Madam Speaker, I thank all parties for allowing us to split our time today as it is a very important debate.
There are some good things in Bill C-66 which the New Democratic Party supports, especially the introduction of some of the interventions in fuel efficiency and economies for our homes to help us kick our dependency on oil. We support that. However, there are some weaknesses which we will touch upon, but it is a step forward.
The great disappointment the New Democrats is this will do nothing to address the systemic problem of dependency, speculation and fluctuations in the oil and gas industry which impact on the Canadian economy, consumers and our sovereignty.
Energy pricing is something that affects every industry as well as almost every consumer. With the wild fluctuations that can take place, it literally can drive people out of business. It also can cause people to make choices in buying prescription drugs to treat their health, or paying the rent, or buying food or getting their kids to and from school.
Canadians face these significant problems. When there are wild fluctuations and prices go up, there is often little time in between to deal with it and budget for it. Too many Canadians now are dealing with issues related to home income costs and being unable to afford the things that are necessary for them to prosper. The bill does not address that issue.
I want to touch briefly on what is happening with the industry in general. First, heating oil prices have risen by a third over the last year and natural gas prices have nearly doubled. World production of oil and gas continues to meet world demand, but three apparent physical factors are the main contributors to the problems that we are facing today.
First, we have a growing demand from industrialized countries like China and India, as well as a growing demand from North America. Because of NAFTA, our market is integrated with the United States. As well, the massive industrialization of China and India is usurping resources not only in the oil and gas industry, but also in other industries, for example, steel, where it will have a significant impact upon Canadian companies as well as on our ability to compete.
Some of those countries, and I point to China in particular, subsidize those industries and have lower working and environmental standards that allow them to compete at a lower wage. This is affecting Canadian jobs.
Second, we have increasing prices and demand. OPEC countries are uncertain about their reserves and ability to increase production for the long term. The statements that came out of OPEC after Katrina identified that it could do little to keep oil prices down any more because refining capacity was so restricted. Although it pulled more barrels of oil out of the ground, it had little opportunity to move that into refining to keep the price down. That is very important to note.
During our hearings in the industry committee, we heard testimony from the industry as well as outside industry which identified that Canada's refining capacity was at 95% to 97%. At the same time a company like Petro-Canada was closing the Oakville refining. It decided not to invest in the improvements and upgrades of that facility or to build a pipeline to Montreal to increase refining capacity. The end result was it lost half of its refining capacity. Now we will be importing oil from another company to offset that lost refining capacity. That vertical integration is very critical on the market.
Last, another threat to future supplies and increased demands is related to the political uncertainty in certain countries where exploration has taken place. There is the potential of tapping into those markets because of the environment and political instability. We witnessed the retreating of plans to expand or to get into those markets. For example, Petro-Canada had to leave an opportunity behind most recently.
The industry committee convened a meeting over the telephone because of the price spikes related to Katrina and the effect upon Canadian consumers and society. There has not been enough talk about the industry, its profits and what happened during that time period.
Recently, the Canadian Centre for Policy Alternatives released an independent study on gas pricing entitled “What's Behind High Gas Prices”. The study proves that Canada's oil and gas industry has reported record profits of $16 billion in the last year alone, according to Nickle's Energy Group.
Michael Ervin, a leading industry insider and consultant himself, described the industry's recent profit margins as spectacular.This would not have been so bad if it were not for the expense for Canadian consumers or if it were down to simple market forces, as had been advocated by the industry. However, it is not. There is clear evidence of price gouging by the Canadian oil and gas industry, particularly during the period of the recent U.S. hurricanes.
Continuing with that study, it was able to conclude that the price of crude oil rose by $10 U.S. per barrel between June and September. If the industry had kept its other expenses constant, that should have led to an increase at the pump of just 70.9¢ per litre. Instead, the average increase was 15¢, with some communities paying significantly more. Over Labour Day weekend, the average increase was 40¢ on the June price alone. According to a report from the CCPA, the price of Canadian gas should never have gone above $1 per litre.
The gas industry was engaged in clear gouging, taking advantage of public fears over Hurricanes Katrina and Rita. For every penny per litre the gas rises, the industry takes an additional $1.1 million per day. This means that the point of peak gouging, when the difference between a justified crude oil increase and pump price was as much as 45¢, the industry was raking in $15 million of excess profit every day.
Regarding the industry and its refining capacity, the evidence presented by experts at committee was that the profit zone was spectacular. That came from its own advocates.
We need to talk a bit about what is happening with the industry and what it is getting from the Canadian citizen. The Auditor General did a report and analysis of the industry. She found that the fuel sector received more than $40 billion in federal subsidies over the last 30 years. What we have is record profits at the pump, record prices at the pump and the industry continues to get massive subsidies from the Canadian government. This is incredible. Canadians would be shocked.
The Pembina Institute recently stated the industry had $1.4 billion annually in grants and subsidies. It is based on lowering the cost to producers, not to consumers. The industry gets tax deductions in terms of forgoing tax revenue, due to industry specific tax concessions.
It also is important to note that the industry will receive a general corporate tax reduction under the government. There has to be a sense of balance in this. That is not happening in terms of the debate. We will see, with this legislation, that some Canadians will benefit to a certain degree by a few hundred dollars. They will be able to put that money toward the increased cost that they have incurred and will incur in the future related to the price of gasoline and natural gas for heating their homes.
That money will be shifted over to the industry. There is nothing in the legislation that does anything to have a significant overview as well as accountability that will ensure the gouging does not continue. At the same time we will have a settling of prices.
I understand and appreciate the fact that we are moving to more sustainable practices, but that has been done out of crisis. Once again the bill, which will be administered over five years, looks to address some of those concerns, but it is not aggressive enough.
I would point to the auto sector. I represent a significant auto sector strategy. We are trying to work toward getting more energy efficient vehicles on the road, while at the same time creating Canadian jobs. The government has yet to come forward with a national auto policy on that. We should have incentives on the front end and at the same time ensure that the technology is based in our country. This will help to create jobs. We will have cleaner, more efficient vehicles on the road that produce less pollution. More important, it will take our dependency off a system that creates far too much vulnerability for ordinary citizens and does not have a great accountability in terms of the environment and where are country will go.