That, in the opinion of the House, the government should establish a plan to counteract the negative effects of repeated increases in gas prices, specifically including: a surtax on the profits of major oil companies; the creation of a petroleum monitoring agency; and the strengthening of the Competition Act.
Mr. Speaker, I am very pleased to put this issue before the House today.
We all know, in our everyday lives, that the rise in gasoline prices over the past few years has had a severe impact on the manufacturing sector. Particularly hard hit were all those who drive cars, often low-income earners, who have seen their buying power dwindle, while at the same time, oil companies were raking in staggering, excessive profits. For example, Esso Imperial's after-tax profits for 2002 were $1.214 billion. They then rose to $1.701 billion in 2003, $2.052 billion in 2004, and $2.6 billion in 2005, for a grand total of $7.567 billion.
When we look at that total amount and at the rise in profits, from $1.214 billion in 2002 to $2.6 billion in 2005, we can see why there are so many losers in our economy right now, despite the fact that the economy appears to be doing very well.
The losers are consumers who are earning minimum wage and who have no choice but to drive their cars to get to work.
In my riding, in La Pocatière, a lady told me about her situation. Because of gas price increases, she was losing money by going to work. That is reality, hard reality. On the one hand, oil companies are raking in enormous profits, and on the other hand, people are between a rock and a hard place. This is true of individuals, but it is also true of groups.
At present, with the rising dollar, there is undue pressure on the manufacturing sector in Quebec and Canada. This is caused in part by this enormous increase in the price of gas. When combined with the increase in energy costs, there is upward pressure on the dollar and thus there are higher costs for our businesses. This is not merely a matter of criticizing the government, it is a fact of our daily life, and it has to be dealt with one way or another.
The Bloc introduced this motion because at present, the government’s failure to act in this regard is very bad. We do not detect any desire on the part of the federal government to face up to this problem and take proactive measures.
This week, again, the Standing Committee on Industry, Science and Technology was told that at present, economic activity in Canada was on a roll because of energy prices and raw material exports.
However, when things slow down in that respect in a few years, we will have been short-sighted and imprudent by failing to ensure that the rest of the economy is sound, and we will have a less than satisfactory outcome. It is this government that will be responsible for that outcome. I reiterate this so that it is clear in the minds of my colleagues and the public as a whole.
I will give another example: Suncor Energy. In 2002, its after-tax profits came to $749 million. And then things got better. For the period from 2002 to 2005, the total was $4.169 billion. Those rising profits are the concrete example that shows how one sector of the economy has taken the rest of the economy hostage.
People were spending part of their purchasing power on energy, on gasoline and heating oil. Their money is now inflating the profits of these companies, and nothing is being given in return to ensure that the wealth is spread around.
I would stress that there are different aspects to the Bloc motion. It talks about a plan to counteract the negative effects of repeated increases in gas prices. We must first identify the negative effects. As I said, we can all see the negative impact of price increases, particularly when there are sudden fluctuations in the price of a product that is so important to the economy.
We have to find a way of averting these sudden and unexpected increases, these yo-yo prices. We have to find ways to regulate the situation. We are not talking about price controls, but about studying the market, understanding how it works, and trying to implement measures and do things that would enable us to take the appropriate corrective action.
In terms of an action plan, the Bloc is open to suggestions, but it hopes that any plan will include a surtax on the big oil companies’ profits, in particular. In the short term, a portion of those excessive profits absolutely must go back to the people who have been the victims of these sudden increases.
We should even begin developing a long-term solution minimizing our dependence on oil. We must invest in technologies that will improve our environment and enable us to exploit new resources. It would only be fair for some of the funding for these programs to come directly from oil companies. But I doubt we will get this kind of result on a voluntary basis.
Again this morning, Yves Séguin, a well-known economist who was Quebec's Minister of Finance, said that at least one company had stated clearly that it was not increasing its refining capacity, but was selling as much as possible. The current refining capacity can yield such huge profits, and the company is cashing in as soon as possible. Even if the company fails to make appropriate investments later on, it will have netted maximum profits, as it is doing now.
It seems to us that this kind of situation could be balanced by a surtax on oil company profits.
We have also been suggesting other solutions for a while now, including the creation of petroleum monitoring agency. This idea came up two or three years ago during hearings before the Standing Committee on Industry that the Bloc Québécois had asked for. Oil company representatives testified, telling us that they themselves would agree to such an agency being established. This is not about controlling prices, but about having a tool that would enable us to use independent statistics to evaluate how the market works.
Yesterday, Natural Resources Canada held a briefing session. The statistics they provided came from a private company that specializes in that kind of information. I have nothing against the company, but it completely lacks the transparency we need in order to rely on these statistics.
So, we have proposed the creation of a petroleum monitoring agency. This way, the market could be monitored and its operation studied. For three years, recommendations would be made in this House regarding changes in the market in order to determine the measures to be put in place. I am not talking about creating a permanent bureaucracy, in fact we want it to have a time frame, but rather a watchdog that would let the petroleum industry know that the government and elected representatives were aware that something was not working in the market. The oil companies are entitled to profits, but not unreasonable profits as they are currently making, especially if they are harming the economy. So we will put relevant solutions in place.
Such an agency would help determine, for example, whether it might not be beneficial in the future to prevent the integration of products, that is, the extraction of oil, its refining, its transportation and its retailing. Might it be possible to come up with solutions similar to those tried out in certain American states? For example, it might be proposed that a company be restricted in the degree to which it is incorporative, that is, it would not be able to act at all levels this way and would have to provide many more details on profits at each stage. This is the sort of recommendation we would like a newly created petroleum monitoring agency to be able to propose.
Last fall, it will be recalled, following a second offensive by the Bloc, the Liberals agreed to assign half the mandate sought to the petroleum monitoring agency. Yesterday, during the briefing, I learned that the new Minister of Industry, who has a very market oriented approach, does not want the government to intervene in any way. According to him, things would be even better if there were no government intervention. I do not understand why he got elected in a government if he does not want government to intervene. The minister has decided to study the matter of the petroleum monitoring agency and to let its creation drag on, despite the increase in prices we have faced and continue to face. According to recent newspaper articles, another major hike is in the works. Summer is coming. With the approach of summer, people will be getting ready to travel. We will see the impact of this on the price of gasoline.
The stakeholders in this industrial sector are entitled to the same conduct as other players in other industrial sectors. However, there is one distinguishing feature: try using firewood to make your car run and see how well that works. The automotive sector, which is the foundation of our industry, offers products that run only on gas. It is the only fuel that can be used. There is no other product to compete and the oil companies are not really making an effort to find one, either. For example, they are in no hurry to move forward with products such as ethanol.
If there were a surtax on petroleum products, it could be arranged to have a portion of the revenue go towards accelerating and catalyzing the development of renewable energies and making their use more widespread. We could thus reduce our dependency on petroleum products.
We can see that many outcomes are possible, if the government assumes its responsibilities. That is the goal of this motion: first that the government assume responsibility in this area.
The other feature addressed specifically in this motion involves strengthening the Competition Act. Also, last fall, if you remember, under pressure from what the Bloc had initiated and given the urgency of the situation,we succeeded in getting hearings with the Standing Committee on Industry, Natural Resources, Science and Technology before Parliament resumed its work. The government tabled some amendments to the Competition Act to grant authority to conduct general investigations and market surveys. An enormous problem had arisen with the Competition Bureau because that agency acts as a quasi-judicial body. It must be able to supply proof of collusion.
Proof of collusion means legal proof. It requires, for example, written evidence, copies of faxes sent to service stations, to four different locations at the same time. Such documents are required. That type of thing was not found. They probably do not exist, although it is not necessary to have that.
For a number of years, the whole issue of refining has been controlled. The number of refineries in North America and around the world has been systematically reduced. As a result, today the number is down to a bare minimum. Every time a crisis occurs—a storm in Africa, a flood somewhere else, hurricane Katrina last summer—the price goes up suddenly.
If we had been smart enough to develop additional refining capacity, when hurricane Katrina struck, there would have been one or two more refineries in the northern United States, Canada or Quebec that could have augmented the capacity of existing refineries, as they are trying to do in the Lévis area. We would have had the tools we needed. But no, the refineries rake in profits and, at the same time, get huge tax cuts from the federal government.
Since 2002, the tail has been wagging the dog. We have seen the profits that the oil companies make, yet the federal government gives them tax breaks, huge tax cuts. This is clearly undesirable and inappropriate in the current situation. What we need is increased contributions from oil companies in the form of taxes or a surtax, as we are proposing.
We know that the factors contributing to the increase in the price of gas are the price of crude oil, the cost of refining, taxes and the retail profit margin. The price of crude oil is set in international negotiations. We have no day-to-day control over it, but we should certainly be concerned about it. The President of the United States has been, as have the G-7 leaders. This concern needs to grow so that fluctuations are minimized, because they have a major impact on the economy.
Then there are taxes. We know that taxes did not cause the price fluctuations. But governments need to look at what can be done about taxes. We have already talked about the excise tax on gasoline, which has been fixed for a long time. It was put in place to help reduce the deficit.
The major item that we could work on in the short term is the refining cost. Refining is the process of taking crude oil and transforming it into gasoline. At present, profits on this refining process are excessive. The additional increase of 10 or 12 cents per litre of gas hurts and is due directly to the excessive profit at that stage. In terms of cost, there is no justification for such an increase.
This week at the Standing Committee on Industry, Science and Technology, one of my Bloc colleagues indicated that, generally, when the cost of raw materials increases in an industrial sector, somewhere in the chain, a competitor usually tries to save energy and cut costs, so that at the end of the day it can remain competitive on the consumer market. The gasoline market is rather unique. When there is an increase at any stage it is passed on directly to the consumer. Everyone operates the same way and, ultimately, it is always the consumer who pays the price.
It is this type of situation that the petroleum monitoring agency could look into, examine in depth and determine if there any measures that could be implemented to correct the problem.
The retailer's margin is more a provincial responsibility and some provinces have taken action.
I think our work here in the House of Commons should be more focused on the effort to examine competition and refinery profit margins.
That is where the Bloc Québécois insists the government focus its energy, as well as agreeing to have a plan and admitting in this House that there is a specific situation in our economy that can be attributed to the increase in the price of gas. It should also admit that people and the economy are being severely punished. If we do not look at this issue in greater detail then we are in for a rude awakening in the short term, economically speaking, joining the people already going through tough times right now.
As part of the solution, we must discipline the industry and send it a clear message that the government is worried about this issue and, furthermore, it is very important that the Competition Act have some teeth.
The former competition commissioner, Konrad von Finckenstein, said that:
—while the [Competition] Bureau's mandate includes the very important role of being an investigator and advocate for competition, the current legislation does not provide the Bureau with the authority to conduct an industry study.
The commissioner thus acknowledged that this authority did not exist in the legislation. It took two years to get the Liberal government to table amendments that responded to this requirement. They unfortunately were not voted on before the election. However, the commissioner who succeeded Mr. von Finckenstein reiterated, when the amendments were tabled, that it would be an important mandate to entrust to the competition commissioner. She added that this authority existed for other competition commissioners in developed countries throughout the world, and that it was an additional tool she would like to have.
There is no reason the current federal government could not go ahead and table such a motion.
I hope the Liberal Party of Canada will support our motion, which resumes in part the amendments to the Competition Act that we suggested to them and that they agreed, as a government, to advance during the last increases in summer 2005. We also need to have the other mandate for the petroleum monitoring agency because there are matters to be looked at from that angle that are not related to competition but deserve our attention.
I would like to conclude on an important point. A fair society is important to our fellow citizens. They see the gifts given to the oil companies over the last few years. They might have been able to understand this in hard times when these gifts might have helped the companies turn a profit. But in the current situation, for example, corporate income tax is being reduced to 19% by 2010. Faster repeal of the capital tax has been suggested, and a reduction in income taxes for the shareholders of large corporations. All these measures are being discussed of course. It is not a matter in economics of focusing in order to change the balance of our entire tax system, but in view of the situation created by all this, that is to say a fabulous increase in profits, our motion contains concrete action, namely the imposition of a surtax on oil company profits.
This would be a way for the government to show all the people of Quebec and Canada that we are assuming our responsibility to distribute the wealth, that we are not just a company board of directors but a Parliament and a government that is concerned about these things. We hope very much that the federal government will take this kind of action.
I hope that we will ultimately find a long-term solution that makes us less dependent on the oil industry and able to use renewable resources. Most of all I hope that today's debate will show people that there are some members who have a sense of fairness, a sense of responsibility, and who are aware of the severe negative effects that rising gas prices are having these days in our society. I also hope that this desire, as expressed by the Bloc Québécois, will tonight become the House’s desire and that the government will act as quickly as possible. If not, it will have to answer for what it does in the next election. This is the kind of decision, actually, that will have an effect on the economy—which seems to be doing well today—not just next week but in six months, in a year and in two years from now. The people will remember who defended them.