Debates of Sept. 26th, 2005

Gasoline Prices

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

Mr. Speaker, Canadians are calling us and writing to us each and every day about how can they keep up with this ever escalating price of oil and gas.

As I said in the debate, I do not agree necessarily with the Conservative approach of simply cutting the tax on gas. That is an approach that leaves the real culprits off the hook. That does not get at the fundamental issue, which is the profitability or the price gouging of these oil and gas companies. They have such a monopoly over the situation that they can basically charge the price they want.

It is not an easy matter to address. However, the government can be more proactive in regulating the industry. We may be unable to control the weather that leads to certain market conditions, but we can control the industry from dumping these markets spikes onto the laps of consumers. We can protect the consumer from these huge spikes in the prices at the pumps.

Our goal has to be to eliminate the potential for market manipulation, to drive down consumption of oil and gas which would moderate price volatility and reduce pollution. That is the challenge for all of us.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Speaker, I would like to thank my colleague from Winnipeg North for giving me the opportunity to share this time with her.

As we are all aware, gas prices are an issue of extreme importance right across the country. In Burnaby—New Westminster it is equally an issue of extreme importance.

With the approach of winter we will be seeing the consequences of this sharp and sudden spike in gas prices, much of this taking place with old stock. After hurricane Katrina we saw a rapid spike upward that has meant consequences, particularly for low income Canadians, that we have to be very conscious of.

I heard a program on the radio the other day advising seniors on the best methods for making that desperate choice between eating or heating. I find it deplorable that in a country as wealthy as Canada we are asking lower income Canadians, Canadians who have suffered the most from the stagnation of the past 15 years, to actually choose between buying groceries or going to the food bank at the end of the month or heating their homes or apartments.

We are also talking about the fundamental impact on those who must drive as part of making their living. This sudden spike in gas prices is having an impact on truckers, taxi drivers and rural route postal workers.

Over the past 15 years 80% of Canadian families have seen a reduction in income in real terms. We are talking about a desperate situation that is being made much worse.

What is the solution? The NDP, as my colleague from Winnipeg North has pointed out, has put forward a very sensible three point plan to address these issues immediately. We cannot afford to wait. The first and primary point in this three point plan is the issue of accountability in pricing. We have believed and have been pushing for many years in Parliament to have a watchdog over the type of price manipulation and profiteering that we have seen most recently.

I heard who attended the industry committee hearings last week. A consultant in the oil and gas industry said to committee members that the profit margins for refining had been spectacular over the past few weeks. When we say spectacular in the hands of the oil companies we know what impact that has been for Canadians across the country, in particular low income Canadians.

We have seen record profits. I will mention just a few of them for the record because it is important. Exxon's worldwide profits increased by 32% in the second quarter of this year, up to $7.64 billion; Royal Dutch/Shell profits are up to $3.9 billion; Esso profits are up to $539 million; Shell Canada profits are now up over half a billion dollars.

At the same time as we have seen these record profits in the oil and gas industry, and we are not talking about the mom and pop shops that existed across the country, in refining with the big oil we are seeing record levels of profit and we have seen the Liberal government pushing down the corporate income tax rates for the oil and gas sector. It was 28% in the year 2000 and it will be down to 21% in 2007.

At the same time as we are seeing record profits in the oil and gas sector and we are seeing huge price increases for heating oil and for gas, it is important to note the extensive subsidies that come out of the taxpayer's pocket.

Pembina Institute produced a report on government spending on Canada's oil and gas industry. What the Pembina Institute concluded was that the Government of Canada provided the oil and gas industry with $1.446 billion in subsidies in 2002. I am quoting from the report summary.

The increase in subsidies between 1996 and 2000 was 33%. Total expenditures between 1996 and 2002 inclusive were equal to $8.3 billion. The federal government expenditure on oil sands alone was estimated to be over $1.1 billion.

We are talking about a heavily subsidized industry with corporate tax rates that are actually declining and corporate profits that are at a record rate and yet there is no accountability for pricing. It is unbelievable that while Canadians are facing these sharp price increases it has only been the NDP calling for a watchdog on the industry. Only the NDP has said that there must be accountability in pricing. Only the NDP is standing up for consumers and saying no to the oil and gas companies. We are the ones telling them that they cannot gouge the public and that we will stand up and fight for Canadians from coast to coast to coast. That is the first point in the three point plan.

The second point is greater energy efficiency. We saw this last spring when 19 NDP caucus members forced through major changes to the finance minister's budget. As a result of that, $900 million will be going to rapid transit and energy efficiency. We would like to expand that program. We also called for mandatory fuel efficiency. We are the only party in the House to actually call for mandatory fuel efficiency. The Liberals and Conservatives were opposed. Mandatory fuel efficiency helps Canadians.

The third point, equally important to others, is cost relief for the most vulnerable Canadians in Canada. We are pushing for rebates through the tax system so we can help those Canadians who are facing the choice this winter between eating and heating.

Those are the three key points that we have put forward in the public and which we are now putting forward in the House to deal with what is an emergency. This evening's debate is an emergency debate and it is an emergency for low income Canadians, for seniors on fixed incomes, for single parent families and for Canadians who are already suffering from the loss of real income that has taken place over the last 15 years. This is no small issue. This is an emergency which is why we have called for a watchdog agency and for increased energy efficiency. We need to protect the most vulnerable members of our society.

In getting back to the issue of the watchdog, I should mention the petroleum monitoring agency that would monitor prices to avoid the kind of sharp increase in price that we saw on old stock that was produced at the lower prices but was charged at the higher prices. While we have been calling for this, the industry committee in 2003 actually agreed with the idea of having a watchdog agency and the NDP pushed that issue forward. Members of the Alliance Party at that time, now the Conservative Party, were fundamentally opposed to any overseeing of Canadians' interests through a petroleum monitoring agency. Members of the Liberal Party said that they were in favour of this but, as we can see two years later, the issue is much worse and nothing has been done. For two years now we have continued to call for that watchdog which is of fundamental importance in protecting Canadians' interests.

We also have been raising the issue of proportionality. We know through NAFTA and the dispute settlement mechanism that was ripped up by President Bush just a few weeks ago that what Canada gave away in those negotiations was proportionality on our energy. If we reduce supply, even in the event of a national emergency, we are now forced to reduce domestic supply proportionate to the exports that we may reduce. Other countries have a dual pricing regime in place. Countries like Saudi Arabia have a dual pricing regime in place. We do not have dual pricing to benefit Canadians. We have a proportionality where we continue to export most of our energy to the United States, even in a situation where to all intents and purposes the dispute settlement mechanism and the signature for NAFTA have been ripped up and the signature that the United States applied to NAFTA has basically been disabused.

Those are our solutions in our three point plan. We are hoping through the debate this evening that other members of the House will take note of our three point plan to help Canadians deal with this emergency so that we can start helping Canadians through this winter and help them cope with these high gas prices.

[Larry Miller, Conservative, Grey—Bruce—Owen Sound, ON]

Mr. Speaker, it is good to be back in Ottawa working for my constituents in the riding of Bruce—Grey—Owen Sound.

Last Wednesday I along with the people in my riding watched prices go from an average of about $1.049 up to as high as $1.72 in about 12 hours and in less than 24 hours later it was back down to a range of 98¢ to $1.02 per litre, where it sits today. The fluctuation was in the range of somewhere near 70¢ per litre.

Would my colleague from British Columbia not call that price gouging in the worst possible way? It is the same thing when we come up with some suggestions about tax cutting. On the one hand my colleague over there seems to indicate that he would like to see something happen to help Canadians but when it comes to any tax cuts the government over there says that it cannot do that and that it will not even consider it. Those were the exact words, I believe, because the oil companies are just going to eat that all up.

Does my colleague not think that indicates that there is something seriously wrong within the industry? We talked about price gouging and I am going to ask the question. Our colleague talked about the NDP. It was gouging us back here for $4.6 billion in the spring. What kind of review or framework policy changes does my colleague think need to happen within the gas and oil industry to actually help the consumer and businessmen across the country?

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Speaker, I actually agree with the two points my colleague from the Conservative Party made. He said that there was something seriously wrong in the industry and I agree. That is why we have been calling for a watchdog, a petroleum prices review board, a monitoring agency to ensure that this kind of price gouging and profiteering in the industry is held in check. That is government responsibility. We have to have balance in the sector. We cannot simply have the law of the jungle where large oil companies are extremely profitable. They have had record profits because they are able to do whatever they want to manipulate pricing.

Those who set public policy have to be responsible and tell Canadians that these things will be monitored through a watchdog agency. Since he made the comment that there is something seriously wrong in the industry, I would hope he would agree with us and our caucus and push forward the idea of a watchdog. We have been pushing it for a couple of years. I hope this is the time where the rest of the House will listen and agree with that point.

I also agree with his second point that the Liberal government has done nothing to address the issue. It is just one of a whole series of issues where the Liberals have done nothing.

On the softwood lumber issue, which is near and dear to my heart because the British Columbia industry is bleeding $4 million a day in punitive tariffs, we have seen nothing but empty words and posturing from the government rather than taking the kinds of measures that should be taken. I agree with his two points and I hope he will join me and my colleagues in pushing for the watchdog, the petroleum prices monitoring agency, so this kind of thing cannot happen to Canadians again.

[Mario Laframboise, Bloc, Argenteuil—Mirabel, QC]

Mr. Speaker, I would first like to go back to the monitoring agency. My question to the member for Burnaby—New Westminster is this. The Bloc Québécois proposed the motion to create this monitoring agency at the Standing Committee on Industry, Natural Resources, Science and Technology in February 2003. In November 2003, a committee report recommended the creation of this agency. This has still not been done and it is worrisome.

Why? Because the first week of September, the net profit of oil refiners was 45¢ a litre, when we know that, at 7¢ a litre, they are making a reasonable profit. Consequently, since 2003, that is from 2004 to 2005, oil companies have increased their profits by $1.5 billion a year. We expect that $2 billion extra will be added to their profits, which were at $7 billion in 2003 and which will exceed $10 billion in 2006.

Here is the question we are asking ourselves. Why is the government maintaining its position and refusing to create this agency that would put money back directly into the pockets of taxpayers instead of into the pockets of big oil companies?

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Speaker, I thank the hon. member for his question.

It is beyond understanding that the government did not act since we know that there is a crisis right now and we know how it affects all Canadians.

The position of the NDP is well known. We also know that the Bloc has proposed the creation of a monitoring agency. We just heard the Conservative Party member. All that is interesting. The member from the Conservative Party said that he too found problems in the industry. Two years ago, Liberal members said the same thing and argued for a monitoring agency.

It is hoped that by the end of tonight's debate, a concrete solution will have been found. That could very well be the creation of a monitoring agency to protect Canadians from what has been going on in recent months and more precisely in recent weeks, where we saw unjustified price increase.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I will be splitting my time with the hon. member for Algoma—Manitoulin—Kapuskasing.

There are too many dimensions here to address in a 10 minute speech. I will just declare that the long term approach to higher energy prices and gas prices has been well addressed by both ministers who spoke earlier, so I will not talk about some of those long term things that we can do.

I am sure that most members in this place heard very strongly from their constituents about their concerns on this issue. It is an important issue. The better educated all members and Canadians are about what the push pulls of energy pricing are, the better off we are. Then we will all begin to agree on what are our viable options to dealing with the spike in energy costs.

I am not just talking about gasoline. We have just had an increase of over 15% in natural gas costs in Ontario effective July 1, and it is expected that all other forms of energy will also follow suit, so we are definitely in for a significant increase in the cost of energy.

I also want to declare that I do not want to talk about the commercial aspect like truckers and whatever. There are some special things like flowthrough or input tax credits on GST. It would not make the numbers comparable, so I want to talk about the ordinary consumer, who is the end user of the commodity, in this case being gas.

I also want to declare that we cannot just talk nationally about this because we have excise taxes at both levels of government, but each province is different. We have HST in the east and we have no provincial tax in Alberta. From the perspective of Ontario, I can give an idea to Canadians about what is included in the price of gas.

In the province of Ontario, if refiners produced a litre of fuel at 70¢ per litre, there is a 10¢ excise tax per litre, which brings it up to 80¢. Then there is a 15¢, actually it is 14.7¢, provincial excise tax, which now brings it up to 95¢. Then there is GST that we pay on commodities that we purchase. That is 7% of 95¢, which is 6.5¢. That litre of gas that the producer produced at 70¢ will now cost the consumer 101.65¢, around a dollar.

As we can see, in terms of a litre of gas that was produced at 70¢, the producer cost to the consumer is 70% of the total and 30% is taxes split between the federal and provincial governments. In fact, 15¢ is provincial and 16.65¢ is federal, so it is roughly split between the two. Compare that to the situation where the world price of a barrel of oil increases and all of a sudden the refiners have to purchase that oil at higher world prices.

Let us say they produce it at $1. The provincial excise tax stays the same because it is on a per litre basis. It does not matter how much the commodity costs, it is still 15¢. The federal excise tax is also the same. It is still 10¢. It does not go up with the price of the commodity. It is a flat price per litre.

That $1 per litre of produced refined product, plus the 15¢ provincial excise tax and the 10¢ federal excise tax brings us up to 25¢ and the GST on top of that is 8.75¢, so it is now 133.75¢, almost $1.34. Of all of that, 75% of the component cost is the producer cost. It is the $1 as a per cent of $1.34 that the consumer pays.

The federal component, which is important to understand in either scenario, ranges from about 14% to 16% as the federal take. Canadians should know what it will mean. People told me that gas is up at $1.20 and it really should be back at 75¢.

I asked the question and received the answer this evening about the one penny reduction in taxes to Canadians. A one penny reduction in any tax, either the excise tax or the GST, is $400 million. When people say why do we not have a 5¢ reduction, that would result in $2 billion. Now we have to talk about the magnitude of the revenue impacts to the government because people are actually saying gas should be 75¢ or 85¢. In other words, we are talking about maybe a 25¢ reduction in the consumer cost per litre which would be $10 billion. I do not know where we get the $10 billion because that would certainly impinge on the things that are also important to Canadians such as health care.

Let me move on. There will be some discussion about the tax on tax. This has to do with the fact that the goods and services tax, as with any natural resources product where there is an excise tax, is a federal excise tax included in the price. It is 10¢ and the 7% GST is .7¢. So the tax on the tax is only .7¢. Even if we include it on the provincial portion, the maximum we are talking about is 1.75¢. It is not enough that it would really change things. But people say we still have to do something. I agree. We should do something.

Supply and demand issues I am sure have been discussed and will be discussed by others, but we do know that the OPEC countries, Brazil and Mexico, are the ones that feed the supply for the world demand for oil. Even though Alberta produces oil and we have some offshore oil, we are price takers. We are not price setters. Canada does not make the prices. That is the reality. We cannot tell Alberta that it should set a different or more beneficial price for Canadian consumers. Alberta producers are in business and unfortunately we cannot have it both ways. In a democratic society, in a free trade society, they have to have that opportunity.

It is extremely important not to forget that as part of the last election campaign platform and it is in the process of being delivered, half of that federal Excise Tax Act money has been promised and it is going to be delivered to the municipalities across the country over the next five years. It is almost $5 billion. Of the taxes that we are collecting on gasoline, some is already going to the municipalities for infrastructure, for green projects, for transit, for all of those things that are very much related to this whole energy equation because it is not just driving a car. Everything we touch has something to do with fuel.

I would like to see three things happen. First, I would like to continue our commitment to the municipalities across the country, so that they will continue to get 50% of the federal excise tax. Second, I am very much in favour of yet another energy rebate to low and modest Canadians to reflect the fact that there is a spike of energy costs. It may be more than a spike. It may be lasting. If we were to give it across the board, that means the amount that any one Canadian would get would be smaller. If we were to focus it and target it on those most in need, those least able to afford these higher increases, we would be able to allow a little bit more.

Finally, and this is extremely important. When Canadians say one gas station has a price that changes and the guy on the opposite corner changes his price, they say it must be anti-competitive activity, it must be collusion, and it must be price-fixing. Canadians do not believe what they are hearing. The minister said in his speech that there was no evidence in the last review of any anti-competitive activity. If Canadians are not convinced, we have to do something to convince them. That is why we should have some changes in the Competition Act that would permit the Competition Bureau to trigger its own investigations at its own volition rather than having to wait for a complaint to be formally lodged, so that it can be a more aggressive watchdog on behalf of all Canadians.

[Jeff Watson, Conservative, Essex, ON]

Mr. Speaker, there is no incentive for oil companies to increase production if the result is a drop in both price and their profits. We know this. The Liberal government knows this too. It has an incentive, therefore, to let prices stay high precisely because it rakes in millions of dollars in taxes: millions from small businesses, from seniors on fixed incomes, from farmers and from rural Canadians who do not have access to public transit.

Not only does the Liberal government profit by millions of dollars from Canada's most vulnerable with high gas taxes, but Environment Canada reported that to meet its Kyoto objectives the Liberal government wants a target price of over $1.40 a litre in the price of gas at the pumps, which is higher than what we are seeing at the pumps today.

My question is very simple. Why does the government talk about looking for ways to help vulnerable Canadians today when it secretly plans for higher prices at the pumps tomorrow?

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, people who want to play politics with an issue that is very important to Canadians will learn very quickly, and to read the same answer or statement that a member gave before verbatim and put words in somebody else's mouth, there is absolutely no truth whatsoever.

In fact, the Government of Canada is also one of the largest consumers of petroleum products. Higher commodity prices are going to also cost the government, which means our costs to provide those services go up. There is no advantage to the Government of Canada. As a matter of fact, because the federal excise tax is on a per litre basis, higher prices do not generate any more federal excise tax.

[An hon. member]

It does for the GST.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, it is simply the GST. There is absolutely no benefit to that because of the GST credits that have to go out to offset it. Calculations have been done showing that on this basis even the jump from $1 to $1.30 was a net benefit to the Government of Canada of about 2.1¢. That works out to about $800 million, and I am sorry, but one would not do that for $800 million. We are giving half the excise tax to municipalities over the next five years for important long term investments. We are going to help with this problem.

To simply not even address some of the fundamental points that Canadians are interested in, and to play politics, to be partisan on this issue, is shameful.

[Mario Laframboise, Bloc, Argenteuil—Mirabel, QC]

Mr. Speaker, the member from Mississauga South seems to forget that, in the end, his nice calculation is meant for a perfect world where prices hardly vary. Our problem is that, within a few weeks at the beginning of September, the price variation reached 40 to 50¢ per litre and that oil companies have put 45¢ per litre in their pockets just for refining. In 2005, oil company profits will increase by nearly $1.5 billion, rising from $7.2 billion to $8.6 billion. If nobody stops them,their profits will reach $10.9 billion in 2006, which is a $2 billion increase.

What he tells us is that, while the government is not making more, except from the GST, its friends, the oil companies, are raking in huge profits and every quarter, money is flowing into shareholders' pockets. That is what we want to stop.

The problem is that oil companies are using crude oil price increases to rake in huge profits from refining. That is what we want to prevent through a petroleum monitoring agency. When refineries make profits, they should be fair and reasonable profits, without abusing people each time there is a crude oil price increase.

I do not understand why the government does not agree with our proposal for the creation of the petroleum monitoring agency. Why does the government not decide, if it is making huge surpluses with GST, to give back a large part of the money to the people, who greatly need it and who are being swindled by oil companies?

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, as I indicated in my speech, out of a litre of gas that costs the consumer $1.33, only 16% is federal revenue. By his statement, I think the member agrees that we do not have a lot of room to play with, with the massive spikes we have seen, but the member should also know that six years ago the world price of a barrel of oil was $10. Today it is about $67. If we look at a graph of the price at the pump compared to the world price of a barrel of oil and follow it, we will see that it tracks very well.

The member has raised the issue, which I think most Canadians have also raised, that people just cannot believe it. The profits of the petroleum companies are up 500% over the last few years. How are they making so much money unless they are gouging us? There are these questions, yet we have had the Competition Bureau do these reviews and it has not been able to find any anti-competitive activity.

But I do know the only way we are going to improve the confidence level of Canadians in terms of making sure there is no anti-competitive activity going on is to give more teeth and more power to the Competition Bureau, such as triggering its own investigations, to make absolutely sure.

I have to tell the House that these corporations are blue chip stocks in the Canadian economy. They are held in virtually everybody's RRSP and in company pension plans, et cetera. I do not believe they would ever risk somehow taking money they should not have, but I think Canadians do. As a member I agree that Canadians want greater assurances and independent and frequent monitoring of the pricing mechanism to ensure that those spikes are due to real and unforeseen or uncontrolled activities.

[Brent St. Denis, Liberal, Algoma—Manitoulin—Kapuskasing, ON]

Mr. Speaker, as we begin on the first day of the return of Parliament this fall, my mind is first brought to the fact that we are going to be here most of the next three months until just before Christmas. We will be away from our ridings more and will certainly be away from our families. We know that we will all miss our families and there is the work that awaits us every weekend when we get home to our ridings.

I do not want to miss the chance while we have the member for St. Catharines here in the House to acknowledge that he led the committee when it wrote the report published in November 2003, which led the way on a recommendation that the Government of Canada establish an agency, which the committee report refers to as a petroleum monitoring agency. It was an all party agreement, although the then Alliance Party, now the Conservative Party, issued a dissenting report not agreeing with the consensus of the committee that there should be some kind of monitoring agency. I am confident that the government is looking at some form of monitoring, so I want to extend congratulations to the member for St. Catharines on his leadership at that time.

I would also like to acknowledge the participation of members of the House in a very interesting, all day, special meeting of the industry committee, on the morning, afternoon and evening of last Thursday, September 22. The member for Vancouver Island North, who is here debating tonight, is an important member of that committee. He sat with us all day long. The member for Yukon, the member for Wellington—Halton Hills and many other members participated in an all party meeting, which I thought was a very good opportunity not only for parliamentarians but for Canadians at large to get a better understanding of how the oil industry works.

We started the meeting with the idea of what happened over recent weeks when the gasoline prices went up so high. More recently we have seen them moderating somewhat, but they have not gone back to their August levels, at least not yet. We hope they will.

We heard from about 25 witnesses. I would like to thank them publicly, at least as many of them as I can get on the record. We had witnesses from the industry, from Ultramar and Petro-Canada and from their associations. We had witnesses representing the independent petroleum marketers, some of the small gas stations we see in our small communities, such as McDougall Fuels in my riding of Algoma—Manitoulin—Kapuskasing. We heard from the Association québécoise des indépendants du pétrole, an organization based in Quebec.

We heard from finance and natural resources officials. We heard from the Competition Bureau. We heard from experts, including the Conference Board of Canada. By the way, the Conference Board has done its own studies and has come to its own conclusions on the oil industry in Canada. I will let the testimony on the record speak for itself.

We heard also from the Canadian Federation of Agriculture, the Canadian Federation of Independent Business, the Canadian Trucking Alliance, the Air Transport Association of Canada, Option consommateurs and the Sierra Club of Canada. We heard from the Consumers' Association of Canada, the Canadian Taxpayers Federation, L'essence à juste prix, the Canadian Renewable Fuels Association, Iogen Corporation and the Coalition pour la défense des consommateurs de carburant du Saguenay-Lac-Saint-Jean.

We heard from a wide variety of witnesses who gave us a very interesting perspective, but we are not there yet. It is obvious to me. I am just the chairman of the committee and I am speaking only for myself at this point. We have not reported, but I expect that after hearing from the ministers we have invited to appear over the meetings ahead and from the other witnesses, the committee will report to Parliament in the weeks ahead based on the desire of committee members to wrap things up. I am sure it will not be months. It will be just a matter of a few weeks, I hope, but there were almost as many suggested solutions as the number of witnesses we heard.

It is not easy to paint a clear picture of what is going on. It is a very complex industry. One of the things I was struck by was the razor thin balance between supply and demand for energy in the form of carbon fuels: gasoline, diesel, heating fuel and so on.

We heard that the refinery capacity in North America was pushing 90%-plus and that a new refinery has not been built in North America for about 30 years. We have to ask ourselves why. I am not prepared to come to any conclusions. The Competition Bureau commissioner, Ms. Sheridan Scott, reported to us that there is an ongoing study. Even though they reported on retail level allegations of collusion in the past, they are continuing their work. I believe partly in response to the independent fuel retailers they are looking somewhat at the wholesale level of gasoline in the gasoline supply chain right now.

Let us not prejudge what they will conclude, but we all know as members here that our constituents are frustrated. They do not understand why the retail price of gasoline in Kapuskasing is so much higher than it is in downtown Toronto. They do not understand why the price on Manitoulin Island is so different than it might be even in Sudbury, a drive of only an hour and a half to two hours.

Those who drive trucks, particularly logging trucks in the forestry sector, know how difficult it is to pay for the fuel to carry the logs to the pulp and paper mills. They are frustrated. They look to us to provide answers. Whether governments are to blame or not for the high prices of gas is really irrelevant. The consumer, the citizen, the taxpayer simply wants to know what is going on and what can be done about it.

For example, just before I went to the meeting I received an e-mail from Mr. Makela, who is the proprietor of Lauzon Aviation near Blind River in my riding. He has a small bush plane business. I am sure the member for Vancouver Island North has small charter companies and bush plane companies in his riding. These folks have to pay the going rate for aviation fuel and it hurts. Clearly, this is a partisan place that we operate in, but I only hope we can work together for a common goal not only to provide answers to our citizens but to come up with some clear-cut initiatives that will ease the pain and burden.

Gasoline prices today are a challenge. In a rural riding like mine, everybody has to drive any distance to get to one service or another. I have a riding of 110,000 square kilometres. We have to drive somewhere to get many of the services, even if it is to go to a hospital. There is no question about cutting back on driving. If people have to go to a doctor, they have to drive to the doctor. There is no public transit option for my constituents. We hear this frustration and we have to find some answers for them.

As important as gas prices are, I am looking with some trepidation to the winter months and the possible cost of heating fuel, whether it is traditional oil or natural gas, because other forms of energy will get sideswiped in all of this. Energy all combined rises and falls as one piece of the sector rises and falls. I have a letter from the Canadian Gas Association which tells us that gas prices will go up. Hopefully they will not go up unreasonably, but I think we can expect that they will go up.

I am particularly concerned, as no doubt are all of my colleagues in this place, about people on fixed and low incomes, those who are more vulnerable in society. We think of our seniors. I am hoping that the government will find its way to do something to assist the most vulnerable in our society this winter should heating prices be more than manageable.

I am also hopeful that there will be some measures to help our trucking industry or small businesses that are dependent upon fuel prices. The government cannot do everything.

As my colleague from Mississauga South mentioned, a 1¢ cut in the federal excise tax or GST is equivalent to $400 million per penny. If we look at the U.S. its prices for retail gas are lower than ours, but it does not have medicare. I am sure if those citizens added the cost per month of their universal medicare to the price of gas, our prices would be comparable.

I want us as a government to watch out for those who are vulnerable in society. Let us move aggressively toward more efficiency in our lives, whether it is at home or in transportation. Let us be sure we keep that commitment to municipalities to share the gas tax for their infrastructure.

[Peter Van Loan, Conservative, York—Simcoe, ON]

Madam Speaker, for working families in the riding of York—Simcoe the rising gas prices pose very real challenges. If we think of some of the communities there, Keswick, Alcona, Bradford, Holland Landing, Mount Albert, many people travel great distances to work every day and they have to depend on the automobile. If we think of the rural parts of that constituency, the farmers who rely on gas for their input, the people who have to transport goods, cattle and so on, there is a real impact and it is hurting their lives. Typically those families, the husband and wife both travelling and commuting to work, are budgeted tight. They are trying hard to get ahead, pay the mortgage, make a brighter life for their families, and they cannot accommodate this unexpected giant jump in gas prices. It is a big part of their budget and they cannot afford it.

There are no public transit alternatives open to most of them and thanks to the NDP-Liberal budget deal, there will not be, because in that NDP-Liberal budget deal the transit money was based on ridership. Toronto, where the riders already are and the infrastructure is, got all the money. York region or Simcoe County, where the population is growing and they need the public transit investment, got shortchanged because the formula was skewed against them getting the public transit money.

When we talk about, as the Liberal member before me did, having money from the excise tax for the municipalities, if the rising prices go up and consumption goes down, we know that portion of the revenue that is available for municipalities will actually go down as well. The municipalities will lose out as well from the higher gas prices.

It is hurting families, it is hurting municipalities, it is hurting everyone, but we do not hear any answers from the government on the simple things it could do. We have a tax on a tax. It is the excise tax that has the GST charged on top of it. There is an excise tax on gasoline and then the government charges GST on the tax. It would be as if we sent in our property tax and we had to add on 7% for the federal government, or if when we filled out our income tax and we had to send in $12,000 to the government and then we had to add another 7%, another chunk of money, close to $1,000, just for the GST on our income tax. That is an offensive form of double taxation. The government could do something about it. I would like to hear from the member what he intends to do about it as part of that government.

There is a temporary excise tax that was introduced to deal with the deficit. The deficit was wiped out years ago. That temporary tax was introduced in 1995. It has not been removed. That, too, is an offensive form of taxation on gasoline that could be wiped out.

The fact is that the government is addicted to taxes and any solution that involves reducing taxes is one it rejects.

The Liberal member for Mississauga South just spoke. His concern about tax is to think of all the money the government would lose. That is how the government thinks about taxes, not as money coming from constituents, but as money that goes to the government. It does not realize that people work hard to earn that money.

Finally, we need to see some real competition in the industry. I would like to hear the proposals from the government. It has had a decade to work on that. It has not delivered any solutions. We need to see real solutions for the constituents in York--Simcoe, such as wiping out the tax on the tax and eliminating the temporary excise tax that should have been eliminated years ago and seeing some real competition. I have yet to hear that. I would like to hear that now, a commitment from the government to do those things.

[Brent St. Denis, Liberal, Algoma—Manitoulin—Kapuskasing, ON]

Madam Speaker, I appreciate the comments from the member for York—Simcoe. I would not have enough time to comment on everything he raised. He wanted to get on the record and I appreciate that is his job. Let me pick up on two things he said.

He mentioned farmers. Certainly there are farmers on Manitoulin Island and in the Highway 11 and Highway 17 areas of my riding. It occurred to me last Thursday as I listened to the committee testimony that I referred to earlier that there will be some suppliers of services that will need to pass on their very significant new transportation costs. Farmers are among them.

I do not know if governments can be involved in this. However, I think our society has to accept that for those sectors of the economy for which transportation, and therefore fuel costs, are significant, the passing on of a cost does not bring with it a penalty. In fact, those who purchase these goods must be prepared to accept that the suppliers of these goods have a need to pass on some of these costs.

We need our farmers. We need the forestry sector. We need all sectors of the economy to survive and thrive in this beautiful country of ours.

I am not sure this can be regulated. I am hopeful, with the encouragement of governments at all levels, that the passing on to the next level in the chain of transportation costs can be done in an orderly and managed way.

Finally, on competition, I think the petroleum monitoring on which the former chairman from St. Catharines led us would go a long way toward helping that.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Madam Speaker, I will be splitting my time with my colleague, the member for Vancouver Island North.

One of the real causes for rising gas prices is the rising price of oil. Recent events down in the south of the U.S. with the hurricane is another reason for rising prices of oil. While the government would not be prudent if it wanted to control the price of oil, and while the government cannot solve the problem entirely, it can help to mitigate some of the adverse effects, especially on average people who drive, use energy and home heating fuels. The government can act to help mitigate some of the burden put on Canadians as a result of rising fuel and rising home heating costs.

This is important because home heating costs this winter could double. We need to find out what plans the government has to help out the most vulnerable in our society, the elderly, those on fixed incomes, the infirm, to ensure that they have enough money to cover their home heating costs and that the government will not leave them out in the cold this winter.

This is an emergency debate, a take note debate and an important debate. In recent days we have had panic buying and signs of lineups, lineups we have not seen at gas stations since the oil shocks of the 1970s. We saw that happen across southwestern Ontario and the GTA last week. People who work in these areas need to be assured that the government has a handle on this situation. Unfortunately, we have seen no action from the government whatsoever on this file.

The action the government could take and the action we suggest it take on this issue, not to solve rising energy cost problems but to offset them, is to reduce the tax burden on Canadians. Recent reports have said that the government will collect an additional $2 billion this year as a result of rising fuel prices. Yet the government says that it is not a lot of money. If it reduces taxes 1¢ per litre, the tax burden would only be reduced by $400 million. Two billion dollars extra in government revenues from rising fuel prices could be offset by a 4¢ or 5¢ reduction in fuel tax prices. The government though seems to pooh-pooh this, that it is not a very significant amount of money and that it will not have a huge impact.

Two billion dollars is a lot of money which if spread across 308 ridings in the country is about $6 million per riding. In my riding of Wellington—Halton Hills this is $6 million that is not going to local businesses, or to local restaurants, or to local shopkeepers and local retail outlets. That is $6 million that is not going to be spent in my riding. Recently local business owners have told me that they have noticed a drop in business as a result of rising gas prices. This is having a significant impact on local economies and on the national economy.

The government's response to the issue, however, has been that not much should be done because it really will not make a difference. It is clinging to the indefensible position that 1¢ a litre will not make much of a difference. One cent a litre is a lot of difference. It is about a million and a half dollars out of each riding that local businesses no longer have. Four cents per litre is six million dollars out of the local economy. It is a lot of money and the government should act on this.

For every $400 million that the government says is irrelevant, that is $400 million out of the Canadian economy and it is $400 million by which the quality of life for Canadians is made poorer.

Another shortfall of the government's reaction to rising fuel prices and home heating costs is the fact that over the last number of years it has failed to act to encourage and support renewable energy sources. It has dragged its feet on implementing alternative sources of energy to complement hydrocarbon, gasoline and diesel fuels so that the demand for gasoline and diesel has shifted on to other alternative sources. Because of the government's shortsightedness and the fact that it has not acted, demand has significantly risen in recent years. We are now in a situation where many working people are feeling squeezed by rising energy costs.

This has real implications, especially in the manufacturing heartland of Ontario where the manufacturing industry, which already has lost somewhere in the range of 100,000 jobs in Ontario in the last year, is feeling the double squeeze of the rising dollar, which is hurting their exports, and rising fuel prices. Yet the government says that it does not feel there is a problem. Even if there is a problem, $400 million is not a lot of money to put back into the economy because 1¢ per litre really will not make a difference. We as a party beg to differ and feel the government should act on this.

The other thing I find interesting is because of the government's failure to act on this issue and to provide some guidance and direction, it has started to obfuscate about the spectre of possible anti-competitive behaviour in the gasoline market. It is just a smokescreen for hiding the real fact, which is the its lack of inaction.

There is an old saying that actions speak louder than words and the government's lack of action on rising gas prices and home heating costs speaks for itself.

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

Madam Speaker, I object to a statement that the member made about the government not investing in renewable energies. We have been a leader in the world in investing in renewable energies. In the recent budget the highlights were huge increases in our wind energy and a whole new renewable program. We have invested hundreds of thousands of dollars in reducing housing costs. We have invested in solar and ethanol energy.

What is ironic and what riles me about the comment is that Her Majesty's Loyal Opposition always votes against us. It voted against Kyoto where we had a renewable energy plan. It votes against all the investments in this type of supply side management. I agree 100% with the comment that it is what we should be doing and that is what we are doing. Hopefully he can get his party onside with us as we continue to do that and stop voting against such initiatives.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Madam Speaker, the member's question highlights the government's hypocrisy on renewable energy sources. The government took power in 1993. It is now 2005. I live about an hour and a half from downtown Toronto just outside of Fergus, Ontario. We did not have smog days when the government took power in 1993. We now have plenty of them.

On an average summer day in my riding people choke on the air. We get up at 7 o'clock in the morning to listen to smog advisories and how people who have breathing difficulties should stay indoors. The air quality is so poor that they should not go outside.

The Ontario Medical Association attributes the poor air quality to the government's lack of action on renewable energy and alternative energy sources. The Ontario Medical Association attributes thousands of deaths in the province of Ontario every year to poor air quality because of the government's complete lack of action on a whole range of fronts, whether it be lack of funding for TTC, alternative energy sources or clean air. The facts speak for themselves.

People in the GTA sit in their cars for two to three hours a day because of a lack of infrastructure investments on the part of the government over the last 10 years. People in the GTA are choking on smog. The government has great rhetoric on renewable energy sources, alternative fuels and its commitment to the environment, but the facts speak for themselves. The facts speak to a complete lack of action on the environment, renewable energy, alternative energy and cleaner air.

[Mario Laframboise, Bloc, Argenteuil—Mirabel, QC]

Madam Speaker, I listened intently to my Conservative colleague and I hope that he will agree with me. It is true that the government gets more tax revenues, among others, from the GST and the tax on gas. But there is also the fact that oil companies are taking advantage of the situation to amass surpluses that we should simply condemn totally.

During the past month, on September 2, oil companies took in 46.4¢ a litre for refining. On September 3, 4 and 5, it was 39.3¢ a litre, while in 2000, the average for the year was 7.9¢ a litre.

Our problem does not come only from the fact that the government should help the people most in need. The Bloc Québécois is in favour of this. However, we must also be able to discipline the industry, which is taking advantage of the situation to amass surpluses because the price of crude oil has increased around the world.

In the last 30 days, the price of gas has increased by 26.1¢ a litre. This is what the industry has collected for refining, while, in one year, by collecting 7¢ a litre on average, it would make reasonable profits.

Will my colleague agree that there should be a petroleum monitoring agency to be able to discipline the industry, which only cares for its shareholders and providing them with dividends every three months, instead of giving some to consumers?

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Madam Speaker, in short the answer is no simply because the empirical evidence, the facts, the studies done by the Competition Bureau, which I have read, do not point to the fact that there is widespread anti-competitive behaviour in these markets. Therefore, I do not agree with his party's suggestion on this matter.

[John Duncan, Conservative, Vancouver Island North, BC]

Madam Speaker, I am one of those people who was referred to by the member for Algoma—Manitoulin—Kapuskasing, the chair of the industry, natural resources, science and technology committee. We all sat through a long meeting on Thursday, with 25 witnesses, I think he said.

What is clear from this debate, the debate last Thursday and the posturing of the various political parties is, first and foremost, that the government is addicted to the tax revenues it receives, and on all fronts, but specifically when we talk about fuel, the government is addicted to those revenues.

Second, the Conservative Party of Canada is the only party in this place that is in favour of reducing the cost of fuel to the consumer or end user. If we take that as the pretext or context of all of the other positions that people have taken, they are either putting up a smokescreen or creating diversions or red herrings in order to avoid addressing that issue head on. This is really the issue that the consumer or end user is concerned about. The more diversions or obfuscations they can create, the more likely that their argument will be somehow saleable wherever they are trying to peddle it.

Those hearings last Thursday, if we put everything into the context of what I have just said, were very instructive indeed. With hurricane Rita bearing down on the gulf coast of the southern U.S., the government members on that committee contributed to the perception that we had a major price spike coming and helped create a panic at the gas pumps. All we have to do—

[An hon. member]

Oh, oh!

[John Duncan, Conservative, Vancouver Island North, BC]

I am being told by government members that I should not overestimate the impact of the committee. I am not overestimating the impact of the committee. I talked to some members of the national media that day. It was testimony by Liberal members that led them to seek out single stations that were gouging across the country and blow that up into a bigger story. That is exactly what happened.

That led to all kinds of other dimensions, whereby when I left that committee meeting and drove into a west Ottawa neighbourhood, there was a lineup at the pump to buy fuel where I would rarely see cars at that time of night, fuel that was still selling for the same price 24 and 48 hours later. This was all, excuse the pun, pumped up by Liberal members with a personal agenda to try to avoid the real questions in their own backyards where they had problems, either with the truckers' strike in the case of New Brunswick or with some other pressure point at home where they really did not want to deal with the issue the government could control, which is tax revenues.

So not only did these members contribute to the panic, but they attacked the refining sector, because they knew they could not attack crude oil prices. Those are set on a worldwide basis. They could not or did not want to attack the dealers and they did not want to attack the taxation issue. There was only one thing left, which was attacking the refiners.

Despite all of that, the ministers walked in here today and delivered an absolutely contradictory message: that the reason we do not have more refinery capacity is because they have not had enough return on investment and therefore the government has a responsibility there. I am not sure what its responsibility is, according to what they were saying.

I know what the government's responsibility is. We need some investor confidence in this country, which will come only when we have an energy framework, a framework that this government has not delivered in spite of the fact it has been promising one for a long time.

That is what happened in the bubble of Ottawa. Unfortunately, at home the tax burden is keeping people away from work in some cases in the resource manufacturing or transportation sectors because of high fuel prices. People, especially seniors and those on fixed incomes, are extremely concerned about what will happen this winter.

We all know what is in the ability of the government to most readily influence, what it can do right away, and the Conservative members have been putting forth that point of view for a long time. We put it forth again at committee. At each and every opportunity where we could talk about tax cuts that would make sense for Canadian fuel, we were attacked for taking that position. Whenever groups representing part of an industrial sector or a consumer group gave the same kind of testimony, they were aggressively attacked for their position by the Liberal members on that committee. It was at the point where we actually had denial; the Liberal members denied that if there were a tax cut it would ever show up at the pump.

We have examples in Canada in which we can compare province to province, or we can compare Canada to the U.S., where, if there is a lower taxation regime, guess what, there are lower fuel prices. We have the example of Poland. Last week, against the advice of the European Commission, it dropped the excise tax on fuel by the equivalent of about 10¢ Canadian per litre. That is already being reflected in large part at the pumps. Poland is doing the right things for its economy.

As we heard from the industrial sector, it makes a lot more sense from an economic standpoint to tax outputs rather than inputs. At the very time when our government is talking about trying to deal with the fact that our productivity is lagging, there is a double reason why it would make sense to reduce the tax load on fuels. Also, as people have mentioned here tonight, there are the irrational taxes that were based on a premise. For example, we had a 1.5¢ excise tax on consumer gasoline to help pay the deficit, which has now been paid for eight years. This was a tax installed by the Conservatives, which was supposed to stay in until the deficit was slain. The deficit was slain eight years ago but the tax is still there.

Also to address the deficit, a 4¢ per litre excise tax was put on aviation fuel. It is still there. Over the last eight years, that tax has collected over $300 million. That tax is money taken directly out of the aviation sector, a sector that has had nothing but grief over the last eight years and could have very well used that money to good purpose, for a purpose a lot better than any single thing I could imagine it was actually put to use for by the government.

The other ogre that was brought up was about this 5¢ per litre going to the municipalities. I will wrap up in one sentence. It is 1.5¢. It is not statutorily enabled past this next year, which is still at the 1.5¢ level, and all of the rest of it is simply Liberal policy that may or may not come to pass.

What is it all about anyway? The provinces spend over 100% of their fuel revenues on roads, so what is the big deal about the federal government spending maybe 50% of fuel excise taxes, never mind the GST, on roads and infrastructure?

[Gord Brown, Conservative, Leeds—Grenville, ON]

Madam Speaker, as we come back to start this session it is fitting that we are having this take note debate this evening, because this is now probably the most burning issue on Canadians' minds. In my riding of Leeds—Grenville, we have farmers who are now taking crops off the fields. Of course my area is so dependent upon tourism and also on manufacturing and shipping goods out to the United States. All of these areas are impacted.

I have a question for the hon. member for Vancouver Island North. Why does he think the government is so addicted to these taxes and is not forthcoming enough to be able to cut the taxes, to axe the tax on the tax?

We were hearing about the possibility of some help for low income earners this winter for home heating oil. I also spoke to some firefighters this summer who were concerned about what impact prices may well have in terms of safety, with the possibility of people attempting to use alternatives to heat their homes.

Why is the government so addicted to these taxes? Why does the hon. member think that the government will not come forward, axe the tax on the tax and give consumers a break before this economy does go into the tank?