INST Committee Meeting

37th PARLIAMENT, 2nd SESSION

Standing Committee on Industry, Science and Technology

EVIDENCE

CONTENTS

Tuesday, May 13, 2003

º

1615

The Chair (Mr. Walt Lastewka (St. Catharines, Lib.))

Mr. Roland Boulé (President of the Regional Executive, Estrie Region, “Association professionnelle des chauffeurs de taxi du Québec”)

º

1620

The Chair

Mr. Frédéric Quintal (Spokesperson, “L'essence à juste prix”)

º

1625

º

1630

º

1635

The Chair

Mr. David Chatters (Athabasca, Canadian Alliance)

Mr. Roland Boulé

Mr. David Chatters

Mr. Roland Boulé

Mr. David Chatters

º

1640

Mr. Roland Boulé

Mr. David Chatters

Mr. Roland Boulé

Mr. David Chatters

Mr. Roland Boulé

Mr. David Chatters

The Chair

Mr. Gilbert Normand (Bellechasse—Etchemins—Montmagny—L'Islet, Lib.)

Mr. Frédéric Quintal

Mr. Gilbert Normand

M. Frédéric Quintal

º

1645

Mr. Gilbert Normand

M. Frédéric Quintal

Mr. Gilbert Normand

Mr. Frédéric Quintal

Mr. Gilbert Normand

M. Frédéric Quintal

Mr. Gilbert Normand

M. Frédéric Quintal

Mr. Gilbert Normand

M. Frédéric Quintal

º

1650

Le président

Mr. Paul Crête (Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, BQ)

Mr. Roland Boulé

Mr. Paul Crête

Mr. Roland Boulé

Mr. Paul Crête

º

1655

Mr. Frédéric Quintal

Mr. Paul Crête

Mr. Frédéric Quintal

»

1700

The Chair

Mr. Brent St. Denis (Algoma—Manitoulin, Lib.)

M. Frédéric Quintal

The Chair

Mr. Dan McTeague (Pickering—Ajax—Uxbridge, Lib.)

The Chair

Mr. Frédéric Quintal

Mr. Brent St. Denis

»

1705

The Chair

Mr. Brent St. Denis

M. Frédéric Quintal

The Chair

Mr. James Rajotte (Edmonton Southwest, Canadian Alliance)

M. Frédéric Quintal

»

1710

Mr. James Rajotte

M. Frédéric Quintal

Mr. James Rajotte

Mr. Frédéric Quintal

Mr. James Rajotte

M. Frédéric Quintal

Mr. James Rajotte

Mr. Frédéric Quintal

»

1715

Mr. James Rajotte

The Chair

Mr. James Rajotte

The Chair

Mr. James Rajotte

Mr. Roland Boulé

»

1720

Mr. David Chatters

The Chair

Mr. Dan McTeague

Mr. Roland Boulé

Mr. Dan McTeague

Mr. Roland Boulé

Mr. Dan McTeague

Mr. Frédéric Quintal

Mr. Dan McTeague

M. Frédéric Quintal

Mr. Dan McTeague

M. Frédéric Quintal

»

1725

Mr. Dan McTeague

M. Frédéric Quintal

Mr. Dan McTeague

M. Frédéric Quintal

The Chair

»

1730

Mr. James Rajotte

The Chair

Mr. James Rajotte

The Chair

Mr. Serge Marcil (Beauharnois—Salaberry, Lib.)

The Chair

Mr. James Rajotte

The Chair

M. Paul Crête

The Clerk of the Committee

Mr. Paul Crête

The Clerk

Mr. Paul Crête

The Clerk

Mr. Paul Crête

The Clerk

The Chair

M. Paul Crête

The Chair

Mr. Gilbert Normand

Le greffier

Mr. Paul Crête

The Chair

Mr. Paul Crête

The Clerk

Mr. Paul Crête

The Clerk

Mr. Paul Crête

The Chair

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CANADA

Standing Committee on Industry, Science and Technology

---

NUMBER 044

l

2nd SESSION

l

37th PARLIAMENT

---

EVIDENCE

Tuesday, May 13, 2003

[Recorded by Electronic Apparatus]

º  (1615)  

[English]

    The Chair (Mr. Walt Lastewka (St. Catharines, Lib.)): Order. We are meeting today, pursuant to Standing Order 108(2), for consideration of the possible causes of the recent increase in the price of gasoline and the significant negative effects the increase is having on the economy, and to recommend appropriate corrective measures to the federal government.

    Today we have two witnesses, Frédéric Quintal and Roland Boulé.

    Some of the documents are in English, some are in French, but as we did yesterday, we'll circulate all the documents. Some of them are just charts, and it's good for you to have the charts.

    I apologize for being late. There was voting in the House. We'll begin with ten minutes from each of you, and then we'll go to questions.

    Mr. Boulé, s'il vous plaît.

[Translation]

    Mr. Roland Boulé (President of the Regional Executive, Estrie Region, “Association professionnelle des chauffeurs de taxi du Québec”): Thank you, Mr. Chairman.

    Ladies and gentlemen, members of the standing committee, allow me to introduce myself. My name is Roland Boulé, and I am President of the Regional Executive, Estrie Region, of the Quebec Professional Taxi Drivers Association.

    The Quebec Professional Taxi Drivers Association is a non-profit organization representing all Quebec taxi drivers. The Association currently has more than 5,400 members who are all taxi drivers. We feel we must appear before the standing committee in order to state our position mainly on the significant economic effects of an increase in gasoline prices and to recommend corrective measures.

    We don't claim to know the possible causes of the recent rise in gasoline prices. However, like most people, we see that oil company profits are going straight up in tandem with that increase. The Quebec taxi industry underwent a reform when the Act respecting transportation services by taxi went into effect on June 21, 2001. That act was followed by the adoption of regulations.

    The industry must renew its fleet and invest significant amounts in equipment acquisition. As vehicle acquisition costs rise, the industry must cope with the recent increase in gasoline prices, which further complicates its task. A few statistics are necessary at this point. Currently, 19,004 persons hold taxi drivers licenses permitting them to ply their trade in various cities and regions of Quebec.

    According to the Quebec Transport Commission, 5,564 individuals and corporations own 8,452 taxi licences. There are three classes of licence operators and taxi vehicles: taxi drivers, owner-operators and owners. Each of those classes is defined in detail in our brief.

    Contrary to public belief, there are few taxi fleet owners. Those fleets are not as big as those that may be found in Toronto or Ottawa. The media often confuse taxi service agents with fleet owners. Consequently, when we deal with the impact of gas price increases, we're dealing with the consequences for individuals and small businesses.

    The SECOR Group has published a study showing that, in 1998, when gas sold at the pump at an average cost of 55¢ a liter, gasoline constituted 39.2% of a taxi licence owner's variable costs and between 17.2 and 20.1% of all a driver's expenses. That's the most important supply in operating a taxi licence. In absolute terms, a taxi licence owner or driver must spend an average of $3,869 a year to operate a single taxi licence.

    Since 1998, individuals responsible for paying for fuel have been affected by a 30- to 45-% increase in the price of their biggest supply. That often results in personal income reductions for self-employed workers. Taxi driver incomes are regulated by the Quebec Transport Commission through a fare schedule.

    The fare amendment procedure is quite complex, as a result of which there can be no applications for fares to be fixed at regular intervals to reflect changes in gas prices at the pump. In addition, drivers can't have their meters modified every month.

    Taxi drivers are dealing with a main supply the prices of which is dictated by the free market, whereas their incomes are regulated by a control agency which must also take the public interest into account. Taxi drivers must always consider that it is established that a 1% increase in taxi rates results in a 1.2% loss of clientele. Consequently, the fare increase mechanism should be sparingly used.

    The taxi is a means of transportation favoured by business people, institutional customers, tourists and persons with low income or reduced mobility. It is unlikely that gas price increases and, consequently, taxi rates will reduce the business clientele. However, the impact on large corporate consumers of taxi services which must move employees from one place of business to another will be significant.

    As for tourists, we find it hard to see how an increase in taxi fares resulting from a rise in gasoline prices could reduce that clientele, which often has no other choice but to take a taxi when travelling in the country they are visiting.

º  (1620)  

The only consequence would be to make taxis less competitive with other means of transportation such as the bus.

    A rise in taxi fares attributable to increased gas prices will eventually affect more vulnerable persons. They will stay at home for lack of affordable means of transportation, either because they have low incomes or because they have problems walking.

    The gas price increase doesn't have just economic effects. It can also result indirectly in social problems of isolation for persons who rely on the taxi as their primary means of transportation.

    Let's move on to the solutions we suggest. The first solution would be to harmonize the federal government's rules on tax credits with those of Quebec. The Quebec government has included in its tax legislation a tax credit for every taxi licence equal to 2% of a taxi company's revenue to a maximum of $500.

    This measure would have the effect of preventing taxi drivers from adjusting their fares at any time to reflect the increased cost of their principal supply. This measure would have no impact on the clientele and would have the spillover effect we referred to. According to the calculations in our brief, we estimate that this measure would cost the Quebec public treasury at most $7 million.

    Our second suggestion is based on the situation of taxi drivers in France. Taxi drivers in that country pay no tax on the first 5,000 liters of regular gasoline consumed. In Canada, it would be possible to consider exempting taxi drivers from paying the federal excise tax of 10¢ per liter on the average amount of gasoline consumed by a driver in one year. In Quebec, operating a taxi licence for one year requires that an average of 7,000 liters of gasoline be purchased. The federal excise tax exemption would cost the Treasury nearly $6 million. The two measures combined would cost the public Treasury approximately $13 million for Quebec.

    To manage this measure, we recommend that the excise tax be refunded when the taxi driver is required to make his GST remittances. In that way, taxi drivers would benefit from the measure four times a year. The tax credit we refer to would be applicable once a year.

    In conclusion, the effects of the gasoline price increase compel us to choose between having taxi drivers absorb the additional cost and passing the increase on to taxi service consumers.

    We believe that the Canadian government must act immediately to protect an industry which depends in large part on fuel prices. It must do so by adopting flexible, fair and equitable measures to help an industry consisting of more than 19,000 workers in Quebec.

    Thank you. This ends my presentation. If you have any questions to ask me, I'm prepared to answer them.

[English]

    The Chair: Thank you.

    Mr. Quintal.

[Translation]

    Mr. Frédéric Quintal (Spokesperson, “L'essence à juste prix”): I would like to thank our federal political institution for the opportunity to express my point of view on the oil industry issue as an ordinary Canadian consumer.

    I have been an observer of the situation and a stakeholder in this cause since October 2000. I have approximately 150 media interviews to my credit, and I took part in a political process at the provincial level in Quebec City in October 2001.

    The purpose of this submission is to show that the natural laws governing the market place have lost a great deal of their effect in the oil industry in North America. The arguments concerning factors that affect prices such as the cold winter, vehicles that consume more gas, a strike in Venezuela and so on are, after all, factors that did not have such a major impact on prices before 1998.

    Lack of regulation in the search for constantly increasing profits, dubious mergers, pushing refining capacity to the limit, deliberate price manipulation, which has been admitted and acknowledged by industry representatives, all serve to explain the extremely volatile price fluctuations over the past three years.

    This committee has decided to shed light on the oil industry. I would say to it that what hurts an economy most are sharp and uncontrollable movements. Our Canadian government has tools to control interest rates through the Bank of Canada. It also has a telecommunications rates control instrument in the CRTC. It also has a control instrument in the agricultural boards in order to set quotas and determine the prices of certain commodities.

    Table 1 shows changes in monthly refining margins in the oil industry. Those changes may vary by as much as 120% from month to month. I know that the oil company representatives who appeared at the last hearings explained that they were responsible for only 15% of the components of the price of gasoline, that 85% of the price is determined on international markets, and that there are taxes. But you must recognized that, in that 15%, there were monthly fluctuations in the refining margin of up to 120% over the past three years. That's starting to hurt the economy, and it's mainly on this point that I want to shed some light.

    On another matter, I'm going to talk about a point that we don't really control here, which is the price of oil. In January 1986, the OECD warned the industrialized countries that, within 10 years, world demand for oil could reach a level that was sufficiently close to production capacity and that that would cause situations of vulnerability. What happened in December 2002? Venezuela went on strike, and a 3% shortfall in global production resulted in a 25% increase in the price of oil in four weeks. Let's do a little calculating. Venezuela deprives itself of $75 million of revenue per day, whereas the other producer countries take in additional profits of $490 million as a result of the increase from $26 to $33.

    The industry often says it's taken a bit by surprise. Today, 50% of vehicles on North American roads are sport utility vehicles. As a consumer, I tried to see whether it was possible to determine the profile of the fleet of vehicles on the road today. I called the Régie de l'assurance automobile du Québec, and they were able to give me a profile of the motor vehicle fleet on our roads: three million cars and 851,000 light trucks, sport utility vehicles, 4 x 4 and pick-up trucks. As a consumer, I was able to obtain access to those figures.

    On certain Web sites, that of the Energy Information Administration among others, extremely accurate information is given on annual mileage by type of vehicle. In the appendix, I've presented an unscientific indexed inventory of 69 sports utility vehicles that are on our roads. In 2003, Chrysler came out with the Pacifica, but that vehicle was on the drawing boards in 1999. It is possible to obtain this information, and I would like the oil industry to stop telling us that it was surprised when it found itself with vehicles that consumed more gasoline. It was predictable.

    As for the cold winter, everyone came up with the argument that winter was cold this year. It's as though a cold winter in North America was a new thing. I remember that the winter of 1994 was much colder. I went to check at a weather office in the Montreal area, and, in the appendix, I've provided the minimum and maximum temperatures for each day in January and March 1994 and January and March 2003.

º  (1625)  

The minimum temperature for winter 1994 was one degree colder and the maximum 1.6 degrees colder. And yet, in Table 9, which is a compilation from 1995 to 2001, you will see that the average annual refiner margin for motor gasoline virtually did not change in 1994, despite the cold winter. There was no difference. However, you see that, starting in 2000, the refiner margin rose from 22¢ or 23¢ to 29¢ a gallon, in U.S. currency, then to 34¢ a gallon in 2001.

    What made the refiner margin suddenly fluctuate and become a much bigger source of profit? Mergers. In the document I have here, I've prepared a list of some mergers which I was able to index personally. There were many others.

    In 1981, the number of refineries in the North American market was 324, and it fell to 155 in 2001. The capacity utilization of those refineries was 68%  in 1981 and is now 92%  and even occasionally 95%  during certain peak periods.

    The Conference Board study on page 12 states that, in the 1990s, the benchmark price set on the basis of American wholesale prices favoured Canadian consumers. That study was published in February 2001. I'm sorry, but, in the past two years, the American market has favoured us more; the American market is sick. A single refinery closes for an annual two-week maintenance period, and that affects the inventory of finished products and forces prices up.

    In May 2001, Valero Energy was allowed to acquire Ultramar Diamond Shamrock and found itself with 13 refineries. It is extremely profitable for Ultramar Diamond Shamrock and Valero to close a refinery for maintenance because that increases their refiner margin by 2¢ a liter in the other 12 refineries. That should be monitored.

    I'll give you the example of a product everyone knows: orange juice. That's a very healthy market. In 1994, frozen concentrate products were mainly sold in the orange juice market. In 1994, a company called Tropicana identified a new potential market share. There were people who were ready to pay more to avoid having to add water to a concentrate, who wanted a fresh, ready-to-drink product: freshly squeezed juice. In 1994, Tropicana did not hesitate to increase its production capacity to go after that new market. We would never have seen that if oil company presidents had been put at the head of orange juice companies in 1994. Frozen concentrate would cost $2, $3 or $4 and there would be price fluctuations.

    What I'm presenting here is a market where there is healthy competition. It also involves a raw material, the orange, which is accessible once a year during the harvesting period, not a product like oil which is accessible 12 months a year.

    I've also shown how the oil industry has structured itself over the years to increase its profits. In the 1980s, demands declined and many facilities were closed, and refiners received permission to exchange supplies. Esso closed its refinery in Quebec, but still has service stations there served by competitors. Eliminating refineries enabled it to increase its profits. There were also cuts from 1990 to 2001: 4,500 Shell and Esso service stations closed their doors in Canada. That was an extraordinary saving in the number of points of sale that had to be supported. As to the third source of profits, the smaller number of points of sale made it possible for the remaining service stations to increase their daily volume of liters sold. Those increased sales made it possible to allocate a single service station's fixed costs over a larger number of liters sold, thus resulting in a reduction in fixed costs per liter sold. That's a third source of profits. The last is the most important. Since everyone decided to base their benchmark price on the New York or Chicago price, every time something happens, with the smallest change in demand in the American market, our refiner margins in the wholesale price, which are based on American prices, fluctuate and follow them. The Canadian market is healthy, but, since the 1990s, it has been based on American benchmark prices, which we should no longer depend on.

    I'm saying that the American market is not healthy. During the hearings, reference was made to the statement by William Greehey, President of Valero Energy, who suggested that he saw no new refining capacity on the horizon and that, instead, we would be facing longer periods of higher refiner margins and shorter periods of lower refiner margins.

º  (1630)  

    I therefore recommend that the Canadian government legislate to create a monitoring agency whose mandate would be to control and supervise the factors that influence the refiner margin price, refiners' crude oil inventory levels, the finished product inventory level that should be maintained and the inventory level that should be maintained for peak consumption periods such as winter in the case of heating oil. It's predictable and it can be established.

    This is not an exaggerated or wild request I'm making. In March 2001, I unofficially met with Mr. Perez of the Canadian Petroleum Products Institute, and he agreed to face a monitoring agency similar to the CRTC in the case of telecommunications. Mr. Perez even agreed to talk about that unofficial meeting on the CPPI's Web site. I have appended the letter I submitted and the project that was supported by the CPPI.

    What I'm asking you is not crazy, despite last week's refusal by Mr. Blaney of Shell, who said that he would not do business with Canadians if the Canadian trade environment was too regulated, that he would leave Canada. Mr. Perez, the CPPI's president, said he could live with an agency that would regulate the oil industry's commercial practice in Canada. That's mainly the request I'm making here.

º  (1635)  

[English]

    The Chair: Thank you very much.

    Mr. Chatters.

    Mr. David Chatters (Athabasca, Canadian Alliance): Thank you, Mr. Chairman.

    I really don't know where to go with these two presentations, particularly the taxi industry presentation. I listened attentively, and I can't really see where either presentation is really relevant to what this committee is trying to achieve. I'm sure any agricultural group or any trucking firm could come and make the same pitch on the effect on the industry of the price of gasoline.

    Certainly I sympathize with that challenge, but it really doesn't have any relevance to what we're trying to achieve here, which is to identify evidence of any price-fixing or collusion in the industry that is gouging the consumer. So these are really difficult presentations to respond to.

    However, I do have a question for the taxi industry representative: Is the industry in Quebec an unregulated free market system? Can anybody buy a car, put a taxi sign on it, and become a taxi driver?

[Translation]

    Mr. Roland Boulé: No, not just anyone can buy in; it's regulated by the Quebec Department of Transport. There's the new Bill 163 in the taxi industry in Quebec. To buy a taxi licence, you really have to...

[English]

    Mr. David Chatters: In that sense, then, the taxi industry holds a monopoly in Quebec; it's not open.

[Translation]

    Mr. Roland Boulé: It's not a monopoly; it's the Department of Transport that manages the licences. You buy a taxi licence at its market value, at the market price. The government cost to transfer the licence is $250. You can buy a licence from someone who wants to sell it, at the market price. In addition, if there is a need and someone can prove that an additional taxi licence is necessary, the government will issue an additional taxi licence, depending on the area, region or city.

[English]

    Mr. David Chatters: After listening to the two presentations today and to yesterday's presentations, it strikes me that if each particular interest group that's made a presentation finds a fluctuation in gasoline prices, up and down, without previous notification of this fluctuation...

    Why aren't you making presentations to the Government of Quebec to regulate the industry in Quebec and stabilize prices? It's perfectly within the jurisdiction of the Province of Quebec to regulate gasoline prices in the province. It seems to me that's what you're looking for. It's not within the purview of the federal government to regulate gasoline prices.

    Why are you making the presentation to the federal government rather than the provincial government?

º  (1640)  

[Translation]

    Mr. Roland Boulé: The provincial government has already reacted. At the end of the appendix, you'll see that the Quebec government has granted a $500 tax exemption at the end of the year for each taxi licence. It's on the last page of the appendix to the brief.

    The cost of gasoline increases constantly. As the provincial government has already done its share, the federal government should do the same one day.

[English]

    Mr. David Chatters: But it's not within the jurisdiction of the federal government to stop gasoline prices from rising and falling. It's within the jurisdiction of the province.

[Translation]

    Mr. Roland Boulé: The provinces are responsible for determining prices so that the prices of taxi licences can be set, but changes in the oil price hurt us a lot. Gas is our biggest expense. The place where we can make ourselves heard today is here. We're telling you that we can't move quickly in the case of price setting. When we apply to the provincial government to increase fares, we have to wait four to six months before we get an answer, negative or positive. You have to wait four to six months just to get an answer from the Quebec Transport Commission.

    We have to find an easy way to manage this system. The best example is that of France. If the 10¢ excise tax were abolished, that would be a major gain for us and wouldn't penalize the clientele.

    I'll give you the example of the postal workers.

[English]

    Mr. David Chatters: It wouldn't reduce the fluctuation of gasoline prices just because you have the excise tax back on your... It wouldn't do anything to reduce the fluctuation in prices.

[Translation]

    Mr. Roland Boulé: It wouldn't do anything to reduce the fluctuation in prices, but for us, it would be a major change, for the GST.

[English]

    Mr. David Chatters: Well, the same thing would make a lot of other industries much more profitable, but I don't think that's what we're here to talk about.

    Mr. Chairman, I think that's all I have.

    The Chair: Thank you very much.

    Monsieur Normand.

[Translation]

    Mr. Gilbert Normand (Bellechasse—Etchemins—Montmagny—L'Islet, Lib.): Mr. Quintal, you're very well informed. However, I would have liked to know what causes the difference between the price of oil here in North America, in Canada and in the United States, and in Europe, in England, for example, where oil can cost between $2 and $2.50 a liter, if you convert to Canadian dollars.

    Mr. Frédéric Quintal: The price of gas is much higher in the European countries mainly because of taxes. If you factor out the tax, you see that the cost price of crude oil, the refiner margin, distribution expenses and the retailer's mark-up are virtually the same as here. There's very little difference.

    I went to Paris a year ago. Gasoline cost the equivalent of $1.50 per liter. It's really the tax that makes the difference. That was a European decision to discourage gasoline consumption. France, among others, which has no oil and must buy its oil outside the country reduced consumption by imposing a lot of taxes in order to avoid a trade deficit. That's really a shock treatment.

    When you go to France, you see small three-cylinder cars, Smart cars, public transit, trains that run on time. It's spectacular. I spent six days there last year, and, for six days, the suburbanite I am very readily became a city-dweller on foot because it's functional.

    Mr. Gilbert Normand: Here in Canada, the oil companies are controlled in large part by foreign interests. Do you think that's the major difference resulting in these fluctuations? Do you think that's attributable to the fact that we don't have investment legislation in the energy field?

    M. Frédéric Quintal: I've taken a look at the history of this in Canada. In the past, the Canadian government intervened at a very high level through certain regulations. One thinks of Bill C-42, which was passed on March 21, 1979, to enable Petro-Canada to be fully responsible for oil supplies imported for all Canadian refineries. That was because of a low blow by Exxon corporation, which had diverted an Esso tanker headed for the refineries in the east to its American refineries when supplies from Iran were halted. That justified Bill C-42.

    There was the National Energy Policy. Mr. Trudeau, of the Liberal government at the time, wanted to prevent this wonderful Canadian natural resource from falling into foreign hands. That lasted some time. It worked, but there was a lot of protest.

    When you look at the financial power of the oil lobby, you see that Exxon's sales are greater than Canada's annual budget.

º  (1645)  

    Mr. Gilbert Normand: There was a lot of talk in the newspapers about the political problems in Venezuela this past winter. The Venezuelan government accused the Americans of wanting to overturn it in order to protect the oil companies. Do you think that it would be possible to consider imposing a surtax here in Canada on exports to the United States?

    M. Frédéric Quintal: I'm not a specialist on oil transactions in foreign markets. That's been done in the past, but it's not my area. The main problem today is that the base price, the benchmark price of products coming off the loading ramps, the Canadian wholesale price is based on American wholesale prices and that this system no longer favours Canadian consumers and never will again. I don't see how it could favour them in the coming years because many businesses in the American market have merged or been rationalized to make refinery capacity very tight.

    In April 2000, when the refinery on Aruba, an island north of Venezuela, burnt down, that made the refiner margin fluctuate in Canada, at least in the Montreal area, change to 14.5¢ a liter. Since only one refinery in the Caribbean was not enough, the North American refineries were glad to serve that refinery's clientele in the Caribbean, and that had a spillover effect. The Canadian refineries did not have a shortage at that time, but since the market was based on prices in New York, they had no choice. Oil company spokespersons told us they had no other choice but to follow suit.

    Mr. Gilbert Normand: You can read right now that Canada is the biggest supplier of the United States, with approximately 6%. We have reserves that could meet the needs of the planet for about 100 years with the oil sands.

    Mr. Frédéric Quintal: Yes, mainly.

    Mr. Gilbert Normand: We're also told that the oil sands are not profitable when the price is below $25 a barrel. Do you believe that Canada could contemplate being self-sufficient? There's obviously a delivery problem when you ship from the west to the Atlantic provinces, but do you believe it's possible to consider becoming self-sufficient before exporting?

    Mr. Frédéric Quintal: That started on January 17, 1974, when Industry Minister Donald Macdonald announced the construction of the Sarnia-Montreal pipeline to supply Montreal refineries with heavy oil from western Canada. However, when refineries started closing in the east end of Montreal, the first four refineries that closed were refineries that were unable to process heavy oil from the west. The last was Gulf, in September 1985. Starting in September 1985, the Sarnia-Montreal pipeline became the Montreal-Sarnia pipeline; that was oil imported from Portland to Montreal that then went to Sarnia. That's lasted until now.

    Mr. Gilbert Normand: We're currently experiencing a difficult situation mainly in the east. Natural gas from Sable Island goes to Boston, and all of eastern Quebec is not served. New Brunswick is virtually not served.

    M. Frédéric Quintal: I don't know about natural gas. I focused on gasoline and oil.

    Mr. Gilbert Normand: In any case, it's on the subject...

    M. Frédéric Quintal: I would like to come back to the question of operating expenses for oil sands oil. I read an article, and I was told earlier--the data will differ--that the cost to extract a barrel of oil from the oil sands in northern Alberta was approximately $18. So, before considering establishing a system under which the price of oil could be disconnected from the global market, with a floor price of $22 or $23 to enable the oil companies that operate it to make a certain profit and a ceiling price to enable Canada not to fall victim to prices of $38 or $39 a barrel, such as those we saw in February, before the war in Iraq, we should think carefully about it. Mr. Trudeau tried to do so in 1980, and that ended in 1985, because the financial weight of the oil companies prevailed over the Canadian government.

    Mr. Gilbert Normand: You're asking that a price monitoring and control committee be established. Should the Canadian government's entire energy policy be reviewed?

    M. Frédéric Quintal: That's a think-about-it. Here I have a good study on competition in the Canadian oil industry which was presented in 1986. Unfortunately, Brian Mulroney vetoed its publication. I don't know when the veto was lifted, but, 17 years later, it's available. Let's look at the chronology of Canadian government intervention in the oil industry. It started in 1957 and ended in 1985. It's up to you, the Standing Committee on Industry, Science and Technology, to enter the next date.

º  (1650)  

    Le président: Thank you.

    Mr. Crête.

    Mr. Paul Crête (Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, BQ): Thank you for coming and making a presentation. Mr. Chatters asked you what you were doing here, Mr. Boulé. A representative of the multinational Shell came and made a presentation to us two weeks ago. He said in his brief that short-term gasoline price fluctuations had no economic impact. So that's a good reason for you to be here.

    Explain to us what the three months when the price of gasoline was very high meant for a taxi driver. Perhaps you have examples from home, from your region. What are the consequences for a taxi driver of a sudden increase in the price of gasoline, without any control?

    Mr. Roland Boulé: Normally, I use $26 worth of gasoline during a shift.

    Mr. Paul Crête: If Mr. Chatters listened, that would be good.

    Mr. Roland Boulé: As a result of the gas price increases that have occurred, I spend $30 or $31 per shift. As there are two shifts for every taxi car, that represents an increase of $8 to $10 per 24 hours of operation.

    That money is taken directly out of the pocket of the taxi owner, who can't and won't pass on the bill to customers because he would lose clientele every time a rate increase request was made.

    Second, if a rate increase request is made, the customer is penalized. Part of the working class and an appreciable class in society cannot own a vehicle or does not want to own a vehicle. If prices increase, customers will think twice before taking a taxi.

    Third, disabled persons cannot always afford to travel. If costs increase, those people will also be penalized. It's always the consumer who's ultimately penalized.

    Mr. Crête, you said that Mr. Chatters was wondering what we're doing here. Ultimately, in the taxi industry, we would like to have something across Canada that could ensure that there is a balance between clientele and oil interests, which are not regulated. We in the taxi industry are regulated. Laws exist and things are imposed on us. We're told that we can't do too much or go any further.

    If we really had a free market, we could charge the prices we'd like. That would be quite different, but there would be no logic.

    Mr. Paul Crête: Thank you, Mr. Boulé.

    Mr. Quintal, in your recommendation, you talk about creating an oil industry monitoring agency, the tasks of which you describe. I won't read them.

    From what I understood, it would not be a price monitoring agency, but a kind of observatory which would provide us with daily or monthly reports on the situation so that we could know exactly what is going on with respect to refiner margins.

º  (1655)  

    Mr. Frédéric Quintal: It goes a little further than that, Mr. Crête. That agency would not merely observe; it would also intervene. Things have gotten out of hand in recent years; there's been abuse by the industry.

    The Americans created the strategic petroleum reserve in 1977, a strategic reserve of 600 million barrels to be used in case of extreme crisis. In February, despite the intensity and constant escalation of the U.S. intervention in Iraq, they never touched it. I refer to it in my brief where I discuss certain arguments of the U.S. Energy Secretary, Mr. Abraham. In other cases, when the refinery closes for an annual maintenance period, as was the case of Tosco in New York in May 2001, that affects the price.

    Action should be taken so that there is a little more authority in this area of the industry, particularly in view of statements such as that by the president of Valero Energy, Bill Greehey, who says he doesn't see any new refinery capacity on the horizon.

    Mr. Paul Crête: You tell us we now rely on the price of the American market, the New York market. That may have been advantageous in the past, but it isn't anymore. That's what I understand when we're told that we take the refiner margins from the New York market and apply them in Canada. There's something a bit indecent about that.

    What should we do to ensure there is genuine competition between corporations and so as not to rely simply on the price determined in another market, so that all companies adopt exactly the same profit margin? What measures would you suggest?

    Mr. Frédéric Quintal: To restore healthy competition in the market, it would be necessary to... You know that started in the 1980s, when the refineries began to close in certain provinces. That permitted what's described in the Conference Board's February 2001 study, that is the switching or exchange of supply with areas not served by a refinery. As a result of that friendly behaviour, companies started talking to each other and becoming less competitive in order to preserve their market share and territory.

    It took time to happen; we didn't see it coming. It wasn't a question that concerned me at the time, in the 1980s. The U.S. market benchmark price was introduced in the 1990s. Those people were visionaries; they did that in anticipation of extraordinary profit-taking.

    Two years ago, I took part in a televised debate in which Carole Montreuil, Quebec's spokesperson at the CPPI, said that, if we didn't follow the base price, the benchmark price of the Port of New York, big oil interests would siphon our reserves of product refined in Montreal. That made me a bit angry in that their priority was to get the best rate on the wholesale price, wherever it might be in the world. Their first concern is not to provide good service to the network of service stations in Quebec or elsewhere in Canada. Their objective is to go after the best possible price on what they refine and not to serve their clientele. I find that way of proceeding insulting.

    A system must be established in which an agency sets the Canadian wholesale price, a little like the CRTC does every time Bell Canada wants to raise its rates. It's a different market, but a comparison can be made. Every time Bell Canada wants to change its long distance rates or base rates, it has to appear before the CRTC. If Hydro-Québec was a private company and followed the American market, today we'd be paying hydro rates that are three times higher than at present.

    I'm talking about nationalizing and that's another thing, but, as Mr. Girard explained yesterday, in view of its enormous importance in the day-to-day operation of the economic structures of the industrialized countries, perhaps we should consider gasoline as an essential good and put it in a separate class. The problem is that on the day the first oil deposit was discovered somewhere on earth, the person who discovered it became richer than the government authorities defending the interests of consumers. From that moment on, perhaps 100 years ago, the oil industry's financial power has always prevailed over the public interest.

»  (1700)  

[English]

    The Chair: Mr. St. Denis.

    Mr. Brent St. Denis (Algoma—Manitoulin, Lib.): Thank you, Mr. Chair, and thank you, gentlemen, for being here today.

    I'll be honest, I didn't enter this review believing the oil companies automatically were guilty of great crimes against consumers. While the system is not perfect, I believe that, for the most part, the marketplace over time would balance things out.

    To Monsieur Quintal, there have been numerous previous efforts to prove collusion or unfair marketing and pricing practices by the oil companies, which, at least at the federal level, have not yet proven the case. Now, you contend in your comments here that you believe there is some form of collusion or fixing of prices.

    What was wrong with the previous studies that they didn't find that out? What were the failings in the previous attempts to prove that the oil companies were doing improper things that resulted in unfairly high prices for consumers? I wonder if you would be able to address the failings of the previous efforts to prove that.

[Translation]

    M. Frédéric Quintal: First, I strongly suggest that you obtain a copy of this study. I can send one to you if necessary. You have it. I can send you a copy, Mr. St. Denis. I understand that Mr. Mulroney...

[English]

    The Chair: Maybe we can get that tabled with the clerk and then we'll circulate it.

    Mr. Dan McTeague (Pickering—Ajax—Uxbridge, Lib.): Mr. Chair, it may be helpful. That's the old Restrictive Trade Practices Commission's view on the industry. It was conducted by a fellow named Bob Bertrand, the former chair of the commission. The book is still available in the library here for anybody to see.

    The Chair: Okay.

    Monsieur Frédéric.

[Translation]

    Mr. Frédéric Quintal: We're talking about the Green Paper. That was in 1986, wasn't it?

    In that study, it was shown that there were risks. At the time, in 1985-1986, it was mainly a question of prevention. It was said that, if the industry was allowed to organize and structure as it was starting to do—it began to permit supply exchanges and to have a common wholesale price at the loading ramp—we would one day find ourselves with conditions that would eliminate the natural laws of the market, which is what we're currently seeing.

    What we've seen since 2000 is neither short-lived nor cyclical. The table in my Appendix 1 shows the exaggerated fluctuation in the refiner margin for every month. That margin was quite stable prior to 1998. There was good stability.

    I don't think I mentioned the word “collusion”, except that today we're observing similar behaviour. People have agreed not to increase production capacity at a given time, and that's become profitable. You have to watch out for that.

    Of course there are a lot of studies, in particular the Conference Board's February 2001 study, which states, at page 12, that basing the Canadian benchmark and wholesale prices on American prices is favourable for consumers because the American market is favourable. I'm sorry, but the events of winter 2003 and May 2001, when a single refinery in the Caribbean closed due to a fire, showed that that market was no longer favourable. The refinery's utilization capacity is too tight in relation to demand; it can no longer absorb anything. A single demand peak results in incredible profit-taking at the refiner margin level.

    I want to demonstrate that here this afternoon. Perhaps we should think about detaching ourselves from that way of structuring prices.

[English]

    Mr. Brent St. Denis: In the English version of your presentation, just for the record, you do use the word “collusion”. On the first page, in English, it says the purpose of the submission is to “establish the collusion that occurs in the industry”.

    My second part to the question is that because the oil companies... and we've seen issues of corporate governance happening in the U.S., with Enron, etc. I'm sure questions can always be asked about corporate governance, but generally there is a fair degree of transparency. For example, I could buy shares in Shell and go to the annual meeting.

    Inasmuch as many of the shares in these companies are owned by teachers' pensions funds, retired workers' pension funds, etc., it's the consumers who really have an opportunity to be involved in the governance of the companies. It's always confused me that consumers would somehow keep coming back to government when consumers can go to the companies, buy shares on the open market, and participate and ask questions. I've never seen any stories about consumers doing it on that side; they always come to government looking for solutions.

    That's not to say they shouldn't, but it just occurred to me it never—

    A voice: They can't afford it after... [Inaudible—Editor]...

    Mr. Brent St. Denis: I'd like him to answer the question, or Mr. Boulé; maybe he has shares, I don't know.

    When you buy gas, instead of getting Aeroplan points, you should get points to buy shares in the company so that you get dividends back on the profits to supplement your gas price.

    A voice: Right on.

»  (1705)  

    The Chair: I know one thing, if we don't get to the question and the answer, we're going to run out of time, that's for sure.

    Who's going to answer the question?

    Mr. Brent St. Denis: So on the question of corporate governance in the oil industry, is there not an opportunity there for the public to be involved as well?

[Translation]

    M. Frédéric Quintal: Yes, of course. On the one hand, you can be privileged and take advantage of the extraordinary results and operating profits of those companies as a shareholder. Personally, I've invested in a Sun Life pension fund. That pension fund may own shares in oil companies, but I'm not aware of it.

    However, I deplore the price fluctuations. If, in my consumption habits, I decide to switch from frozen orange juice that cost $1 a can to a product that costs $3 a can, it's because I have decided to spend more money on a better quality product. All Canadian taxpayers work hard for their money; when they spend, they want value for their money. How is it that I can get more liters of gasoline for $50 now that I could in February? It's not because I'm getting better quality or better service; it's simply because that consumer product is in a system where profits are incredible precisely because of price fluctuations.

    I got nothing more in February when I bought gasoline; I merely allowed company owners to make additional profits. That's what I deplore. I'm ready to spend more, but I want something extra.

[English]

    The Chair: Merci.

    Mr. Rajotte.

    Mr. James Rajotte (Edmonton Southwest, Canadian Alliance): Thank you very much, Mr. Chairman, and thank you for coming in today, gentlemen.

    First of all, I do want to correct something that was said earlier. It was mentioned that the tar sands are profitable only at $25 per barrel, but in fact that's incorrect; they're profitable at $13 per barrel. That's their break-even point. I think we should use the correct figure.

    On your presentation, Mr. Quintal, this second one, you have the date, the refining margin, the cost, and the profit. Could I just ask where you obtained your cost from? What's the source for your figures?

[Translation]

    M. Frédéric Quintal: In his presentation last Wednesday, Mr. Ford Ralph, representing Petro-Canada, swore to us that, in the winter of 2003, I believe, he hadn't made more than 2.6¢ a liter in profit, from refining and retail sales together. I found those figures on the Web site of the Canadian Petroleum Products Institute. Those figures are compiled with the firm of MJ Ervin & Associates, which was here yesterday.

    We have an average refiner margin for every two-week period. There's a table for six or seven two-week periods covering all of winter 2003. For example, we see what the average refiner margin was for the period from January 8 to 21. A refinery's operating costs are approximately 3.5¢ a liter, and there are margins of up to 9¢ and 10¢. That's simply to show that, although Mr. Ford Ralph seemed sincere when he said he hadn't made more than 2.6¢ a liter in profit, there are ways of using figures to support the interpretation you want to make.

    But the facts are there: here are the actual refiner margins during winter 2003 and here are the operating costs. It's up to you to make your own deductions as to the actual profit per liter of gasoline sold. And I'm only talking about refining; I'm not talking about retail, and I'm not talking about the profits that Petro-Canada earned from the Hibernia and Terra Nova platforms.

»  (1710)  

[English]

    Mr. James Rajotte: That's actually what I'm asking. I see where you're getting the refining margin from; you have that here, in these documents. I'm just asking, where can I find the source for the cost being 3.5¢ for all of these dates? You say it's from MJ Ervin, but from which document here would I find that?

[Translation]

    M. Frédéric Quintal: I don't have any documents on operating costs. No official document will confirm operating costs for you, but I've been observing the situation for two and a half years and I very much defend the cause. I've met various stakeholders and I got those figures from unofficial discussions. Unfortunately, it's not scientific, but that's the industry average. That's what industry people say unofficially. Oil company spokespersons will be able to give you other figures.

[English]

    Mr. James Rajotte: But which people? To be fair, if we're going to be accurate, I think we should know where we're getting our figures from. You've done a good job of providing FuelFacts, which shows the refining margin, but you're saying within a refining margin there's quite a large profit, but to get the profit you're identifying the cost as 3.5¢. Now, I don't know whether it's 3.5¢, and I'm just asking....

    Before a House of Commons committee states that the cost is actually 3.5¢ and the profit is, say, 7.3¢, and accuses the oil companies of doing this, we should have some source for this. If someone has told you this, then we should have that person's name so that we can reference it and say, this person in the industry has assured us the cost is 3.5¢, and it does not fluctuate, and therefore, when the refining margin fluctuates, the cost stays the same, and therefore the profit goes up regardless of which way the price goes.

    It's just so that we can source this.

[Translation]

    Mr. Frédéric Quintal: I've tried to consult a number of files for two and a half years. I've managed to obtain copies of some 10 or 12 studies on inventory manipulations and a number of specific factors. Unfortunately, it seems that that information is kept totally secret in the industry. There are no publications or official documents. I was only able to gather testimonials left and right, and I was unable to record anything. However, if you hang around or manage to hang around with industry people, they'll tell you that that's an average.

    I unfortunately have no scientific data to support that statement. I wanted to write it down, even though it's not scientifically proven. The only recognized scientific data are those of MJ Ervin & Associates Inc. on the refiner margins for last year. The data on operating costs...

[English]

    Mr. James Rajotte: Okay, thank you.

[Translation]

    M. Frédéric Quintal: ...come solely from conversations I had with industry people.

[English]

    Mr. James Rajotte: I'm not sure how we'll include that in our report, saying that one of the witnesses talked to people in the industry and they told him this, but we don't know who any of these people are.

    I guess I do take your point, though, that MJ Ervin is an expert in this area, and he does provide excellent facts, so I think that will just be a difference of opinion.

    I do want to ask about your presentation when you talk about government interference in the past. Just to get you on the record, I'm not sure what page it is here, but in your recommendations you say, “The federal government has intervened in the Canadian oil industry in a very authoritarian way in the past.” I think you're absolutely right on that. And then you mention the creation of the National Energy Program. In your view, was that a good intervention or a bad intervention?

[Translation]

    Mr. Frédéric Quintal: I'm just starting to get an idea on that matter. I've only been working on it for four months. I'm developing an overview through newspaper archives that I'm consulting at a university library in the Montreal area. The program had its purpose, given the particular conditions of the time.

    At this stage, it is hard to form a personal opinion on the situation because I don't feel well enough informed; I don't have all the necessary information. For example, I find a 1980 article, which refers me to an article from 1978, which in turn refers me to an article from 1974. It's not complete enough. I've given myself roughly two years to conduct a complete study in my free time. I'll probably be able to say something more specific in two years. From what I've read on the program to date, I firmly believe that the government at the time, that of Mr. Trudeau, had reasons to act as it did because of the situation and the economic context of the time.

    In 1980, there was a certain myth of a possible shortage of global world supply. You read that in the newspaper articles from 1979 and 1980. That seems absurd today because we have incredible reserves, but the prospecting capacity and instruments of the time led people to believe there was a possible shortage. They also had a sense of the importance of self-sufficiency; they thought that Canada had to use its own natural resources before exporting them. I remember reading in the newspaper articles that that sense was very strong at the time.

»  (1715)  

[English]

    Mr. James Rajotte: Do I have time for another question, Mr. Chairman?

    The Chair: You have at least one more minute.

    Mr. James Rajotte: Okay.

    Just from reading through your recommendations and your analysis, it does seem to me to be very similar to what was done with the National Energy Program in many respects. I know you say you have yet to research it and fully comprehend it, but you can come out to Alberta any time and talk to all the people whose lives were destroyed, frankly, by that program. If it ever happens again, I just think...

    Well, I won't go there, Mr. Chairman.

    The Chair: I'd appreciate that.

    Mr. James Rajotte: But you could talk to the people whose lives were absolutely destroyed by that government action.

    I'll finish up with one last question to perhaps both of you, particularly to Mr. Boulé but also to Mr. Quintal, please.

    When you spoke, Mr. Boulé, I could certainly sympathize; when you're limited in your fare structure and the price of gasoline goes up, it certainly impacts you. Of course it does. But it seems to me that rather than having an exemption, or changing the Tax Act, the simplest thing to do, if you wanted to do it, would be to regulate the price of gasoline in the province of Quebec. And that is solely within the jurisdiction of the provincial government. They can do this. They don't need a mandate from the federal industry committee.

    Is this something you think the province should do, and would this not be simpler than somehow setting up an agency to monitor federal gas prices?

[Translation]

    Mr. Roland Boulé: The Quebec government has taken certain actions to assist the taxi industry. It has granted tax exemptions. I'll give you an example. We're entitled to a $500 exemption over five years to purchase new vehicles; that's to assist taxi owners.

    But the costs don't stop there. The new act has led us to buy new or nearly new vehicles, which automatically results in an increase in insurance premiums. It also results in higher expenses for automotive parts because the cars are more recent. We have to absorb all that, not to mention the fact that the gasoline market is completely crazy. We're talking about a 35 to 40 percent increase in prices.

    Ultimately, it's simple. The provincial and federal governments must make a joint effort to assist self-employed workers, small companies and taxi associations. We aren't multinationals; we're individuals. There are 8,000 taxi licences. These are individuals, not multinationals. If we were just a multinational, like the major oil companies, we could manage the situation and get ourselves out of it. But that's not the case. We don't have the power to stabilize and lower prices. We can't adjust; we can't move. We're in a straightjacket and we have to live with that. Our purchasing power diminishes from day to day and from year to year.

    We're telling the federal government that it's time to give us a hand. That's why you're here. We're asking you to grant us a 10¢ reduction in the excise tax. Give us that amount so that we can operate in the current market.

    We're not responsible for the fluctuation in gas prices. We use gas. I understand that it's tempting for the large multinationals to think that, since we use gas, they can change the prices. Why do prices change? This morning, I left Sherbrooke, where the price was 71.4¢. Here it's 65.7¢. That's what I saw this morning when I arrived in Ontario. And yet, there is oil. I ask myself the question. Why can't we have a fair and reasonable price? Companies are entitled to make profits, but I'm entitled to make profits as well.

»  (1720)  

[English]

    Mr. David Chatters: But you can't have—

    The Chair: David, I have to go to Mr. McTeague, and the chairman's taking at least a minute at the end.

    Mr. Dan McTeague: I'll be as brief as I can, Mr. Chair.

[Translation]

    Mr. Boulé, you just stated the price in Sherbrooke. How much was it?

    Mr. Roland Boulé: This morning it was 71.4¢.

    Mr. Dan McTeague: It was 71.4¢, and here it was 65¢?

    Mr. Roland Boulé: It was 65.7¢, yes.

    Mr. Dan McTeague: I wouldn't go so far as to agree with the Canadian Alliance, but that difference can be easily explained by the difference between provincial tax levels.

    Mr. Quintal, you commented on a study conducted in 1986. You also commented on the Conference Board. There's a link between that factor and the bill I introduced in 1988. It was defeated in committee, but it experienced good success. We subsequently had more success since I managed to have another bill passed, but it must be said that, at the same time, we made our... Have you read the recommendations that the Liberal Committee on Gasoline Pricing has made?

    Mr. Frédéric Quintal: It's the first document I came across when I started looking into this question in October 2000. It's a 1998 document from the Liberal Committee on Gasoline Pricing in Canada.

    Mr. Dan McTeague: I was the chairman of that committee. It should be said, however, that the data in that report were published five years ago. In that document, we tried to find solutions. Among other things, the Conference Board... [Inaudible—Editor]... of that recommendation. As a member and chairman of the committee, I was quite disappointed at the limits set on resources and at the Conference Board's ability to distribute a report designed to provide objective information not limited to the facts provided by Purvin & Gertz or MJ Ervin. The same thing is still said in the Fuel Facts report: it states that it's provided for the oil industry. It states lower down:

[English]

    “For the most current pump price survey...”

[Translation]

It's presented by and for the industry. These are obviously people who receive money from the industry.

    Do you have any examples to give us to facilitate matters for the committee? One of the objectives we could agree on would be to form an objective opinion of that industry. A price survey could be conducted at the federal level by independent people unrelated to the industry so that we can know whether the utilization rates are real or not.

    You could give us your opinion, and that could enable members to maintain an objective view of the industry. In my opinion, that doesn't exist at that time. Do you agree that the problem exists?

    M. Frédéric Quintal: I'm trying to understand the question.

    Mr. Dan McTeague: Where do the data and figures you have gathered and that appear in your documents come from?

    M. Frédéric Quintal: They're the appendices to my presentation.

»  (1725)  

    Mr. Dan McTeague: Yes, but those appendices are based on reports by MJ Ervin and Purvin & Gertz, the same people who presented the same figures to the Conference Board. The Conference Board made all kinds of suggestions in this regard, one of which posed a problem for you, the question of the market in the United States. The Conference Board made a recommendation which you found disturbing.

    Is one of your concerns individuals who provide this information? Are those people accountable to the oil industry because they work for it? Do they alone issue data, whereas they have interests in the industry?

    M. Frédéric Quintal: In the data compilation in my document, I often refer to InfoPrix, which is the Web site of the Canadian Petroleum Products Institute (the CPPI). I must acknowledge that the information provided seems good, official and certified. So I don't hesitate to use it.

    I also refer to the Energy Information Administration Web site, http://www.eia.doe.gov/; it's one of my favourites at home. The data you find there appears to be realistic. Of course, there are always different ways of interpreting it, but it nevertheless seems objective. I believe the data is reliable.

    Mr. Dan McTeague: Do you share the concern expressed in my report with the fact that, in Canada, we've gone from 35 refineries in 1986 to 19 or 18 now, I believe?

    As you know, Valero in Saint-Romuald will soon increase its capacity and will no longer serve the regions of Quebec alone, but also those of the United States.

    You cite as an example the situation prevailing in the United States, where they've gone from 350 to 155. We've observed the same phenomenon in Canada, where utilization rates have increased. The intention is to modify the refineries so that they can produce a gasoline product containing less sulphur. Do you believe that the implementation of these new standards will make the situation even more serious next year?

    M. Frédéric Quintal: Modifications will be made to the refineries so that they can meet the refining standard, a sulphur rate of 30 parts per million; that standard will be applicable starting in January 2005. In that connection, we can cite as an example California, where gasoline reformulated to cope with periods of intense smog appeared on its market in 1996. It was noted at the time that the availability of reformulated gasolines prevented California from gaining access to importers. It is this phenomenon more than any other that explains why the highest gas prices in the United States today are in California. Studies have been conducted to explain and confirm that.

    In Saint-Romuald two years ago, refining capacity gradually increased to 40,000 barrels a day. We're going to see it again. This may be a consequence of the closing of other refining facilities. I don't know.

    However, I know that, with the dollar at its current level, it is advantageous for Valero to refine in Canada rather than in the United States. Perhaps the company had to choose to invest in Quebec or Texas, where operating costs in U.S. dollars were perhaps higher. I don't know the reasons for that decision.

[English]

    The Chair: I apologize, but we've come to the end, and I have one item I must cover with the committee.

    I want to thank the witnesses for being with us today and for sharing their thoughts with us.

    The clerk received a notice from the journals branch of the House, which was read Monday, May 12, 2003:

Pursuant to Standing Order 39(5), the failure of the Ministry to respond to the following question was deemed referred to the Standing Committee on Industry, Science and Technology:

    The question was by Mr. Ritz from Battlefords—Lloydminster:

For the past five years, can the government provide a breakdown of federal research funding, including research projects and infrastructure, by university, including the name of the recipient, a brief description, the type of funding and the amount?

    With the new type of procedure we have in the House, if the department doesn't answer the question within 45 days the department has to come here, in front of the committee, and explain what happened, why, and how they're going to answer it. And we have to do it within five days.

    So I will be bringing this to your attention tomorrow, and it will be circulated to you this evening or first thing in the morning. I wanted to read it out to you because of the time element. Next week is recess week, and I wanted to complete this before then. We have five business days in which to do it.

»  (1730)  

    Mr. James Rajotte: With “business” meaning days we sit?

    The Chair: Five sitting days from Monday. We're only meeting tomorrow, not Thursday, and I don't want to force us into having to meet on Thursday, so we'll cover it tomorrow at the end.

    Mr. James Rajotte: Or do it the Monday we come back?

    The Chair: Five sitting days is Monday to Friday this week, right? My objective is to do it tomorrow.

    Are you aware of this, Mr. Marcil?

[Translation]

    Mr. Serge Marcil (Beauharnois—Salaberry, Lib.): Absolutely not, Mr. Chairman.

[English]

    The Chair: We just received this from the department.

    So we'll try to do it tomorrow afternoon at 5:10, probably. I don't know how much time it will take. This is the first time it's ever come to the committee.

    Mr. James Rajotte: Can I just get clear on this? By doing it tomorrow at 5:10 we will have...

    The Chair: The department has to be here to tell us what happened and why—

    A voice: And when they will answer.

[Translation]

    M. Paul Crête: What's the subject?

    The Clerk of the Committee: University research.

    Mr. Paul Crête: University research?

    The Clerk: The question is this: can the government provide a breakdown of federal research funding over the past five years?

    Mr. Paul Crête: Who's asking us that?

    The Clerk: It's Mr. Ritz, a member from the Canadian Alliance, who submitted a written question.

    Mr. Paul Crête: All right, and he didn't get an answer within the time period and so it comes back to the committee.

    The Clerk: Those are the rules.

[English]

    The Chair: We have to have them here, in front of the committee.

[Translation]

    M. Paul Crête: Mr. Rajotte's comment is relevant. That may be settled...

[English]

    The Chair: I don't know how much time to leave for it. I thought leaving 20 minutes would handle it. The experience in other committees has been 10 to 15 minutes.

[Translation]

    Mr. Gilbert Normand: It's not up to the department to provide that; it's the role of the granting councils which provide the grants.

    Le greffier: It's sent to the committee chosen by the member. Mr. Ritz sent it to the committee. Tomorrow we'll receive relevant people. I have contacted them. The officials will come and explain why they didn't answer within the 45-day period. However, they will not provide figures.

    Mr. Paul Crête: They may say the same thing as you, Mr. Normand, that is that is not up to them to answer.

[English]

    The Chair: Well, it's to be tabled in front of a standing committee. That's the new procedure. So that's what we'll do.

[Translation]

    Mr. Paul Crête: Mr. Chairman, I would like to ask another kind of question. The Minister of the Environment was unable to appear previously before the committee. That meeting was not postponed. What is happening now in that regard?

    The Clerk: The minister had other appointments. We hoped to have the deputy minister, but he changed positions on May 31. He is therefore on leave prior to his new assignment...

    Mr. Paul Crête: Is the minister still in his position?

    The Clerk: ...in June. Yes, he had other appointments outside.

    Mr. Paul Crête: All right. but when are we going to see him?

[English]

    The Chair: We're trying to do some scheduling.

    This meeting is adjourned.