de la statistique du Québec, a department of the Quebec government, the CEP estimates that at a minimum of 2,000 jobs were lost. A recent study by the Conference Board of Canada dated October of last year, 2011, studied the effects of the closure of 10% of Canadian refining capacity, what it would mean to the Canadian economy. They estimated that over a five-year period, if 10% of refining capacity were closed, 38,300 person years of work, $4 billion of cumulative GDP, and $508 million of provincial and federal income taxes would be lost.
In the study, they note you can use their results in a linear fashion. Doing that, we calculate that the closures of the Oakville and Montreal refineries produced a loss over a five-year period of 25,000 person years of work—I should point out again this is direct, indirect, and what they call induced jobs—$2.6 billion of GDP, and $330 million in lost taxes, both federal and provincial. Now Ontario and Quebec are at the mercy of supply disruptions in Europe because that's where the excess supply or the shortfall must come from. It's made up of a flotilla of tankers heading down the St. Lawrence Seaway into Montreal. The Port of Montreal had a record year last year. Of course, given the extra tankers going down there, there was more environmental damage because of spills.
Ontario, however, still remains vulnerable to supply disruptions because it's short—still. Last August they experienced gasoline shortages—again. In the summer of 2011, a few years after the ones in 2007, they experienced shortages. This was because—now get this—the repairs at the Shell refinery in Sarnia took longer than expected. This was not some kind of odd accident. This was routine maintenance that took a bit longer than expected. People in the greater Toronto area, Sarnia, and London experienced shortages.
We believe this is the new normal in Canada—at least, that is to say, in eastern Canada. The supply of product is now so tight that a disruption at home or in Europe, a refinery accident or other serious event, will cause shortages and rationing of gasoline. We've allowed ourselves to get into a very awkward, even dangerous, situation.