Madam Speaker, once again I have an opportunity to give a brief illustration of some of the concerns I have with Bill C-3.
Let me state from the outset that I will be supporting the bill. It is a timely bill. We are debating a bill on a day in which Canadians, short of what happened in the House of Commons in the past 24 to 48 hours, are beginning to wonder whether or not a nation so blessed with energy is being put in the situation where it is being manipulated by its own resources. Canadians are seeing prices that they could never have imagined a few years ago.
Some time ago members on this side of the House took under their own wings the idea of looking at the gas and oil industry. I am proud to say that the industry is doing extremely well in Canada, but not as proud to say that for most of my constituents it is doing far too well.
I would like to indicate where the bill could be improved because it is clear that its intention is to divest, among other things, federal government shares which it currently owns in Petro-Canada. Petro-Canada was created out of the national energy policy. As a young assistant I sat in the gallery and watched as the act unfolded. Back then it was an issue for me. Amazingly enough at the age of 38 it is still an issue for me and it will continue to be an issue for most Canadians.
I will provide my colleagues with a description of where the energy sector is going. There has been a lot of interest in the idea of a continental energy policy. I had an opportunity to make some observations on that during the take note debate last evening. The most interesting comment that I have heard came from the former governor general of the country, Ray Hnatyshyn, who as a young member from Saskatchewan referred to a continental energy policy as it related to Canada and the United States at the time as being a bit like “swapping partners with a bachelor”.
The difficulty is trying to explain to Canadians that when there are opportunities to provide more energy for other parts of the world desperately in need of energy, there inevitably becomes a consequence to one's own consumption and to one's own domestic situation as far as the market is concerned.
It would probably shock and surprise Canadians to know when they are fuelling up with gasoline or buying home heating fuel, or truckers who are using diesel fuel, that all our energy is priced in U.S. terms because of the differentiation between the Canadian and the U.S. dollar.
The standard benchmark for oil as set by West Texas Intermediate is about $26, $27 or $28 a barrel in the U.S., which is $42 or $43 in Canadian terms. That number has to be divided by 159 because a conventional barrel of oil yields 159 litres of gasoline. That makes it about 25 or 26 cents a litre. That is the breakdown of why people in Ontario are paying 80 cents a litre for gasoline and perhaps more.
Crude oil in Edmonton today is selling for about 26 cents a litre. It takes about one cent to push it through taxpayer funded pipelines which we gave over to the oil industry as an apology for the energy program many years ago, so it is now 27 or 28 cents a litre.
Refiners in Ontario and across the country will then transform the crude product, the bitumen, into a rack price, which is known as the wholesale price. This usually costs them about two or three cents a litre. However the margin today is 18 cents a litre. Of the refinery's production, 15 cents is going into the pockets of oil companies. I am not so concerned about their ability to do it. They say it is economics 101 and it is their right to do these things because that is the way it is done in other markets.
In the U.S., the average refinery margin is hovering about nine cents a litre. However, because we are Canadians and because it is our own product priced in U.S. dollars, not including taxes, we are being forced to pay an extra eight or nine cents a litre. That may not mean a lot but when we consider that 35 billion litres of gasoline a year are sold in Canada, we are talking about a transfer, for every penny where there is no competition at that level, of some $350 million from the Canadian consumer's pocket to the oil companies. Some members may wish to nod their heads approvingly or disapprovingly but the facts and the proof are in the pudding.
The record profits that are being made in the downstream, in the refining and retailing of gasoline, is testament in and of itself of the evidence that something has gone completely wrong with the industry and for which there is no oversight.
I would now like to talk about the retail margin. If I am an independent I would be buying gasoline today for about 74 cents a litre including tax. I would have about four to five cents to work on. That is usually what is needed to turn a pump on, to pay for staff and to keep one's nose above the water line.
Since 1993 we have seen the sustained policy of oil companies, using their huge profit at the refinery level to cross-subsidize. That never gets challenged because there is no competition there. They do not mind losing money at the retail level.
Big, beautiful gasoline sites are being put up by the integrated major oil companies in the country. It costs millions of dollars to acquire the land, to put up the infrastructure and the capital, and yet they are running on margins of one cent a litre or half a cent a litre, and in some cases negative one or negative two cents a litre.
This would be completely illegal in the United States. Shareholders would get upset at losing money at the retail level because retailing and refining gasoline are completely different. Also anti-competitive questions would be raised. To build a facility like that on the most expensive sites to attract people to the site would be prohibitive. It would likely reflect in the cost.
Hence when we go to the United States, and many of us have done that although with our weaker dollar it has been more difficult, we go to a little gas station on the side of the road. It is an ugly, beaten up looking thing. The guy is outside with his dirty hands and his wife is pumping gasoline. The gasoline at this station is 10 cents a gallon less than the Mobil across the street. A product cannot be offered at cost or below cost unless money is being made somewhere else.
There are opportunities for the government to look at the issue of segment reporting. One of the benefits that I hope would not be lost, in any attempt to sell the final 18% of Petro-Canada shares, would be segment reporting. One of its advantages, because it is a publicly held company, is that it tells people what it made at the retail level. It has not engaged in predatory pricing versus what it has lost or made at the refinery level.
Finally I want to talk about what makes up the cost of gasoline. We have 26 cents for crude. We have 18 cents as a refiner margin today in Ontario, particularly in Toronto. We have taxes in the area of 24.7 cents, which consist of 10 cents for the federal excise, 14.7 cents for the province and about 5.6 cents for the GST. Of course the GST goes up with the cost of the product. The final point I want to put into this cost, and why it is so important for us to consider it now in Bill C-3, is that in the future when it comes to being able to measure these companies we will have less of an opportunity to do so. Yes, the books will be open, but they will be open for shareholders.
Will there be guarantees, as we see with a current partially held public company, that these companies will be held to a higher standard? Will there be guarantees to ensure that all reporting is not combined and that it is not simply put in and consolidated, as we see with Imperial Oil and Sunoco? They tell us what they made in crude and of course what they made in the entire downstream, which is refining and retailing. As we know, they are two completely separate businesses.
There are opportunities for the federal government and parliament to begin to look at the impact a possible continental energy policy would have on product. For instance, in regard to transferring a certain amount of product from Canada to the United States, priced in U.S. dollars, if we do not take into account the fact that there will be an impact on Canadians, a cost push in higher prices, then I think we are engaging in a fool's errand. There is no doubt in my mind that a continental energy policy must take into account the impact it could have on Canadians.
I believe it is important that we head in that direction and that we begin to look at ways in which we can co-ordinate our valuable energies and our resources. However, if we fail to estimate the impact on Canadians, we will lose the very people who give this place legitimacy.
Right now gasoline is at 80 cents a litre in Toronto and there is an 18 cent a litre margin at the refinery level, which not too many papers, media or members of parliament want to talk about. We tend to spin around and worry about the taxes that are part of gasoline. I think they are important, but there is not a single member of the House of Commons who does not know that those taxes go back into general revenues and are there for the common good of the country. We can dismiss re-election for every member of parliament here if we do not like the way our taxes are spent, but there is no accountability for the chairman of Imperial Oil.
That money that we call taxpayers' money, which is part and parcel of the cost of crude, does not go up on long weekends and every Canadian knows that. Canadians also know it goes to pay for our hospitals and for our roads. Equally, they know that if we are dealing with the subject of taxes maybe we ought to look at how the oil industry is spending those taxes.
It may come as a surprise to some members of the House of Commons that an oil company will charge an independent cash on the barrelhead, taxes in, for delivery of goods and products, for their product, the gasoline. They demand the taxes up front. However, because they are large companies they get to keep that tax for 30 to 40 days as a float, simply because they happen to be large players. That is part of their general revenue. Never has working with the government been so profitable.
For this reason I find it rather ironic that we are dealing with what appears to be a rather casual housekeeping matter in Bill C-3, that we should proceed with this. However, make no mistake about it. Most of us here know that we are proceeding with the further privatization of a company that has done very well from the marketing point of view considering where its shares were a few years ago. I applaud the company for that. They are now at $40.72 in trading. That is quite a whack of cash. Some $2 billion is what the federal government has at stake here if it decides to sell its common shares on the open market tomorrow.
I would argue very passionately that this money is only a small amount of the money Canadians put toward creating Petro-Canada in 1990 as a result of a decision by the House of Commons. I think the time has come to do something, given the high cost of energy and the anticipated even higher costs down the road. The oil companies use the excuses of warmer summers and colder winters or shutdowns in Kuala Lumpur or wherever in order to justify these high prices. The excuses are predictable, but they are certainly not exhaustive.
For that reason I think it is important for the House of Commons to consider taking that money and do nothing else, short of putting it in the general revenue, but to give it to every single Canadian on his or her income tax in the form of a grant, a credit or however the system can be worked. I would advocate very strongly for that because I think it gets us away from the arguments being made by members on the other side that the solution to high costs of energy is somehow related to taxes.
Members on the other side know only too well, as my colleagues here from New Brunswick know, that when the provincial government of New Brunswick in 1992 gave back two cents a litre to consumers, delivered through the oil companies, the public never saw the savings. The hon. member for Peterborough knows this very well and has said it very eloquently to a lot of his constituents.
Consumers felt that the government was heading in the right direction by dropping taxes, for whatever reason, and it was one of the more difficult environments in which to do it, but the public never saw the savings. This was reason the Liberal committee on gasoline pricing recommended that if we were to take the tax off taxes on gasoline, we must ensure that the resulting savings go to Canadians, not to the bottom line of oil companies.
That was true then and we have evidence of it having occurred in real terms in Canada. It is one of the reasons that, yes, even the right wing government of Mike Harris in the province of Ontario agrees with the findings of the committee. It is one of the reasons they have done nothing with their 14.7 cents a litre.
I also take the liberty at this time to explain and remind members of the House of Commons that when it comes to diesel, the fuel that keeps our trucks going to and fro, the federal government takes a mere four cents a litre, not 14.7 cents, not 22 cents and not 25 cents. We recognize the importance of that industry.
As my hon. colleague from Peterborough explained, which I did not know, when a farmer or a construction company buys coloured fuel no taxes are paid from the federal point of view, period. There may GST on it but that is quickly remitted.
The federal government, as it relates to taxes, is on very strong ground. I believe that some day there will be the ability for us to afford a tax cut in that area, but consumers are not fooled. Only six months ago crude oil was at $38 a barrel and the price at the pump was 77 cents in Ontario. It is now down to $26 a barrel for crude and the price has gone up to 80 cents a litre and rising.
No matter how many analysts or how much of the public's money is being used to bamboozle the public about how gas pricing occurs, the public is not fooled by these rather shameful tactics to use their money to make them feel like complete idiots when it comes to how pricing occurs.
I would not be so passionate about the question of energy or gasoline if I did not think it was a problem that existed elsewhere in other industries. I have talked to other colleagues about this before. I believe we have some problems with respect to concentration. If the oil industry can get away with this, then I am sure there are other industries that can do the same.
I want to finally end by simply saying that I call upon all colleagues and members of parliament on both sides. I am certainly interested in hearing their questions. Believe it or not, I had no intention to stand and talk on this bill but it begins the process of coming to grips with the changes around us.
If we do not begin to understand the market structure to which we are making changes, we will have done a disservice to the public. We will have failed in our mission to create good public policy. I plan to work with the government. It is a good bill but let us do it in a manner considerate to the context in which Canada currently finds itself with high energy prices.