Evidence of meeting #22 for Transport, Infrastructure and Communities in the 41st Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was rail.
A video is available from Parliament.
President and Chief Executive Officer, Canadian Fuels Association
I can't tell you that information. We have a mix of public and privately traded companies. Some of them are part of multinational companies that do not produce disaggregated numbers.
President and Chief Executive Officer, Canadian Fuels Association
I can't even give you a ballpark, Mr. McGuinty.
Liberal
David McGuinty Liberal Ottawa South, ON
Really? You represent a trade association, and you can't tell us how much revenue is grossed in your sector? Five billion? Three billion?
President and Chief Executive Officer, Canadian Fuels Association
It would be more than that, but I can't tell you.
Liberal
David McGuinty Liberal Ottawa South, ON
Mr. Bleaney, what were the gross revenues and the net profits last year for your membership? You have those numbers. Your folks in Calgary have those numbers in front of them. They know them off the top of their head.
Vice-President, External Relations, Canadian Association of Petroleum Producers
As I mentioned, the gross revenue picture for our industry is in the range of $100 billion a year, but that, as I mentioned, services all our cost structure. It also services a wide range of other things. Similar to Mr. Boag's response, some of our members are multinational companies that don't report to the Canadian regime, so we don't have specific reference to their “profits” on hand.
Liberal
David McGuinty Liberal Ottawa South, ON
So we have to go elsewhere to find out what the net profits are for the companies you represent?
Vice-President, External Relations, Canadian Association of Petroleum Producers
To the extent that it's public information for some members, it would be available through various means, but we don't collect and monitor that information.
President and Chief Executive Officer, Budget Propane 1998 Inc., Canadian Propane Association
Yes, our industry is composed of producers, retailers. All I can tell you is that we make about a $10 billion impact on the Canadian economy, and we generate about $900 million in revenues and taxes.
Liberal
David McGuinty Liberal Ottawa South, ON
But you can't tell me what your gross revenues are by sector or net profits?
President and Chief Executive Officer, Budget Propane 1998 Inc., Canadian Propane Association
I don't have it.
Liberal
David McGuinty Liberal Ottawa South, ON
Okay, let's move on.
I'll go to the question of joint liability. I asked the railway companies if they're interested in seeing liability for risk shared. We know, and Canadians know, that the railway companies are obliged to carry the materials that your companies produce, right? They can't refuse them. It's a fettering of the free market, and if I were a real free marketer, I would ask why the railway companies can't say, “No, we're not carrying your stuff; it's too much risk.” But they have to carry this stuff; they have to carry this material. They have to carry it the way they have to carry it, and they are forced to purchase third party liability insurance. We don't know how much it is, Mr. Chair, but we know it's approximately $1 billion for CN and $1 billion for CP.
Both CN and CP are very interested in hearing more about whether your companies and your sectors are prepared to pay, whether you're going to share in the liability, not a pooled approach as you've suggested, Mr. Bleaney, in your presentation. What is the position of CAPP, for example, on making sure that... I don't want to hear, “Let's make sure the railways are doing their job. Let's make sure it's their responsibility.”
I want to know, is CAPP prepared, are your members prepared, to step up and purchase the liability insurance, thereby making sure that your companies' regulatory officers and compliance officers are paying very close attention to a couple of things? One is the railways' actual performance. What is happening in these safety management systems? Two is that your members are actually paying attention to what the Auditor General of Canada is saying, because he's the only credible voice in this entire area in my view. He's the only objective voice, and the scathing indictment of the transportation safety system and rail safety system in the last report is really serious stuff.
To begin, is CAPP prepared to sit down with the railway companies and come up with a joint mechanism, not a pooled resource, where CAPP members get third party liability insurance?
Vice-President, External Relations, Canadian Association of Petroleum Producers
As I mentioned in my presentation, it's our view that, for the handling of insurance on the major lines, it is something that's most appropriate for the carrier to manage. The reality is the cost associated with that insurance will be something that flows to the parties that are shipping on that carrier system, because that's something the cost will flow through.
Liberal
David McGuinty Liberal Ottawa South, ON
Sure, and ultimately to the consumer, right? The purchase of your products is paying for that insurance as well, right?
Vice-President, External Relations, Canadian Association of Petroleum Producers
Well, it comes into the cost structure of transportation.
Vice-President, External Relations, Canadian Association of Petroleum Producers
I want to clarify a little about the hybrid argument that I was mentioning. What we're speaking to there is that we recognize that the scale of insurance that you spoke to that applies to the main lines in the order of $1 billion is a fairly heavy load for small rail carriers, and we're looking to try to find a solution for them that would be effective to facilitate their being able to conduct their business and still have access to appropriate funding to support them in the event of an incident.
In the short answer to your question, we still think it's with the rail carrier to be the party that takes on this insurance, but the cost structure would flow through to the shippers.
Liberal
David McGuinty Liberal Ottawa South, ON
Okay, so the answer is no. That's your answer, that your members are not prepared, and CAPP is not prepared, to sit down with the railway companies and negotiate a joint liability arrangement where the owners of the dangerous goods don't get to say, “Here are the dangerous goods. Now you're responsible for them and at the back end when we unload, we'll take the responsibility.” So that's the answer.
I don't want to hear about small pooled funds for the smaller railways. I know you're interested in making sure the railways are protected, and I share that concern, but I need to get a clear answer. What is the official position of CAPP now?
Look. We're going to a million barrels a day of surplus capacity in 10 years. If every pipeline planned for this country is built, we're going to have a million barrels a day of excess capacity. It's all going to go on rail if it doesn't go on truck. So now's the time, right? We're 10 years out. You've alluded to these massive increases in shipping oil by rail and diluted bitumen by rail, so I want a really clear answer. Is CAPP prepared to participate, to go out to the market and purchase insurance, to share in the insurance? Otherwise, are Canadians supposed to say to the railway companies that they don't have to carry this stuff anymore?
Vice-President, External Relations, Canadian Association of Petroleum Producers
I'm going to actually weigh in with some support from my team in Calgary, because they're much closer to the liability dialogue at the moment. I'll turn this over to my team.
Vice-President, Oil Sands and Markets, Canadian Association of Petroleum Producers
I do, Mr. Greg Stringham.
The answer to that is we rely on the rail company to provide the insurance, but we will pay the cost. It does not get transferred to consumers because the price of oil is set on the world market. So it's that cost that comes back to us, but we are willing to contribute to that through our tolls, the same way we do on pipelines. The pipelines take the responsibility; they purchase the insurance, but we end up paying for that.
The short answer to your question is yes, we are willing to do that. The best mechanism for us to do that is to do it through those that are transporting it, but to put it into the tolls so that all are covered appropriately, and the accountability for the proper operation remains with the person who is transporting it. The short answer to that is yes, that's how we do it on the pipelines, and that's how we're proposing to do it here, but also supplement it with that fund for the smaller lines that may not be able to go out and purchase adequate insurance.
Conservative
The Chair Conservative Larry Miller
Okay. Thanks, Mr. Stringham.
Mr. McGuinty's time is up, but if any of you want to make further comments on that particular question, I will allow that.
Anyone?
Okay, with that we now move to Mr. Komarnicki for seven minutes.
Conservative
Ed Komarnicki Conservative Souris—Moose Mountain, SK
Following up on the insurance aspect of it, certainly you're saying the shipper looks after paying the rail company, and they look after the insurance. But is there not the potential to augment that? My understanding from CN and CP is that the insurance might not be sufficient if you had a significant event.
Is there some thinking about how you might augment what the rail has for coverage, such as maybe each of the shippers paying into a pooled fund in the event of a big disaster, or doing something, as you were suggesting, for the short lines, ensuring that there is additional insurance?
Mr. Stringham, perhaps, or Mr. Bleaney.