Debates of Sept. 26th, 2005

Gasoline Prices

[Guy André, Bloc, Berthier—Maskinongé, QC]

Mr. Speaker, I would like to ask the hon. member who just spoke a question.

In my riding, farmers have been affected by the mad cow crisis and are now being affected by the oil crisis. Seasonal workers and various workers in rural areas who have to travel to large urban centres are also affected by the oil crisis. Forestry companies in my riding are also affected by this crisis.

We have before us a government that seems not to have any action plan to help all these people affected by the oil crisis. The Bloc Québécois has proposed a plan, but the government tells us that it cannot do anything about this oil crisis and the increase in the price of gas.

I want to ask the Conservative member what he thinks of this government before us with no action plan to face the current crisis that is plaguing our society.

[Randy White, Conservative, Abbotsford, BC]

Mr. Speaker, it does not surprise me that there is no action plan. There was no action plan on softwood lumber. There is no national drug strategy, which I deal with. There are no plans. This is management by crisis.

We are now in a crisis. I dare say that a lot of us in this House have farmers in our areas. I come from a very intensive farming area. I come from an area in which people must commute from Abbotsford in the Fraser Valley to parts west. They are asking the very same thing that my colleague is asking: what is the plan? That is what is in several of the questions I have been asking: what is the plan? The plan cannot be motivated to have gas price increases because “I get more money”. That is not an economic theory that matches with any form of government. I disagree.

My colleague is right: there is no plan. That is what is concerning the nation. That is why we are here tonight debating.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I was interested by a question from one of the member's colleagues, a Conservative member, who said, if I remember correctly, that taxes comprise 42% of the price of gasoline. I believe that is incorrect. I just did a little work on it. Maybe the member could comment. If we have a $1 commodity price and add the 10¢ federal excise and the roughly 15¢ provincial excise, that gives us $1.25. If we add the GST, which is another 8.75, we get $1.33 at the pumps.

[An hon. member]

And the royalty tax--

[Paul Szabo, Liberal, Mississauga South, ON]

Hang on. The 10¢ excise plus the 8.75% GST is 18.75. Let us even say it is 20¢. It is still only about 15%--

[An hon. member]

You're forgetting a bunch of taxes.

[Paul Szabo, Liberal, Mississauga South, ON]

--and that is provincial. It is. The provincial excise is also fixed per litre. We can play with the mathematics, but maybe--

[An hon. member]

This is your own department.

[Paul Szabo, Liberal, Mississauga South, ON]

No, they are playing with numbers.

Here is what I think the issue really is. Maybe the member would like to comment. We know that we cannot say to Alberta that it really has to take a hit, that it cannot follow world prices.

[An hon. member]

You did it before.

[Paul Szabo, Liberal, Mississauga South, ON]

Obviously that is not going to fly. Alberta is in business as well. I would just ask the member if he would simply state what he believes to be the position of Alberta in terms of being an oil producer in the scheme of the establishment of the world price of oil, and whether or not there is any possibility that it would charge on a per barrel basis based on its costs rather than on the world commodity price.

[Randy White, Conservative, Abbotsford, BC]

This is interesting, Mr. Speaker, is it not? This is not Alberta's problem. This is government's problem. Let us not get tied up in here with a member standing up and saying it is x per cent or this or that per cent.

I would be willing and more than happy to table in the House an actual gas station invoice, which I have here. In fact, the actual percentage that government gets is around 39%, so let us not argue with the numbers. If the member wants the bills, he can have them, but that is not the issue here.

We cannot look at this from the Liberal government point of view and say that this is Alberta's problem. This is about an economic theory, to my mind, whereby governments should not place themselves in a position to make a profit off industry profit. That is not government's role. We can look at any economic theory and see that this is not the role of government. The motivation here is for the government to turn its back when the consumer's price goes up because that way it makes money. That is wrong.

I hope we do not let the debate deteriorate by saying, “Let me see your numbers. Let me see your small percentage of who gets what”. The fact is that the government has placed itself in a position where it makes a profit off people who are dealing with monopolies. I think the government should get back to being a little more accountable on the issue and should not blame one province or another.

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Mr. Speaker, I am pleased to rise tonight to discuss gasoline prices, the rapid increase in fuel prices and costs and the effects on Canadians. It certainly has spiked in recent weeks and it has caused a very direct effect on many industries and certainly all consumers in the country of all fuel products.

Some industries have been very directly affected. The trucking industry has been mentioned. It is very directly related to fuel costs. The airline industry which in recent months had shown some signs of real growth and profit potential has really been hit by these high fuel costs. Obviously people in the agriculture industry who are now trying to cultivate the fields are really feeling the impact of these high fuel costs.

That is essentially why we are having this debate tonight, not to mention all consumers who use these products. Right now the big focus is on those who drive vehicles and fill up at the pumps. I think an even bigger problem is looming for consumers, particularly those on fixed incomes, who will be using home heating fuels this winter and not only the increase in gasoline prices at the retail level but the increase in the price of natural gas, something which has not been mentioned here tonight. That is going to have a real impact for people on home heating fuels.

I would like to provide some background on what actually goes into the price of gasoline. There are four main components that we have to keep in mind.

The first is the price of crude oil. It is determined globally. The Minister of Industry said that Canadians produce about 3%. We are price takers. We cannot directly control the price of crude oil. We have to take that price. The main factors are things like OPEC. Obviously political events have a dramatic effect. The demand caused by emerging economies such as China, Brazil and India are an influence as well.

The second component is the wholesale price, which is commonly referred to as the rack price, which is charged to gasoline marketers by refiners. This is on a North American basis. It explains partly some of the regional diversions in gasoline prices. Gasoline at the wholesale level is very much on the North American market, which is why if we exclude taxes, gasoline prices in the New England area, the Atlantic area or eastern Canada, or gasoline prices in western Canada if we exclude taxes are often very similar.

The third component is the retail margin which is the local gas stations where we fill up. This tends to be very competitive. The level of competition tends to determine how low prices are relative to other regional markets.

It is very complex to go from oil out of the ground to the refined product at the pump. There are many influencing factors.

There have been some calls for government to control these markets. In my view we should not control the markets in terms of these three levels. We should allow them to operate as freely as possible. If government were to try to intervene at the crude level, the wholesale level or at the retail level, in my view it would actually lead to distortions which would cause the price to increase.

As my colleague the member for Vancouver Island North pointed out, people who build a large refinery need a lot of investor confidence. They need some stability. They need to know that they are going reap some investment from that in order to build the increased refining capacity in North America. We are not advocating government intervention in these areas.

I also point out to those people who want to regulate gasoline prices in Canada that it can be done but it is done at the provincial level. It is not a mandate of the federal government to regulate gasoline prices. That responsibility lies with the provinces. I would not recommend a province follow that route, but if members of the House want gasoline prices to be regulated, then they should pressure their provincial governments to do so.

The fourth component is taxes. From the information presented to us from the Department of Natural Resources, we find about 39% of the total cost of the price of gasoline is taxes. It is not just federal taxes. It is provincial taxes and in fact includes some municipal taxes. That is a very large component in the price of gasoline.

To provide some background, from a federal point of view there are three types of taxes that are imposed. Royalty taxes are imposed at the extraction stage and enter the manufacturer's total cost or base price before profit margins and other taxes. There are the excise taxes, the federal government's 10¢ per litre excise tax on gasoline and 4¢ per litre excise tax on diesel fuel. Excise taxes generate about $5 billion to $6 billion each year for the government.

There are also the sales taxes which are the variable taxes, the GST and the HST. They are different from the excise tax. This is important and it is why our party is calling for some relief in terms of the GST applied at the pump. The amount of GST or HST is calculated as a percentage and therefore rises or falls with every increase or decrease in price and other taxes. Those sales tax rates may not change, in other words 7% is applied, but the amount collected does change. That is what our leader was trying to explain to the government during question period. As the price goes up, the amount collected from the GST goes up and the government coffers benefit. Our view is that the benefit should flow to the consumers, not to the incumbent government.

The only way to provide immediate relief to consumers is therefore to reduce taxes. That is why we have called on the government for months now to apply some relief, to stop charging the GST and other taxes, to axe the tax on tax, and to even consider perhaps that if the rate reaches such a level, to stop applying the GST on taxes as a whole.

I would also like to comment on some of the things that the new Minister of Natural Resources commented upon, and the Minister of Industry did as well. That is the whole issue of refining capacity.

In order to develop more refining capacity in this country we would need to have an energy policy framework whereby people in the energy sector would have some sort of an idea as to what the government's policy is on energy. I would say respectfully that the government has no energy framework policy. In fact a lot people in the energy sector, and there is a good group that has been formed, the energy dialogue group, with members from the oil and gas, the wind and solar and the electricity sectors, would state that the federal government has shown an absolute lack of leadership on this entire issue.

If one wants to create more refining capacity in this country or in the United States, one will need some sort of framework to provide to these associations. It is interesting. It is not just the oil and gas sector. It is the wind sector and the solar sector that are saying this about the government.

The Minister of Natural Resources was talking about the fact that he drives a hybrid vehicle and he was outlining all the programs that the government has done. One of the things the government could have done from a very practical basis is to do what many states have done, and what the federal government in the United States has done, and that is to provide a tax credit for those people who purchase a hybrid or a clean diesel vehicle. It would lower the amount that they pay for a hybrid vehicle, which is typically about $6,000 more per vehicle. It would lower that amount. It would still be a little more expensive than a standard vehicle but over time it would hopefully pay off if they drove it over a seven or ten year period.

In terms of providing more information and transparency, for which members of the Bloc Québécois and members of our party have called for years, we are fully supportive of that and we endorsed it in a 2003 industry committee report. We would encourage the industry to do that, but if the Department of Natural Resources feels that it needs to provide more information, that Canadians be more transparent, we would obviously be supportive of that. The one thing the government could do on a very immediate basis to provide some relief to consumers and to industries is to take some action and stop collecting so much tax at the pump. That is what it could do immediately. That is what it should do. That is what a Conservative government would do if it were in power in this country.

[Larry Bagnell, Liberal, Parliamentary Secretary to the Minister of Natural Resources]

Mr. Speaker, from my perspective the big problem is heating fuel for low income people as someone mentioned earlier tonight. Should prices persist, and it is not certain that they will, then that has to be dealt with. The only alternative offered by the Conservative Party is over-simplified and is not going to help those people in a big way.

Those members give the impression that there is a large windfall from taxes for the federal government but there is no proof that there is. The excise tax is 10% per litre and that does not go up at all when the prices go up. The 7% GST is, as those members have said, a tax on a tax and that does go up when the price goes up.

There are mitigating factors that also cause the government to lose money. First of all it has to pay more for things that are indexed to inflation caused by these increases such as the GST rebate, old age security, et cetera. The government loses money in that respect. It also loses money when prices go up because people purchase less fuel. This is certainly not a windfall for the government and it may even lose money because of the total increase in price.

There have been several experiments with decreasing taxes, at least one in Canada and a couple in the United States, just as the Conservatives are proposing, but the decrease did not get passed on to the consumer. In Indiana and Illinois after a six month trial period it cost the government millions of dollars. That money could have been put into some other solution to help low income people. In one state the consumer ended up gaining only an amount equal to one tank of gas. In the other state the consumer ended up gaining an amount equal to half a tank of gas.

It sounds good on the surface but it has been proven that a large percentage of the good intention of decreasing taxes does not get passed on to the consumer, and from my perspective, to the low income people who are the ones who really need it.

I would like to know if the member's party has any other suggestions over and above the tax one to deal with this situation especially with respect to home heating fuel for low income people?

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Mr. Speaker, I strongly disagree with the member opposite that this would not have an impact. There would be an immediate impact. It would be an action way beyond any of the words offered by any of the members opposite tonight.

The member said that the government does not benefit that much but it has had a windfall of over $300 million. I do not see how that is not much of a benefit to the government.

I will take no lectures from any member opposite about seniors, especially after the last budget in which the government's increase to seniors will result in about $30 per senior by 2007. That is an absolutely shameful way to treat seniors in this country. I do not think we in this party need any lecture from the government on that.

We have offered other initiatives. Before the last election we talked about things to improve energy efficiency in Canada, like reducing the capital depreciation tax on manufacturers across this country as part of an overall energy framework. We talked about addressing things like the over-utilization of things like natural gas, which is causing home heating fuels to increase. People in this sector have been calling for some leadership from the government for years now and have not been getting any. This would lower the cost of these products over time and provide more stability. There are things like what the provincial Liberals in Ontario are doing in terms of deciding one day they may shut down all the coal fired plants, ignoring the good work done in clean coal technology in provinces like Alberta. It is just contributing to the instability and the overall increase in these prices.

The immediate thing the government could do would be to stop applying the GST to the excise tax and give back the $300 million windfall to Canadians. It is going to be reaping more of a benefit in the future. The government could look at things like a tax credit for hybrid vehicles. It could look at affecting capital depreciation rates. It could also look at an overall energy policy framework that would provide more stability to consumers and industries across this country.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, I am pleased to have a chance to be a part of this very important debate on the first night of the start of our fall session.

It is top of mind for many Canadians. It is a matter of considerable urgency and it is a matter of profound public interest. I want to commend the members of the Bloc who initiated the debate tonight and thank everyone for their participation.

Having listened to some of the government members, I have a hard time believing that they take this all that seriously. As a member of Parliament, I have a hard time believing that members on the government benches really know how much this impacts the lives of ordinary Canadians. We are not talking about some intellectual topic. We are not talking about some airy-fairy matter that does not impact the lives of people. We are talking about something that has a profound impact on the lives of Canadians and on their ability to meet the needs of their families and to continue to provide for themselves and their loved ones.

The increase in gas and oil prices over the last while is hurting Canadians. It is particularly hurting those who are the most vulnerable: low income Canadians, small businesses, truck drivers, rural postal carriers, people who depend on a vehicle for their livelihood. They are susceptible and vulnerable to the price of gas and they are put in an ever increasingly difficult position of making ends meet because of the increase in the price of oil and gas.

We are all feeling the impact. We are all hearing from constituents everywhere about the seriousness of this issue. I want to refer to one that I just received a couple of days ago from a constituent, Nancy Ursuliak, who writes:

As one of your constituents, I want to let you know that I am furious at the blatant profiteering that is driving the cost of gas and oil sky-high, and at the inaction of the Liberal government to rein in the greedy. I shudder to think of the plight of low- and fixed-income citizens as they try to keep warm this winter, of the elderly in areas where there is no efficient and affordable public transit as they try to get to medical appointments or simply do their shopping.

There are many others who are writing and asking us to take note and to take action. I have a hard time tonight hearing what plans the government has to meet the needs of those Canadians.

We have before us some suggestions from the Conservative opposition to reduce gas tax. We have recommendations from the members of the Bloc to look at a more meaningful rebate system. The bottom line is that there must be some relief for Canadians and there must be long term plans on the part of the government to deal with issues of transparency, accountability and sustainability.

We on this side of the House may not have leapt on board the Conservatives' call for the lowering of the gas tax. In fact, we are not sure that gets to the root of the problem, but we certainly are in favour of some relief for Canadians. We certainly want to see a rebate program that reaches out and meets the needs of Canadians who are most in need.

We all remember the last attempt by the Liberal government to provide such a rebate and its dismal failure because it did not take into account the full dimensions of the Canadian public. It did not fully address the needs of all Canadians. Particularly I recall the failure of the government to include students in its rebate program. Needless to say, it was not a satisfactory response to the crisis at the time. What we need now is a comprehensive approach to the concerns of Canadians.

Our first priority must be the pressures that Canadians are feeling right now, those who are suffering and trying to make ends meet. Our second priority must be accountability of the oil and gas corporations to the Canadian public and to this Parliament.

If one listened to the debate tonight, one would almost get the feeling, at least from the Conservatives and the Liberals, that the oil and gas companies have nothing to do with this, that in fact the huge increase in the price of gas at the pumps and the expected increase in terms of home heating fuel has nothing to do with the record profits of the oil and gas companies.

It is as if we can ignore the tripling of profits of oil and gas companies since Katrina. It is as if we can ignore the fact that gas and oil profits have leaped $12 billion a year since 2002. It is as if we can ignore that the estimated total profits for the oil and gas sector is approximately $52 billion. It is as if we can ignore the words of the Canadian Independent Petroleum Marketers Association that appeared before the industry committee this week. It pointed out in very clear terms to the parliamentarians on that committee that it was the way in which the industry was organized and the way in which profits were accumulated that had the most direct bearing on the situation facing Canadians today.

I want to quote from the brief presented to the industry committee last week by a representative of the Canadian Independent Petroleum Marketers Association, who said:

What are the causes of high gasoline prices? The crux of the problem is as follows. The global demand for oil is growing at an unprecedented rate. A very limited number of vertically integrated oil companies exercise total control over all aspects of the petroleum industry from the production of crude oil, to refining, to distributing, to wholesaling, and even to retailing the refined products to the final consumers.

This individual goes on to state:

What we are now faced with is an escalating problem that is affecting the global economy to such an extent that there is an urgent need to address the issues I have outlined.

The representative of the association goes on to suggest that we cannot ignore the way in which crude oil is increasing on a world basis. We cannot ignore the fact that we are reaching peak oil. This is something the government has failed to address.

This brings me to my second concern and that is efficiency. Unless we accept the fact that we are reaching peak oil in the country, unless we understand that we are approaching the end of availability of oil and gas resources in the country, we will be unable to grapple with the situation today of energy prices out of reach of consumers.

If there is one issue that the government has talked a lot about and failed to act on, it is the green car strategies with respect to Kyoto protocol and fuel efficiency. There has been a lot of talk, a lot of rhetoric, but no action.

Without a concerted plan to reduce our reliance on oil and gas resources and without a determined effort to switch to alternative sources of energy and to alternative transportation systems, there is no way in the world we can avoid the crisis that is looming. I refer again to a constituent who wrote to me only a couple of months ago. David MacVicar said:

As you may or may not know, we are near the global oil production peak...It also looks like North America has peaked in natural gas production as well. Both of these production peaks have enormous implications for Canada and the world. It will be a test to our way of life....

Our federal Liberal government has done nothing to address this issue. In fact, they have made the situation worse during their time in government. What we need is a government that isn't scared to stand up and say that Canada's economy cannot continue to grow and recommend other countries do the same.

Those words point all of us in a direction that must be considered tonight. How do we move to greater efficiency in this whole area? How do we ensure that we are ready for peak oil? How do we ensure that we have put in place a plan for long term sustainability?

Unless we deal with the impact on consumers today of oil and gas prices that are going through the roof, unless we deal with gouging by large oil and gas companies, unless we deal with the kind of profiteering that is going on, unless we deal with the need for alternative energy sources and mandatory fuel efficiencies, unless we deal with accountability by oil corporations to the government and to the people of Canada, we will be unable to achieve what all of us want, and that is for Canadians to pursue a decent quality of life—

[The Acting Speaker (Mr. Marcel Proulx)]

I want to confirm that the hon. member intends to split her time.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, I apologize. I got so carried away speaking I forgot to tell you that will be splitting my time with the member for New Westminster—Coquitlam.

[The Acting Speaker (Mr. Marcel Proulx)]

Questions and comments, the hon. member for Vegreville—Wainwright.

[Leon Benoit, Conservative, Vegreville—Wainwright, AB]

Mr. Speaker. Persistence pays. There are two things that are very clear as a result of tonight's debate. First, both the revenue minister and the industry minister have indicated clearly that they are pretty happy with the high fuel prices and that they have no problem with that.

Furthermore, under access to information about a year ago, the Conservative Party found a document, which I believe has now been put on the Department of the Environment web page, in which the government said it would like to see gasoline prices up around $1.40 a litre. It is very close to that. From what the ministers said tonight and from what was in the document that the Conservative Party received under access to information, and we have talked about this in the past, the government likes the high gasoline prices.

The second thing is the government likes tax and high tax. It has refused to do the one thing it really can do, which is to reduce the tax component of fuel. That is very clear from not only tonight's debate, but from the action from the government over the past months and years.

What I found in my constituency—

[An hon. member]

What is the question to the member?

[Leon Benoit, Conservative, Vegreville—Wainwright, AB]

A lot of people from central Canada, like the Liberal member hollering over there—

[Walt Lastewka, Liberal, St. Catharines, ON]

Mr. Speaker, I rise on a point of order. I thought the member from the NDP spoke and there were supposed to be some questions for that member.

[The Acting Speaker (Mr. Marcel Proulx)]

May I remind the hon. member that this period is questions and comments. I would ask the hon. member for Vegreville—Wainwright to please continue.

[Leon Benoit, Conservative, Vegreville—Wainwright, AB]

Mr. Speaker, I can understand the member from the government side being upset with what I have said. It is the truth and it hurts, and he knows that.

What I have heard from central Canada, like from that member's part of the country, is that Alberta is filthy rich. Other comments are that the federal government is doing such a good job because it has surpluses. Both have some problems, the first with Alberta being so rich.

My constituency office has received calls from constituents who do not know how they will pay their heating bill this winter. Their incomes are fixed and pensions have not been indexed to meet the increase in fuel costs. Therefore, they are going to have severe problems.

Could the member comment on those people on fixed incomes, probably about a third of my constituents, and how they will pay these high heating costs this winter?