Subcommittee on Oil and Gas and Other Energy Prices committee  As Peter said, there's a world market for crude oil, there's a regional market for refining, and then there's a local market for retail. Each has its own dynamics. I think you're talking about the regional market for refining, which is either North American or, I would suggest, Atlantic basin.

Subcommittee on Oil and Gas and Other Energy Prices committee  It is an international market for oil and gasoline, a competitive market, and the Canadian consumer is well served by the marketplace.

Subcommittee on Oil and Gas and Other Energy Prices committee  I think those two things do make sense, that if there is an issue and you want to solve it, those would be the mechanisms through which to solve it. One would be to really decide who a speculator is and who is a commercial player and then to put limits on them in the futures market.

Subcommittee on Oil and Gas and Other Energy Prices committee  I think he said that Petro-Canada was supplying all of the GTA, and I don't think that's correct at all. There are pipelines coming from Sarnia on which both Shell and Suncor have product coming into Toronto. There's product coming from Esso Nanticoke on a pipeline. Petro-Canada brings it in by pipeline, but so does Ultramar.

Subcommittee on Oil and Gas and Other Energy Prices committee  I think people over time, people a lot more knowledgeable than I am, have spent time trying to exactly figure that out. It's not only speculators; it's what the security premium in the market is. In other words, is what's driving the price higher the Iranian nuclear program, the Middle East situation?

Subcommittee on Oil and Gas and Other Energy Prices committee  Sure. Nobody consumes crude oil--nobody. Consumers consume gasoline, diesel, and various other products. But at times the market will be driven by various parts of the market. If there's a shortage of crude and crude prices run up, if it's really crude-driven you'll see a shrinking in the refining margin because refiners are trying to outbid each other for crude that's scarce.

Subcommittee on Oil and Gas and Other Energy Prices committee  My answer is that it's going to cause the price to go up. I don't care where you put it on or how you do it; if it's a tax, it has to be reflected eventually in the price. That's my personal perspective.

Subcommittee on Oil and Gas and Other Energy Prices committee  I think that's a question for the guys this afternoon.

Subcommittee on Oil and Gas and Other Energy Prices committee  Inventory is only one piece of the equation. Production is the other piece. Production goes up and down with demand.

Subcommittee on Oil and Gas and Other Energy Prices committee  Did any houses run out?

Subcommittee on Oil and Gas and Other Energy Prices committee  I don't understand the question, then.

Subcommittee on Oil and Gas and Other Energy Prices committee  The price has gone up because the demand for crude has gone up. You're only seeing one piece of the puzzle by looking at U.S. statistics.

Subcommittee on Oil and Gas and Other Energy Prices committee  Again, it's back to inventory. I think you're putting too much importance on the ability of inventory to solve all problems. It will only solve the problem for the duration that you have the inventory. That may work at times; it may not work at other times. In my experience, I was in one situation in my total career where there was a supply situation in Ontario.

Subcommittee on Oil and Gas and Other Energy Prices committee  I'd agree with that as well. The only thing I'd add is that the industry has to produce ultra-low-sulphur diesel, which is added to the cost. It probably costs more to produce diesel now. My belief is that diesel is the cause of the run-up in crude prices. It's not crude prices that are driving the market; it's diesel prices worldwide.

Subcommittee on Oil and Gas and Other Energy Prices committee  I think that is one of the concerns people see in the industry: the high prices of crude oil have not resulted in an increase in reserves. That plays into the peak oil theory. If you look at the major producers, their production levels are flat to declining. Some of the independents in the U.S. are seeing some growth in production.