SYDNEY, MONDAY, JULY 19, 2004
SELECT COMMITTEE ON PETROLEUM PRODUCT PRICING
7:00 P.M.
CHAIRMAN
Mr. William Dooks
MR. CHAIRMAN: Good evening everyone. First of all, I would like to welcome you here this evening. My name is Bill Dooks. I'm the Chairman for the Select Committee on Petroleum Product Pricing. We're here this evening under order of Resolution No. 1676, a resolution of the House of Assembly. I would ask the committee members to introduce themselves, and then I'm going to briefly go over a few rules, not too many, of procedure. Then we'll get underway.
[The committee members introduced themselves.]
MR. CHAIRMAN: I have to inform everyone that your presentation will be recorded this evening. That means the gentleman sitting over there and the young lady will be taping everything you say. So if you should want a copy of your comments, it will be provided for you. We have another young lady sitting down at the back, and her name is Kim. Kim is the person who sort of looks after everything for me. If you are so inspired to give a presentation and you haven't scheduled your name in, you can go back to Kim and she will put you on the agenda for this evening. That's pretty simple. If you want to make a presentation, just go down and see Kim.
1
We're in no hurry here this evening. It's important for this committee to hear what you have to say. The way we're going to do that is you can come up, by yourself or with someone to support you, and sit at the table in front of me. You must state your name for the record and state it clearly, please, and you have approximately 15 minutes to give your presentation. Now if you need a little extra time, we're going to afford you that time. Then, at the end of that, if you wish to take questions, I will open up the committee to question you. Once again, feel very comfortable. If you're not familiar with making presentations, we're going to help you through that because, like I said, we're in no hurry this evening. If there's a question that you feel you do not want to answer, simply don't answer it.
In saying that, first of all, I would like to call, tonight, Ms. Frances Oommen. Once you state your name, ma'am, you can start.
MS. FRANCES OOMMEN: My name is Frances Oommen, and I am a citizen of Sydney. I am very pleased to be able to participate with government in the democratic process. Thank you for bringing the legislative committee to Sydney. It saved us all going to Halifax.
MR. CHAIRMAN: And we're happy to be here.
MS. OOMMEN: The role of this committee is to investigate the supply and pricing of fuels, including heating oil. The committee will seek input from consumers, producers, suppliers and operators, and will make recommendations to ensure reasonable product prices. I personally would like, also, to include natural gas, as well. Natural gas is a heating fuel; natural gas is also used extensively in agriculture in the form of fertilizers, pesticides and herbicides to produce the food people buy at the supermarket. For your information, food at the supermarket is transported, on average, 2,500 kilometres to your table.
I am a consumer. I will speak about the changes in the energy sector and the consequences, and I will offer suggestions. Before I start, I would like to say that some of the information I will be presenting may be new to many people in this room and may be frightening, but as a mother and a health care worker I know that citizens, business owners and governments need to hear this information.
First of all I will talk about supply and prices. All businesses exist to make money for their owners and investors. Oil companies do the math before they develop any new business. Citizens must ask these questions: Why have there been no new oil refineries built in North America for many years; and why do oil companies want to close oil refineries? Few people are talking about it, but the truth of the matter is that the oil supply of the world is running out; the oil supply is drying up. Once it is gone, there will be none left. That means that we will not be able to go to the gas station to fill up the tank.
In the folder in front of you, there is a graph on the left which shows the Hubbert Curve. Forty years ago a geologist, Dr. M. King Hubbert predicted the peaking and drying up of the oil supply in the U.S.A. This prediction was found to be surprisingly accurate. Since the 1970s, the U.S.A. has been importing most of its oil from other countries. The other graph, on the right side, was produced in June 2004 and it shows that increasingly less oil is being produced. The oil is being used up quickly because of high demand. Different experts predict that oil will run out completely sometime between 10 and 20 years from now.
In the marketplace, when there are shortages and increased demand, prices go up; this is how business works. As consumers we should expect rising gas prices. In North America, prices have been kept artificially low. At the present time, in Germany, the price of a litre of gas is $5, and in the United Kingdom, the price is $2 per litre. Oil companies, government and the mainstream media are only just beginning to discuss oil shortages, and they still tend to deny that there is a problem. Most people are unaware of the situation. In my opinion, oil and gas prices need to rise, as this will be an incentive for us to do something to prepare for our future without oil.
Consumers are you and me, and the 6 billion other people on this planet. In Canada, many people own a car. Some people use the public transportation system. Many people, for example in Ontario, live in suburbia and they drive miles every day to work, to the supermarket, to take the kids to school or their hockey practice, et cetera. Their way of life is built around the automobile. Businesses mostly use trucks and vans to distribute their goods. Few people know how to grow the food they need. Few people know how to make things by hand. Everything we buy, own and use is either made of oil or was manufactured or transported using petroleum oil or natural gas. Our civilization is dependent on oil. Producers, a handful of large multinational corporations, invest in the production, refining and distributing of oil. In Cape Breton, I understand that all the oil comes from Imperial Esso. Imperial Esso has the monopoly, there is only an illusion of competition.
As a mother and a health care worker my main concern is that we humans have unrealistic expectations. Every generation expects to have a higher standard of living than the one before. People need to think about the implications of the end of oil. We need to support each other, physically, psychologically and spiritually. We need to talk about the changes that face us all. We need to work towards acceptance of the situation. This is a big adjustment for anyone to make, especially for the people who have the most to lose. Any individual who has suffered a loss needs to go through the stages of grieving, and the same holds true for the human race. The stages of grief include denial, anger, bargaining, depression and acceptance. All these emotions are normal. They are all okay; it just takes time to work through them.
What actions do we need to take now to create as smooth a transition as possible in Nova Scotia? The most important thing we need to do is to get the facts and talk about the end of oil. Local communities need to become self-sufficient in energy through the
development of clean, renewable wind power in every community, big and small. Local communities need to become self-sufficient in transportation, through the development of public transportation, walking or biking to work or school, and the reintroduction of ferries and railways. Every community needs organic farms. Every community needs a farmers' market where people will buy healthy, fresh, locally grown food produced without fossil fuels. In schools and colleges, children and young people need to learn survival skills, how to build appropriate housing to withstand the effects of climate change, market gardening and animal husbandry, weaving, pottery - and tanning and leatherwork, so that people will have shoes and boots to wear.
I know of only two countries where there is any serious discussion about the end of oil and what it means to society. In Sweden, the implications of the end of oil are being discussed by citizens who are being informed through the mainstream media. In western Australia, in 2002, Bruce Robinson wrote a paper on global oil vulnerability and the Australian situation for the state government. Dr. Robinson recommends that community and industrial groups, professional bodies, government agencies and decision makers must talk, both directly and via the media, to enable the community to get beyond the state of denial now evident in most quarters. In August 2004, in western Australia, there is going to be a conference for all stakeholders called, Oil: Living with less.
In Glace Bay, last Winter, there were people who had to choose between paying for food or heat. What will they do when the cost of oil, hot water heating goes up? Cape Breton must generate power using its free renewable resource, the wind. There is a lot of interest amongst citizens to have a wind energy co-op for the benefit of people in this community.
I understand that health care costs in the Province of Nova Scotia are approximately 40 per cent of total expenses. It is known that many diseases are caused by poor nutrition. Nova Scotia imports 80 to 85 per cent of its food from out of province. Mr. Charles Hubbard, an organic farmer from Amherst, Nova Scotia, states that his farm produces more food at less cost than conventional farms; his farm of 50 acres can provide the essential requirements for 25 families. By encouraging the development of organic farms, which produce chemical-free foods, people will eat vital food, become healthier, and the health care budget will go down.
Now that I've given you some of the basic facts, I have some questions for the committee.
1. When is the Government of Nova Scotia going to start a dialogue with citizens and key community leaders about the end of oil?
2. When will the Government of Nova Scotia legislate that committees will become self-sufficient in energy? Will this include wind energy for Sydney and other smaller communities?
3. When will the Government of Nova Scotia vigorously promote the growth of organic agriculture to ensure the survival of our children and grandchildren, reduce health care costs and improve people's health?
4. When will the government stop investing in new wide roads, which will become obsolete in the next 10 or 20 years? And when will the government use incentives to develop other modes of transportation to replace the motor car and the transport truck?
5. What is more important - to pretend there is no problem and to leave citizens in ignorance, so that when oil runs out there will be extreme and terrible social consequences, or is it more important to start talking and making positive changes now, using the goodwill, generosity and creativity of the citizens of this beautiful province?
[7:15 p.m.]
Do we want to build a community in Nova Scotia based on love and trust, or one based on greed and fear? The choice is up to all of us here. Having accurate information about the end of oil is the first step on this journey. If we don't start acting now, it may be too late, because we won't have been able to plan ahead. Thank you. That's my presentation.
MR. CHAIRMAN: Thank you, ma'am. Before I open up for questions from the committee, I would like to say good evening to Paul MacEwan, who is with us this evening, an MLA for your area for a long, long time. It's nice to have you with us once again. Russell MacKinnon, your first question.
MR. RUSSELL MACKINNON: Mr. Chairman, I'd like to thank Ms. Oommen for her rather thought-provoking presentation. My first question is, what do you see as a relatively fair price for the people of Nova Scotia to be paying for their fuel?
MS. OOMMEN: I believe it's in the hands of the market. It has to do with supply and demand.
MR. MACKINNON: That wasn't my question. You had suggested that we were paying far too low a price, and you did some comparables, such as Great Britain and other jurisdictions. Obviously, with your detailed analysis you must have some sense of what you think is a fair price per litre.
MS. OOMMEN: I know that part of the cost is the tax. I know that's another thing that the government has to look at. I honestly haven't thought about this, but my feeling is that the price will need to go up. I know that India and China are wanting to buy oil; their people are wanting their economies to develop. So it is only right that we share, but also the fact that there is less oil being discovered will, of course, put the price up, from the business point of view. I can't give you a price, what it ought to be.
MR. MACKINNON: I guess I'm trying to zero in on the mechanics of your presentation with the proposal for alternate sources of energy - wind, solar, hydro and that sort of thing which is very good. I think members of the committee, some of whom are members of the Economic Development Committee for the Legislature, would readily agree that there has been some movement towards wind power in Nova Scotia, a number of sites. There has been a renewed commitment from the federal government as of late, which I think will be of considerable benefit to all Nova Scotians. But the fact that you've suggested that we're not paying enough, that we're paying too low a fee, I think there would be a considerable number of people in Nova Scotia - perhaps upwards of 900,000-plus - who would take issue with that.
MS. OOMMEN: Of course.
MR. MACKINNON: I certainly respect your opinions on that.
MS. OOMMEN: I think maybe they don't understand why the price will be going up. I was hoping to give that information.
MR. MACKINNON: I guess I'm playing a bit of an adversarial role here, as you can appreciate, because the consumers of Nova Scotia, the people of Nova Scotia would certainly find that every time they have to go to the gas pumps and pay an extra cent or 2 cents or 5 cents a litre, that money has to come from somewhere. Ultimately that will either come from their grocery budget, their electric bill, their telephone bill, their insurance, or maybe it will be one less piece of clothing they have to buy for their children.
I looked at that, and I really appreciate the general thrust and the principle of what you're trying to offer, but then I think to myself there's no guarantee I'm going to get up tomorrow, and we could all get hit with a meteorite tomorrow and everything would all be for naught. So I guess I try to keep things in perspective, but I do appreciate your presentation. Thank you.
MR. CHAIRMAN: Thank you, Russell, and now I would like to introduce Jim DeWolfe.
MR. JAMES DEWOLFE: Thank you very much, Mr. Chairman, and again thank you for your presentation. It is indeed thought-provoking. You did put a lot of effort into this and I think you feel very passionately about your subject matter. Would it surprise you though to realize that already during the course of our presentations we have had presenters who are retailers of gasoline products who pay perhaps 15 cents less per litre than others because of the restraints that the oil companies put on the retailer? There are some who have profit margins of up to 15 cents and others who have profit margins of 1.5 cents or less than 2 cents. So it shows that there is wiggle room there, if you will, from the companies if they were willing to do so.
The other thing that was of interest to me is the thought you mentioned about governments putting money into highways, transportation systems, with oil sort of going out the door. Realizing that most of our goods and services that we receive here in Nova Scotia travel the highways, I think it's very important that the infrastructure of wider, safer double-lane highways from Sydney to the U.S. border, or Eastern Seaboard, are very, very important to the future economic development of this province. Having said that, I'm not quite sure that I share your concerns about the gasoline running out so readily because there are new discoveries and there's more, I'm sure in the future, that are going to capture the interest of the major oil companies for exploration. We're not through with the offshore in Nova Scotia and Newfoundland by a long shot. There's still drilling going on and there's still much interest.
There's also new technology that is available today that allows exploration companies to go onto abandoned fields and I'll just use the Leiden field off the Coast of Scotland and England as an example. I visited that field, and it was abandoned because the fuel ran out, but new technology allows them to go onto that field and they are producing now from that field and there's a 10-year supply, going back into a previously abandoned field with new technology. So there are wondrous things in our future. Perhaps some day it's going to happen that the fuel will run out, no doubt that is going to happen, but also there's new technology in hydrogen fuels, electric and hybrids. I don't have a defeatist attitude about it at all, I think we're going to move into a wondrous future in this country. If you would like to comment on any of that, I would ask you to do so, but I don't share your thoughts on it and I'm glad I feel the way I do because I think the future is bright in fossil fuels and other possibilities of fuels.
MS. OOMMEN: Through my reading, my understanding is that what is being discovered is not large quantities. It will come out of the ground for awhile, but it's not like Saudi Arabia that has been going on and on for many years. Yes, there are technologies. In Alberta you have the oil sands, but a lot of energy has to be used to extract oil from the oil sands. So there comes a point from the business point of view where it's not worth extracting it because it's too expensive to extract it, but then of course if the price goes up, they will go on extracting it because they can still make some profits. But I understand where you're coming from. I did give some Web sites which are interesting reading. If you do have time, you might want to look up a few of those. There are geologists who have written articles and they're listed.
MR. CHAIRMAN: Thank you, Mr. DeWolfe. At this time I would like to recognize Howard Epstein, please.
MR. HOWARD EPSTEIN: Ms. Oommen, thank you very much for your presentation. I say hurray for you for this presentation. It's the first time someone has come to our committee so far in our public hearings and put this context on what it is that we're looking at. I think what you've outlined is the correct context and I think the questions
you've asked are the right questions and ones that any government should be grappling with. So thank you for directing us that way.
If I could point out just a couple of things, if I may, one is I think you suggested that it wasn't a big surprise that the price of petroleum as a commodity was increasing and this was a natural result of the basic economic laws of supply and demand. I think that's not purely the explanation. If I may say so, I think that it's not yet at the point in terms of inadequacy of supply that is driving up the price. I think what you have to recognize as well is that there are a limited number of players who actually have control of the supply and where a limited number of players have control of most of the supply, they're able to drive up the price regardless of what would otherwise be the free play of the marketplace. That's what supply and demand is about, is if there's a marketplace in which everyone, or a lot of players are able to produce the product. That isn't the case with oil and so that's one explanation that I think you might want to consider as an additional point.
The second point is the health effects that you mentioned in passing seem to me much more serious than really you explained. Even if there is, as my colleague and friend Mr. DeWolfe suggested, the possibility of a technological fix in the sense that there might be alternative energy sources that might come forward, one of the things that we aren't as a society grappling with are the health effects, that is we're not grappling effectively with the health effects of the energy sources that we have now.
The third point I want to make to you is that there probably is not too difficult an explanation as to why it is that governments and individuals don't move more rapidly towards grappling with big problems like the ones you've identified and it's not the absence of knowledge. As you have pointed out, for the most part it's available information. For the most part these issues have been identified by scientists and by engineers and for the most part in virtually any aspect of our life we know a better way of living our lives than we do now. The barriers to transformation and the barriers to change are not generally absence of knowledge, but they are adherence to the status quo which tends to mean financial adherence to the status quo. Anyway, thank you again for your presentation, it's very helpful.
MR. CHAIRMAN: Thank you, Howard. At this time I would like to recognize Charlie Parker.
MR. CHARLES PARKER: Thank you, Mr. Chairman, and thank you, Frances, again for your presentation, some thought-provoking information there, and obviously you've researched this, I would think, for quite some time. So I was going to ask you then, what is your background, is this self-study or have you gone somewhere to learn this information? Secondly, I noticed on one of your papers there, you're a citizen educator. Are you actually teaching this, other than us here tonight, but are you at a university or college somewhere? So I would ask you those two questions.
MS. OOMMEN: This is information that I have found myself and I guess I've been looking into this problem since I realized that it was a problem, perhaps two years. I am not at a university. I'm trying to talk to people about this. Actually I have videos that, you know, I sign up for a room in the library and invite people to come to see different videotapes or discuss, but this is very scary and I find that people don't really want to hear about it because it is very frightening. Where I can, I might talk to people, give them an article about something or if they had a question I might try to give them a little background. It's not easy and also I know that people get upset when I do talk about it. It has to be somebody who I feel is a little sensitive or aware of some other things that I can bring up the topic. I know people will be feeling different inside about what I was saying. I'm very concerned about the psychological effect of this information on people. I feel we need to begin to talk about it.
[7:30 p.m.]
MR. PARKER: Okay, thank you. I guess you do have a lot of good ideas and maybe controversial ideas to some people, but certainly some of your ideas around organic agriculture and alternative energy sources and public transit and so on - they're not new ideas but it's true that we do need to start talking about them more. One of the questions you had asked us in your presentation was what can government do to perhaps educate people more about these ideas? I want to turn the question back on you - what do you feel that we, as a government in Nova Scotia, should be doing to help educate people more about some of these ideas?
MS. OOMMEN: In Australia, I think his name was Bruce Robinson, he was asked by the state government to look into this situation because they realized in Western Australia that if there was a problem in the Middle East and say the oil couldn't come on the ships, they would run out of their oil within two weeks. That's a very scary situation for any state government to find themselves in. This August they're going to be having this conference and it's for government and civic planners and citizens and businesses and I think it would be excellent when the time is right, a similar conference. I think the way our society is organized is going to have to change a little because we're going to have to be more compact in one area with everything that we need.
If you think about it, trucks come with food - I understand there's a food terminal in New Brunswick - and also they truck things in from Montreal and at the Superstore I get things from Ontario. That's an awful long way to bring food products and if the people in Glace Bay or Sydney can't afford to pay the price for the food that includes the transportation costs, then the supermarkets are maybe going to say we can't do business anymore because we're not making any money. That means we have to be self-sufficient in food in Nova Scotia.
As I said at the beginning, it's 2,500 kilometres on average that food comes to our table. It may be bananas from the West Indies that come to Montreal and then they go to Toronto and then they come back to Nova Scotia - I'm just guessing. Food, especially food that's made of different components, comes from all over the place. They ship to the warehouse then they go to the supermarket then we take them home.
MR. PARKER: I have one final question, Mr. Chairman. You mentioned throughout your whole thesis here that we're going to run out of oil at some point, perhaps not too far down the road. Do you feel there are enough alternatives to replace that or not?
MS. OOMMEN: That's a very tough question. I know lots of people are talking about the development of hydrogen cells. To make hydrogen cells, it requires a lot of energy. That's a very tough question. The more reading I do, it's not hopeful. There were people who were experimenting with ether, which is something in . . .
MR. PARKER: Ethylene, perhaps?
MS. OOMMEN: No, there have been inventors who have found energy within space. That hasn't really been developed. I have a movie about other forms of energy, but they haven't been developed for whatever reason.
MR. CHAIRMAN: We have to move along now. At this time, I'd like to thank you, Charlie and I'd like to recognize Mr. Danny Graham please.
MR. DANIEL GRAHAM: Ms. Oommen, thank you very much for your presentation. I have a number of preliminary comments and then ultimately I want to put to you a number of questions or observations.
The first is one of appreciation for you coming to this group and providing us with this perspective. It is one that I think you can reasonably expect we'll get mixed reviews on. You've shown a lot of courage in bringing these ideas forward. I think that this discussion needs the perspective in the same way that Mr. Epstein has indicated, we need to have this perspective brought to this table and you're the first person to do it in a comprehensive fashion.
This obviously required a lot of preparation and I was interested to note first that you make, I think, the astute observation that ultimately making decisions like this is about something very personal, about the choices we make as people sharing a planet together. Frankly, that's a perspective I don't think we reach often enough for all of the reasons that you identified. It's rather threatening for us to do it and how can we in Cape Breton or we in Nova Scotia pretend to lead in any way.
However, when one looks at the success that we've had and the leadership we've shown around solid waste management in Nova Scotia and how in other parts of the world they're coming to Nova Scotia to see what we have done, I think that there is stuff that is potentially possible.
I don't agree with everything that you've said. I don't agree that widening our highways because they may become obsolete in 10 or 20 years is something that we should question. I think it's something that we should continue to move forward with. I think that your comments about requiring the facts - and you set that out as your number one action plan - is something that I would invite you to provide us with more. We'll do our own searching, you've provided us with a number of Web sites.
I'm impressed with the article that you've provided from the Associated Press, the CIBC World Market Report, but in terms of being persuasive, frankly, it's still thin. We still would require more information and I realize that's a balance that you need to strike. As one committee member, I would welcome any additional information that you're able to provide, particularly to substantiate your central point and that is that oil is drying up and it may happen in the next 10 to 20 years. I think this is obviously something that has been much discussed and written about and whatever you can provide us with to make that case from a variety of sources with different interests and perspectives, would be welcome.
I'm going to put to you a couple of suggestions or requests, if you don't mind. This, recognizing that you've already done a great deal to prepare for your presentation today. If you can provide us with more information or specific places on those Web sites to go to, to substantiate your case that oil is drying up, particularly in the period that you're talking about, I think it would be welcome and helpful for us as we do our discussions.
I'd like to go beyond that and look more at the consequences of the use of fossil fuels as well. You're familiar with the Kyoto Protocol and whether or not Canada is adhering to it. You haven't spent much time on the consequences issue and whatever you could provide us about some of those points would be helpful. What does this mean for global warming, for example? Also, reference was made to the health effects, the research around health effects is emerging, but there's a fairly substantial body around this. While I don't think you're going to find that this committee is likely to reach a point where we're looking for Nova Scotians to make a wholesale change in their lifestyle as a result of the deliberations that we do and the representations that you've made, there are possibilities to advance the discussion and bring credibility to this perspective and I think it will happen if we adhere to your first request. That is, that we get the facts right. So, whatever you can do with respect to global warming, the health effects and whether or not oil is drying up, I think would be very helpful. Perhaps you'd want to respond to some of those.
MS. OOMMEN: I will be very pleased to supply you with more information. When you say consequences, what are you talking about?
MR. GRAHAM: The consequences of the use of fossil fuels, in particular, gasoline. What are the health effects of global warming, and those sorts of things?
MS. OOMMEN: So, not the consequences of when we run out of oil?
MR. GRAHAM: I think there are two elements to this. You've spoken almost exclusively about the running out of oil part, and I think that there's another parallel argument at least about what's happening even if we continue to use it at the rate that we do and it continues for a long period of time.
MS. OOMMEN: There's a very interesting book in the Sydney Public Library and it's called, The Heat Is On, and it was written a few years ago and it's about climate change and that's a very good book. It explains a lot.
MR. CHAIRMAN: Thank you, Mr. Graham, is that it? Ms. Oommen, I would ask you to forward your information through to the Chair and I'll have it distributed through each caucus member. This time I'd like to recognize, Mr. Gerald Sampson.
MR. GERALD SAMPSON: Thank you, Mr. Chairman. Frances Oommen, welcome here and welcome everyone that's in the audience. I must say you have a very unique and interesting perspective. I know Mr. Graham used the word perspective, but I had already written down and I'm not going to change. (Laughter)
Efficiencies is what I questioned the gas company on in Halifax. You were saying about the oil and gas companies closing. I'm not going to preach to you, I'm just going to give you some of the information that I've received. The gas companies they were talking about creating efficiencies and they were kind of complaining about how come they closed so many refineries and I took them up on the fact that they can produce more with more efficient refineries now than they could a few years back. So they've improved on that.
They gave us figures to show that the prices from their companies are the same now as they were 20 years ago. They say the difference is the 15.5 cents provincial tax, the 10 cents federal tax. Then you have your distribution tax on top of that, then you add HST on top of all of that, and that's what's putting you up there. They're saying they're still supplying it for in the vicinity of around 50 cents or less a litre. So that was their perspective on that.
You're talking about running out of oil. Well, I've coined the phrase since I came onto this committee that greed has no heart and has no blood, and these oil companies are in for business, and they're not going to wait until the tap runs dry and suddenly look for an alternate source. As one is depleting, if that's the case, but I go back to the 1970s when we had the oil shortage and I remember then the only shortage - and it has been proven out - that I could come up with was the shortage of millionaires, and no shortage of oil, and that's the perspective that I come from with that.
With regard to the highways, if I could get enough pavement just to fill in the hundreds of thousands of potholes, I'd be well satisfied rather than widening the highways, just fix what we have. I would be very pleased, but you have a very unique and interesting perspective and I think I was always told to believe none of what you hear and half of what you read, it causes you to use your own smarts, and you seem like a very smart lady. I'm proud that you came forward very well prepared and gave such an interesting presentation, but on that, I think anything that I could ask has already been asked and I just want to thank you for coming.
MR. CHAIRMAN: Thank you, Mr. Sampson. Ma'am, one minute for a closing comment and then we'll say good evening to you.
MS. OOMMEN: Well, thank you very much for your interest and your questions. That was wonderful. That's all I have to say.
MR. CHAIRMAN: Thank you very much. At this time I would like to call Hilda Cormier, please. I'll just go over the rules of procedure, 15 minutes for your presentation, at that time if you wish to take questions, we'll open up the committee for that, and we'd like to remind you both that all words here tonight are recorded. You have the floor, state your name and your business please.
[7:45 p.m.]
MS. HILDA CORMIER: Hi, my name is Hilda Cormier. This is Richard Cormier, my husband. We're from Cheticamp, and we'd like to thank you for giving us the opportunity to talk to you.
I have a brief letter here that I'm going to read to you, plus I gave a package to Kim that she's going to pass on to you because you can't read as you listen, so here I go. We've been the owners of H. Cormier Service Station, it was established in 1976. Richard was 14 years old, he was working along with his father, the late Henry Cormier, and his mother was working doing the book work and taking care of the counter. The station is located in Cheticamp, Inverness County, and is situated in the heart of the Cabot Trail. We are situated in a very remote rural area. This being said, you may understand that business is very harsh in the Winter months and may be very busy during the Summer months.
From 1976-86, we were under the brand name, Texaco Canada. During that period of time Canada changed from Imperial gallons to litres. The gas and station were under regulation. We had rules to follow such as washrooms for men and women. We had to have the service bays. Everything was under the Board of Public Utilities. We had people coming around and we were guaranteed 4.8 cents a litre from our supplier. During this time no one was able to open up a garage anywhere in the area without going to the board to see if there were enough people or whatever their rules were. The most important factor was that no one was permitted to raise or lower the gas price without the board's approval.
In 1986, H. Cormier Service Station purchased a second garage from Esso and changed it, branded to Texaco. Texaco guaranteed a profit margin of 4.8 cents a litre for five years, even though the gas was under regulation. This was specified in the contract with Texaco. Texaco U.S. ended up with a lawsuit with the oil company from the U.S., they decided to sell Texaco Canada and Esso purchased all the Texaco stations. All the companies involved were renamed under the title Esso. The government stepped in to protect the public and made Esso/Imperial Oil sell the eastern end of Texaco Canada to Ultramar Canada, so we were renamed Ultramar. As you can see, we've been through them all.
In 1991, our company changed a second garage branded to Metro Fuels, a division of Imperial Oil and renovated the business at a cost of approximately $200,000. Gas was still under the Board of Public Utilities, but the Nova Scotia Government was in the process of deregulating the petroleum service station. Under my contract with Metro Fuels, they guaranteed 4.8 cents a litre for the next 10 years. In 2001, when Imperial Oil came to an end, the oil companies had changed and did not want to own any underground storage tanks. They would not guarantee any markup on gas and now you had to pay for the gas on delivery. I have to buy the gas at the price they decide to sell it to me, which they sell to me at 0.36 cents above the rack price. They buy their gas at a contract price and that is below rack price. This being said, the supplier is guaranteed a profit of 0.36 cents per litre and more. There are many times I fell below the present day market trend, that the oil companies are keeping the price so low that I am selling the gas at a loss and have to pay the oil company for the delivery of the gas.
We have their credit card system and we have to rent their computer system. We must rent from them, we have no choice. The computer systems allow the companies to monitor all our business from open right to closing, so they know everything that you're doing as you're going along. If we make any profit at all whether it's with the gas, the labour, the store, they know. They know what's there. If we make any profit at all, I have to pay the wages of at least 16 hours a day, in which I'm regulated to pay at least minimum wage. The credit card charges are 0.17 cents which the banks make a killing on, plus the phone, lights, tax, mortgage, insurance and of course, upkeep, and repairs.
In 2001, we had to renovate our business one more time. We had to place new tanks in the ground with an alarm system that was due to regulations from the Department of Environment. This changeover cost us over $400,000. It seems like the employees, they're well protected, they've got the minimum wage, we've got no choice but to pay it. The government have the taxes that they're guaranteed to receive. The oil companies have their contract, they're protected. The environment is protected, but the small independent business is left out, as usual.
We do a lot for the rural communities. We do not only offer a service, we are beneficial in the economic development of all communities. We also play a major role in offering a service that many elderly people and handicapped would not be able to do which is offering to gas up their vehicles. If it was not for us independent businesses, we would
have no more gas in the small towns because, as we know, the oil companies cannot be bothered with the small communities. We take much pride in our business when it comes to our appearance and our operation in our town for the thousands of visitors that we receive every year, because Nova Scotia is renowned for its cleanliness and our hospitality.
The major oil companies will never have any interest in relocating in the small rural communities. They do not invest any money in rural Nova Scotia and we all know that without rural communities Nova Scotia would not be where it's at. This should prove to you that we small independent businesses have invested in our community and even though the volume is not always there, we have always been there.
For an example, in Cheticamp, in a radius of about 40 miles, from Pleasant Bay to Margaree Harbour, in 28 years, since 1976, we had 16 garages in this mentioned area and there have been 12 of them closed down. So now we're left with four. In those four there are three independently-owned stations and one company-owned station. Well, the three independent ones, if nothing changes, are not going to be there for long because we just don't have the margin.
In closing, Richard, do you want to say something?
MR. CHAIRMAN: State your name, Richard, please.
MR. RICHARD CORMIER: My name is Richard Cormier and I'm the owner of H. Cormier Service Station. In 1976, I started in this business with my father and we were up to the point where we had two service stations, with everything, now we're down to one, but in those years I've seen garages close up. In Pleasant Bay, which is around 25 miles to the north of us, there is no service station there. The closest service station to the north of us is 50 miles. For them to cut their grass they have to drive 26 miles to get a gallon of gas. If the power goes out, their power plants and all that, they have no gas at all.
In 1976 the oil companies owned all the storage tanks in the ground. They owned my pumps. They owned the signage on it and all that there. If you broke a nozzle, if you broke a belt on the pump, that was the oil company's problem. They came down, they sent a repairman, repair it, whatever had to be done. In 1981 to get back to the litres, we were making 4.8 cents. Since that time the oil companies have walked away completely from owning pretty well any tanks in the ground at all. We have to replace those tanks. We have to maintain those tanks. I had to buy new pumps to keep up at a cost of over $12,000 apiece. I am now responsible for all that equipment and the repairs on that. It's even to the point my display sign over the canopy, when there are lights that burn out on it - it's their signage, their emblem - I'm the one who had to repair the burned lights and the transformers in the thing there. So here before you were saying that the oil companies are saying that they're making about the same profit as what they were making so many years back, yes, but they have got rid of all their expense completely.
At one time the oil company, if you had an oil company's credit card, we never even had to pay the service charge on the oil company's credit card. If you had a Texaco credit card, the service station did not have to pay the service charge. We paid on MasterCard, American Express. It's not like that anymore. We pay flat above the board completely. I had a small convenience store in my service station. PetroCanada has got to deal with the suppliers. We order. Whatever our order is, say $5,000 a week, or whatever there, they deliver it. PetroCanada charges me $50 for a delivery fee. Before I was with them I could buy pretty well where I wanted to buy. At most businesses if you buy $5,000 worth of stuff, they will deliver it to your door for nothing. So this is where I'm saying, the oil companies are probably saying their margin ain't any bigger, but they've learned how to cut the corners on everything and draw blood from a stone.
Like I said, here we are 20 years afterwards, and I have all this expense and there were times this Winter where we weren't even making half a cent a litre. There have been times where I've been making maybe up to 7 cents a litre, but they're very far apart and it's very hard. As I say, when you turn around and you have to pay employees and all that there, you figure it out, it probably costs us anywhere from 2 cents to 3 cents a litre just to cover the wages. Then I still got all the expense - the lights, the mortgage and everything.
Honestly, two years ago I did this major investment. Anyone with common sense would have never invested $400,000 into a business to say they were pretty well selling the gas at a loss or just breaking even, you know. I wasn't that stupid, but when I signed with the oil companies and all that, oh, yes, you will be doing just as good as what you were and everything. Fine, the oil prices have gone up, whatever, I don't understand how come my margin has disappeared. Do you know what I mean? Oil prices have gone up but, as far as I'm concerned, the oil company is still guaranteed their profit and like I said, there are many stations that have closed up and there are many stations that are going to close up.
MR. CHAIRMAN: Certainly we understand that, sir. Are you open to take a few questions?
MR. CORMIER: Yes, I am, sir.
MR. CHAIRMAN: I would like to recognize at this time Frank Corbett.
MR. FRANK CORBETT: Thank you, Mr. and Mrs. Cormier. I just have a couple of questions to start. How many employees do you folks have?
MS. CORMIER: We've got about six full-time and two part-time.
MR. CORBETT: I think you were saying the companies buy at 3.5 cent over rack, but they wholesale it, so the last delivery, what was your price per litre?
MR. CORMIER: My last delivery, what I paid their per rack price, was at 0.50400. Then you have your road tax, GST, their markup, delivery fees on that, you know. Like I said, before we never even had to pay delivery for the gas. Now every litre that is delivered to my station, I pay 0.0105 of a cent for delivery costs. So do you get what I mean? The oil companies, no costs to them at all, they got rid of all their fuel trucks. They hired separate contractors now to even deliver their gas. So in a year from now if that contractor says, okay, we have to add an extra half a cent to delivery, this is back on my shoulder and the oil companies, that don't bother them at all. Delivery costs, that's your problem.
MR. CORBETT: I'm not sure whose flag you're flying outside your service station now, but who are they, and you say they charge you the credit card fee, like 1.7 cents.
MS. CORMIER: Yes.
MR. CORBETT: Would it surprise you that some retailers are still given, like that as an honour card if you will, that there's no service charge on it, would that surprise you?
MS. CORMIER: Yes, big time.
MR. CORMIER: Yes.
MR. CORBETT: Because we've been told, at least off the record, that some of these deals that people get that cut with the large companies, that they will honour, if you're flying a brand, that their service charge is waived. You pay that service charge?
MS. CORMIER: Yes.
MR. CORMIER: Yes, we do and when I negotiated, my contract came due two years ago, and I negotiated pretty well with all the major companies here and there's not one of them that did not have no service charge and I find this very surprising to believe that there are any oil companies out there that are still saying their brand card and if you look, there are a lot of the oil companies now, they do not even have their brand card anymore. Shell has gone to VISA or MasterCard with this. Esso has done the same thing. They went to a VISA with their little emblem on it and Ultramar has done the same thing there. So, you know, the oil companies, there's only one or two that are still honouring their own credit cards.
[8:00 p.m.]
MR. CORBETT: Well, thanks a lot for your time. I appreciate it because I realize, as you stated, in rural Cape Breton, rural Nova Scotia, that six jobs mean a lot. The fact, as you pointed out, the difference between you and Pleasant Bay, the fuel costs, necessities - before I let you go, what is your annual volume?
MR. CORMIER: Our annual volume this year I think will hit 2.5 million litres.
MR. CORBETT: Thank you.
MR. CHAIRMAN: Thank you, Frank. At this time I'd like to recognize Russell MacKinnon please.
MR. MACKINNON: Thank you, Mr. Chairman. I realize time is getting tight. The issue of regulation versus deregulation, I want to focus on that. In 1991 when deregulation kicked in, we had approximately 900 retailers, predominantly independents. Now we have approximately 500. At that time, the government indicated that the primary purpose was to make this whole service more consumer friendly. However, the price of fuel has gone from 45.9 cents a litre and as of today it's 93.9. Even excluding taxes, it has still doubled, according to the charts that I've checked. The issue around taxation is a bit of a bogus one.
The spirit of the legislation that we now have before us, this is one of the issues at hand, and that is the large oil companies appear to be circumventing the spirit of that legislation by going to the big-box stores, offering all these special deals. They can still write on their books that they're only making 1.5 cents or 2.5 cents per litre - however, what they're doing is killing the small independents. I think you've outlined that in general form, the 16 cents down to 4 cents and so on.
The issue of credit cards is a big issue. We heard a witness the other day indicate that the oil companies, in their estimation, made somewhere in the vicinity of $10.1 million just in credit card service alone last year in Nova Scotia. Can you give kind of a general estimate, maybe you're not in a position, as to how much that has cost yourselves as opposed to pre-regulation?
MR. CORMIER: Credit card charges last year, I paid the oil company $23,000.
MR. MACKINNON: Now, pre-regulation, would that have normally taken place?
MR. CORMIER: Well, before when we were regulated, there was still always a credit card charge fee. The oil company had it, but at that time they all had their own independent card. We were never charged service charge fees on that credit card so you were dealing under their brand name, Texaco. Anyone using a Texaco credit card at a Texaco station, there was no fee. What I understood, the fees were VISA, MasterCard and American Express, which made sense because Texaco or the oil companies had no control, that would go under the bank - the Royal Bank, the master bank, whatever.
But now, the oil companies have caught on too. If the banks can make all this money on interest fees, why don't we do the same thing and this is exactly - they're generating another source of income.
MR. MACKINNON: A short snapper - do you support regulation or the continued deregulation?
MR. CORMIER: I would support regulation.
MR. MACKINNON: Thank you.
MR. CHAIRMAN: Thank you, sir. Thank you, Russell. I'd like to recognize Jim DeWolfe please.
MR. DEWOLFE: Thank you, Mr. Chairman and thank you very much for your presentation. I have to tell you, your story is one that we've heard before. I think you probably realize that during the course of our presentations, we did receive quite a bit of input from the independents. It was really quite an eye-opener when we were told that - you mentioned you handled 2.5 million litres, we've had someone that will be pumping 8 million litres this year and in the red. It's pretty hard to believe. You see these beautiful service stations, high tech, flying the banners of the large companies and being treated like that - it's terrible.
It is surprising that some are able to get better deals, it was even indicated that they have sold at rack.
MR. CORMIER: Could I just mention one thing?
MR. DEWOLFE: Yes.
MR. CORMIER: There's another thing,
MR. CHAIRMAN: Through the Chair. You have to do it through the Chair, but we're pretty relaxed here, so carry on, sir.
MR. CORMIER: Okay, sorry. A lot of the better deals that you're getting, when I wanted to do renovations - we just spent $400,000 on them - my business is very stable. We approached the Royal Bank, the Credit Union, the FDB, everything, there was not one bank that would lend us any money because of environmental issues. I guess, the way the law is written, if I were to default on the loan, the bank was to repossess the garage, if there's any contamination on that site, they're held responsible. So the banks have completely washed their hands of us independents pretty well altogether.
For us to get any type of deal at all, we have to go to the oil companies. This is where my situation, the oil company was the only one willing to lend me the money, not give me the money, lend me the money. This is where you're talking about some getting special deals, if my service station would have been 100 per cent up to standard and I didn't owe one cent on it, I probably could have gotten a lot better deal. But, at the time, I had to put all brand
new tanks in the ground - to tell you the truth, my other tanks were only about eight years old, but the oil supplier that I had before didn't want to cut me any deal at all so I changed suppliers and they yanked the tanks out of the ground just like that. I wanted to buy them, but no way.
So this has a lot to do with the different deals because they control everything. We can't get any money from anywhere.
MR. DEWOLFE: The wholesalers control not only the wholesale price, they essentially control the retail price too.
MR. CORMIER: Yes.
MR. DEWOLFE: Do you find that if you were to put your fuel up a cent, let's say, your next load of fuel would be up a cent?
MR. CORMIER: Yes. We found that. We put the gas up a cent or two and my next load goes up. Then all of a sudden . . .
MR. DEWOLFE: It's a no-win situation.
MR. CORMIER: No. I'm going to tell you another thing, my situation there, I bought one load of gas and I was about two-tenths of a cent below the price - I was selling it for about two-tenths of a cent than what it cost me. I phoned up the oil company and said, what are you doing here? They told me, with our figures, your gas has always been 2 cents higher than what Sydney has been. They compared me to their sites in Sydney. I said, this doesn't make any sense, you should be glad that I was able to get 2 cents higher - that means you're making money, I'm making a little bit of money. No, to their way of thinking, I should always be 2 cents higher than Sydney because now I'm the same price as Sydney, you're going to suffer now.
MR. DEWOLFE: They own you, don't they?
MR. CORMIER: They own me. As I said, it's a no-win situation.
MR. DEWOLFE: A bad situation.
MR. CORMIER: It's a very bad situation.
MR. DEWOLFE: Thank you very much.
MR. CHAIRMAN: Thank you, Jim. I'd like to recognize Gerald Sampson please.
MR. GERALD SAMPSON: Thank you, Mr. Chairman. Hilda and Richard, I can quote names that are identical stories to yours. I'll just give a little overview for general
information. I won't use this young couple's name, but a young couple borrowed money, went into the gas business and I would say got coerced into a 10-year deal or mortgage - whatever you want to call it - with a 5-year option and Shell intends to call that 5-year option. They're locked in for 15 years, it was a very heart-wrenching presentation to see a young family who took a chance and are losing money on the gas and they have a car wash and a little store in there also. Only for that, they'd be under. But, every time they pump gas, they're losing.
You're pumping over 2 million litres a year and you figure you should be able to make money at that. A gentleman whose name I will use, Rodney Grace, he's progressed to his third station and invested in a brand new station, double-lined tanks, state of the art, excellent.
MR. CORMIER: Same as us.
MR. GERALD SAMPSON: Eight million litres a year that man pumps. Can't make any money at it. They're just being sacrificed. Every other story that I'll tell you is repetitive and that's what I said about greed and fear. I don't know what it is or how you're going to get around it, but how long are you locked in for?
MR. CORMIER: Right now I still have another close to seven years to go with them and, to tell you the truth, things were so tight this Winter we could not take our wages out of the business, she and I together. I had to go and drive a tractor-trailer, the long haul to pull my wages into the house because the business could no longer - I would never have invested the kind of money that I did if I had known, and for me to get any money to do that renovation, I had to lock myself in for 10 years with them.
MR. GERALD SAMPSON: A couple of pieces of information for you. You're talking about the money that you paid the oil company in credit card fees?
MR. CORMIER: Yes.
MR. GERALD SAMPSON: Well, the oil company now, if they're going to promote, let's just say a VISA card, or whatever card they promote, they get a percentage of what you're being charged. So they're making money off the credit card and they're making money off you every time you sell. So they've trimmed their corners, like you say, and the only one left to suffer - and the committee has questioned incessantly and whatever the answer is going to be, I don't know - but it seems that everything is geared for the company and nothing for the dealer.
MR. CORMIER: It is.
MR. GERALD SAMPSON: And one gentleman, the young Mader man, up in the rural part of Nova Scotia said that a service station in a rural area is an essential service . .
.
MR. CORMIER: It is.
MR. GERALD SAMPSON: . . . and that put a light on in my head because, as I said, I've been fighting for rural areas for years and it is an essential service.
MR. CORMIER: Do you realize Pleasant Bay has a fire department there?
MR. GERALD SAMPSON: Yes.
MR. CORMIER: And they have got to truck their gas by five gallon cans there. In Pleasant Bay there are two school buses. There was one school bus travelling back and forth to Cheticamp, the other one was just running the kids to a Grade 6 school, from Primary to Grade 6, or whatever there, and that bus had to take a separate trip to Cheticamp every two days just to gas that bus - that's 50 miles return.
MR. CHAIRMAN: One quick one, Gerald?
MR. GERALD SAMPSON: No, that's all. Thank you very much, Mr. Chairman. I sympathize with you, and hopefully we can bring in some kind of legislation or something that will be effective.
MR. CHAIRMAN: Thank you, Gerald, and I would ask the witnesses if they would like one minute to wrap up with a comment.
MS. CORMIER: Well, at this time it's impossible to operate the gas station with the margins that the oil companies are leaving us. So you need at least 3 cents to do just their payroll - the staff that we have -we have got to get that 3 cents. That just covers the payroll, we need more than that. We need to get regulation back in Nova Scotia and the service stations need a guaranteed margin - we figure from at least 8 to 10 cents a litre to survive. It was 5 cents in 1991; just look at everything that we've put on our shoulders since, that the oil companies have gotten rid of. So we've got to get an agreement of some kind of margin so we can survive, and it would be nice to see a regulation coming in with something that says that every year it would be reviewed to see if it needs to be increased, what we've accomplished more, or what we've taken in more.
So we would like to thank you for the opportunity to present this, both Richard and I, and we hope and expect that we can hear of some results within the next couple of months, so that we can keep going with our business or not only us, there will be a lot of service stations closing down.
[8:15 p.m.]
MR. CORMIER: Yes, I just have one more thought. You know how the government is into recycling and everything, right now the recycling in Cheticamp, every time someone goes to a recycling depot and brings back a can of pop, or whatever, do you realize that the recycler gets 3 cents a can to operate? And here we're are selling millions of litres of gas and we're not there. That recycler told me they're involved with a committee too, and every year they've had a slight little increase.
MR. CHAIRMAN: Well, Richard and Hilda, we thank you for coming and giving your presentation tonight. Are you going back this evening or staying up? Well, enjoy your trip back, drive safely. It's a very beautiful part of the Island for sure. Thank you very much.
I would like at this time to call on Councillor MacLeod, please. How are you this evening, councillor?
MR. GORDON MACLEOD: Not too bad and how are you?
MR. CHAIRMAN: Good. Nice to see you here. I will just go over the rules. I think you've heard - 15 minutes for presentation and, at the end of that, if you wish to open up for questions, you can, and I would remind you that your comments are recorded. Sir, state your name for the record and continue.
MR. MACLEOD: Thank you very much, Mr. Chairman. My name is Gordon MacLeod, I'm a councillor with the Cape Breton Regional Municipality. Let me begin by welcoming you all to a beautiful part of the Island. There are some of you who are not from here, but there are those of you who are privileged to live here - not only privileged to live here, but you're privileged to serve people in this area. As you go on your trip tomorrow to Truro, to your hearings tomorrow night, I hope the rain is not falling and that the sun is shining and you see a beautiful view of the Bras d'Or Lakes as you go, whichever route you take. I also want to thank the members of the committee for allowing me this opportunity to offer some comments regarding the issue of petroleum product pricing in Nova Scotia.
Now, I'm presenting both as a regional councillor who has heard the frustrations and the complaints from many local residents as they face high gas prices and high prices for home heating oil, and as an individual with long experience in the marine transportation business. Based upon my experience, I do have some understanding of the importance of energy prices in our economy. I would also be remiss if I did not recognize the Government of Nova Scotia for what I believe is a very important and worthwhile initiative. It is very appropriate to consult the people of Nova Scotia about the impact that high and sometimes volatile petroleum product prices are having on their lives.
Energy has an input into every aspect of our lives and, therefore, when energy prices increase significantly this feeds through to increased costs of production in most industries, and it poses a very direct threat to hundreds of thousands of individuals who are reliant upon petroleum products to heat their homes and to fuel their automobiles and conduct numerous
other tasks. The most vulnerable to high or rapidly increasing petroleum prices, of course, are those Nova Scotians who are on fixed incomes. These are the people most in need of both stability and predictability in energy pricing.
The first point I want to make is to ensuring competition in petroleum product markets in Nova Scotia. While I can express my concern about the price of petroleum products and while I can try to relate the very severe impact that high petroleum prices have on many individuals, I do recognize that I am not an expert in the field of energy pricing, and as I understand the mandate of this body, it is to examine petroleum product markets and current factors that determine existent prices with the intent to make a determination whether current prices are justified. While consultation with the citizens of Nova Scotia is appropriate and necessary on this issue, the mandate of the committee, a determination of whether current prices are justified, implies the need for considerable expertise offered by people who are familiar with the petroleum products markets in this region, both this region, both nationally and internationally.
It seems that in such a complex matter a technical evaluation of the markets is the only way to fully explore options that may be available to the people of Nova Scotia. For example, and to offer a comparison, when the Utility and Review Board considers an application from Nova Scotia Power for an increase in power rates, beyond seeking input from the general public and relevant stakeholders, the board engages a variety of experts to offer opinions regarding the necessity of the rate structure and the validity of Nova Scotia Power's request. While I'm not proposing that Nova Scotia should regulate petroleum products, I think the work of the select committee would be greatly enhanced if there was a mechanism for engaging the Competition Bureau, or some comparable body, which has the capacity to investigate the degree to which the petroleum products market in Nova Scotia is competitive.
Now to the casual observer, Nova Scotia petroleum product prices seem not only to be higher than the national average, but there seems to be a consistency or a conformity in the movement of prices charged by different firms operating in the marketplace that would suggest a lack of competition.
I know in the area that I represent, I don't know what system is used and who makes the decision, but when the decision is made to either raise the price or to lower the price, I think the jungle drums must start rolling and I don't know what the mechanism is, but there's a telephone call or something and everybody synchronizes their watches and says at eight o'clock tomorrow morning the price per litre of gasoline is going to be 98.9 cents. That happens at every gas outlet, or retail market, or retail outlet that we have in CBRM, especially I've noticed in our area and the same thing goes with home heating.
Home heating oil, there's some talk about group prices. If you belong to this group, you can go to one oil company and receive your home heating oil at a certain price. I belong to a group of people, senior citizens of this community, and we form a large group in this
area. We have never been approached to take advantage of a lower price with an oil company although many groups have. Also those who are on fixed incomes, I bet they never were approached to take advantage of a lower price as a group. Now, if there's a lack of competition in one or more of the petroleum product markets in this jurisdiction, governments can require wholesalers to give a certain amount of notice of price increase or governments can reduce the tax applied to petroleum products. However, these measures, because they are not targeted to the root problem, will have little impact on the level of prices.
Thus my first suggestion to the committee is that objective experts should be directed to determine whether petroleum prices in Nova Scotia during the past several years have been the product of a sufficiently competitive marketplace. I think that this type of objective analysis would be very beneficial and I don't think such a comprehensive evaluation can be produced only through a consultation process because regulation is very much a second-best policy as compared to competition. Such an analysis is required before any decisions are made with respect to a greater level of government intervention in this sector of the economy. It may well be that there are a number of things that can be done to enhance the level of competition in the petroleum product sector without burdening both the industry and ultimately the consumer with burdensome regulations. So is there competition in the marketplace and how competitive is it and how does that affect the price?
The other one is the supply of petroleum and other energy products. One of the serious issues that faces Nova Scotia is the extent to which we are dependent upon foreign sources of energy, not only in our consumption of petroleum products for heating and transportation purposes, but also in the generation of electricity. This dependency makes our economy very vulnerable to swings in international energy prices. Nova Scotia has literally billions of tons of coal reserves and by all accounts we have very favourable wind regimes throughout the province. Nova Scotia has a significant onshore and offshore potential for commercial hydrocarbon discoveries and yet for all this potential I am convinced that as a province we are not doing enough to promote domestic production of all types.
The past strategy of the Government of Nova Scotia was to have generating stations at the pitheads for the transportation of coal and Nova Scotia Power would have a long-term contract with the coal companies to supply the coal to the generation stations. The transportation costs would be very small. So the government of the day felt they wanted to do away with that system and they got out of, first of all, Nova Scotia Power wanted to get out of the contract of supplying the coal and then when they got out of the contract of supplying the coal, Devco was closed by the feds. As we all know, that's history and since that time the cost of coal internationally has risen something like 300 per cent. The president and CEO of Emera has said the cost to Nova Scotia Power in the last year has been something like $94 million. Since they got out of that contract, since the mines have been closed, they have been to the Utility and Review Board once and they're going again with double-digit requests for increases.
I believe as part of the review of petroleum prices it is appropriate to reconsider the provincial energy strategy and to honestly evaluate our energy goals and objectives. For a province with so much energy potential, our dependence on foreign energy supply, to me, is difficult to understand. A perfect example is our inability to take advantage of the Sable Offshore Energy Project, in this case almost five years after production. Enormous areas of the province do not have access to our own natural gas and realistically because we have no energy strategy at the time, we likely will never have access to this most valuable hydrocarbon resource despite the fact that the people of the Province of Nova Scotia spent somewhere like $750 million in development of this sector. Instead, this gas and the majority of natural gas liquids are being exported to other regions of Atlantic Canada and to the eastern United States while we use imported oil and coal to heat our homes and to power our generating plants.
The questions are fairly simple. Are there practical measures that can be taken to encourage greater, substantially greater, energy production in this province and, once produced, do we have a strategy to ensure that all Nova Scotians can gain preferential access to these domestic sources of energy? Again, without expertise in the energy field, it would nevertheless seem reasonable to expect that we would want to establish some meaningful targets to reduce our reliance upon energy supplies over time. If we are not serious about doing so, then I think we need to be honest with ourselves and with the public or, if not, we will continue to be victims of the roller-coaster prices that OPEC people impose upon us and then we will be subject to the prices in the international marketplace. So are we developing what we have in Nova Scotia? Do we have a strategy to reduce our dependence on OPEC?
Another point I would like to make is improving availability of price information and I think a key element of a competitive marketplace relates to the availability of information. If we can do nothing else, it would seem possible to ensure that those consumers who want to can access current information regarding petroleum price products in their local market. The sign that you have at a gas station, and they have them at every gas station, is a real good step, you know what they are, but in our area, if you see them at one gas station, they're there at all of them, but we don't know the prices that are charged for home heating oil and more information on that to the consumer would be very helpful. To the extent that there may exist different prices across competitors in the various markets, if we were to promote this information to consumers, it would enhance the competitive process.
[8:30 p.m.]
The last point I want to make is something that has been said here tonight and it has been said many times, there's much said about the government, as the price rises, the government receives more revenues because of the higher prices. It may be possible that through all your investigations you will discover the petroleum product market in Nova Scotia is competitive. Unfortunately, high prices are something that is simply the result of forces we have no control over and are unable to do anything with.
So we remain dependent on outside interests to supply our energy needs. If this turns out to be the case, then at least for the benefit of those Nova Scotians on fixed incomes, there is some merit to discussing the possibility of creating a mechanism that would provide a rebate to consumers based upon their total income and their annual consumption of petroleum products.
The argument of the government has always been if the price goes up, we must maintain our revenues or the oil companies will take it. But, if the government were to say, when the price goes over 80 cents per litre, then what money we gain from that increase in the price - for lack of a better title we could refer to this as the petroleum products stabilization fund. The merits of such a fund are that it can provide a measure of protection and income stability for those on fixed incomes during a period of severe increases in petroleum products.
At the same time, the rebate would be directly targeted to those most in need while preserving the provincial government's share of the total revenue derived from the sale of gasoline products.
In closing, I want to reiterate that in terms of support and sustainable growth and development in this province, I believe the best options involve finding ways to increase competition in the petroleum product marketplace in Nova Scotia and in increasing domestic production of energy and develop a long-term strategy for the energy sector. In the short term, however, improving the information flow for consumers and creating a stabilization fund may offer important benefits for the people of Nova Scotia while we work to implement longer term initiatives.
I greatly appreciate your attention and I appreciate the opportunity to present my perspective on this very important issue that we face.
MR. CHAIRMAN: We thank you, councillor. Are you open for a couple of questions?
MR. MACLEOD: Yes, go right ahead.
MR. CHAIRMAN: I'd like to recognize Russell MacKinnon.
MR. MACKINNON: Thank you, Mr. Chairman. I must say I listened very intently to the presentation and my colleagues know I'm not very easily impressed, but I'll tell you, I was very impressed with your presentation. It was very comprehensive and it deals with a lot of the macro issues that sometimes we tend to overlook. I have two short questions. Number one, I believe I may know the answer from your presentation, do you support regulation as opposed to the present deregulated system that we have now?
MR. MACLEOD: Regulation - if you're regulated in Prince Edward Island and the regulated gas is lower than it is in Nova Scotia - I think that competition in the marketplace would serve us better.
MR. MACKINNON: Yes. If that could be done through regulation, that would answer your question.
MR. MACLEOD: Yes.
MR. MACKINNON: The second question, with regard to the fact that, as a regional councillor - I think this is very important because you represent the taxpayers, not only within your district but right across the municipality - the cost to the municipality for fuel supply whether it be for police vehicles, fire vehicles or what have you, obviously the cost to the municipality has increased I would think quite substantially over the last five years. Could you give members of the committee a sense of what the impact is on your budget? Have you folks been able, with your experts within the various departments, been able to identify what the total cost is, either individual departments or collectively, to the municipality?
MR. MACLEOD: Well, in answer to your question, the budget that we go over once a year, the price of petroleum products is very significant in those budgets. They're very conscious of the cost of running the machinery of CBRM and providing all that they do to provide through that. In heating, it's extremely high.
MR. MACKINNON: Perhaps Mr. Chairman, pro tem, if the witness would be kind enough, committee members can take that on notice if you could, probably over the next month or so, if you could have Mr. Ryan or somebody within the CBRM provide us an overview of what the fuel costs were - whether it be for diesel fuel, heating fuel, gasoline or whatever to CBRM five years ago and what it is now. Just so we get a picture of it.
MR. MACLEOD: I'd be very pleased to do that. I'm sure the municipality would be very pleased to give you that information. No problem.
MR. MACKINNON: Thank you.
MR. MACLEOD: I'll see that the Chairman receives that information.
MR. CHAIRMAN: Everything through the Chairman, thank you.
MR. MACLEOD: Yes.
MR. MACKINNON: Thank you, Gordon, for your presentation.
MR. MACLEOD: Thank you, Russell.
MR. CHAIRMAN: Thank you, Russell. Danny Graham please.
MR. GRAHAM: Thank you, councillor. That was a thorough presentation. It's obvious that you thought this matter through. We're short on time, I'll make my points relatively tight. You've made some interesting points about relying more on Nova Scotia's sources of energy - I think that's an excellent point that we need to take into consideration. I think the stabilization fund suggestion that you have is also an interesting one. I think when one looks at the causes for the increased prices, taxes are clearly one of them. As the price of fuel goes up, we need to recognize that government reaps a benefit as well.
In fairness, we need to strike some balance in who's benefiting from higher prices and what the role of government is in all of this. I think it is an issue that deserves exploration and it's an original type of idea that I think has the original air of balance and fairness. I think it needs to be ferreted out perhaps a little bit more.
I'm interested most in your comments around regulation and you seem to exercise caution around the notion of regulation. You've said that - if I've understood you correctly - in the first instance we should have some objective experts to do a retrospective of some sort on whether or not there is competition. I know there have been several reports that seem to be done and they almost always seem to come back with the conclusion that, yes, in fact, there is fair and open competition. It's a separate question from the question of regulation that affects whether the retailers are being treated fairly, not just the consumer. There are various aspects to that and I just want to get as clear a sense as possible of your distinction between this notion of doing a retrospective of whether there has been proper competition in Nova Scotia and not wanting to jump into the full monty of determining that we should have a regulated industry.
MR. MACLEOD: I always feel, Mr. Graham, that competition is much better than regulation. You may have to do regulation at the end, but I don't see that competition in the marketplace. I don't see it in the insurance industry, I don't see it in the fuel industry, I don't see it in the telephone industry, I don't see it in the grocery industry even when you only have two supermarkets in all of Nova Scotia, except maybe for the Co-op. But, those industries are supposed to be competitive like the insurance, gas and oil, like the telephone company that has nobody else - they have regulations and they're regulated.
Regulations have some merit, but competition is what drives the marketplace. I would like to see competition explored fully first, before you go into regulation.
MR. CHAIRMAN: Thank you, Danny. Gerald Sampson, please.
MR. GERALD SAMPSON: Welcome Gordon.
MR. MACLEOD: Thank you, Gerald.
MR. GERALD SAMPSON: Gordon, you're a man of considerable experience with your history with Marine Atlantic and now as a councillor. Just to fill in some information for yourself, you were wondering about the fast spikes and fluctuations and whatnot, the representative from PetroCanada stated that he has a daily price meeting every morning by telephone and he is told at the end of that conversation what the price is for that day. I equated it to the stock market and he said, that's absolutely right, it's traded on the stock market the same as any other stock, and you see these fluctuations in stocks and that's the way they go on a daily basis. In regard to deductions, like you said, or something for senior citizens, I, too, don't see it.
When you are talking about competition, I call it controlled competition. Now we've kind of put the heat on the oil company officials. The word "collusion" was mentioned somewhere along the line and boy, did that ever make the sparks come out of them pretty quick, but it was a suggestion that was made in a roundabout general sense to let them know that everybody was thinking that they were controlling it one way or the other.
Gordon, I go back 50 years ago, as a kid in North Sydney, and if you didn't know the fishermen, you couldn't get grade-A fish in North Sydney, you had to go to Boston to get it. Guess who got our first natural gas 50 years later? Boston. So, has anything really changed?
I will quote a good friend of mine, Bruce Aikman, a retired engineer down in Middle River. He said Gerald, our resources are controlled by others for the benefit of others and they always have been. The question that I have for you, Gordon, I'm not trying to put you on the spot, but if you were the Minister of Energy right now or tomorrow, what would you do to try to resolve this - because you touched on a few points there in your presentation? What would you kind of suggest that might resolve the situation of fuel prices for home heating oil and gas that we're in? If you were the Minister of Energy, what would you try to promote or put forward?
MR. MACLEOD: Well, I would be looking at the marketplace, the competition you're talking about, and your colleague, Mr. Graham, is kind of leaning toward the regulated kind and you're talking about controlled competition. I kind of agree with you that it is controlled competition but I would like to see genuine competition. I don't know whether the provincial government can do that, if they are able to control these big oil companies. When I look at the first lady who presented and talked about some of the things that are ongoing, like the big three auto dealers. They have vehicles developed that don't take any gas, but they're not mass producing them for the public and I often wonder why.
So I wonder whether a government could get that competition going, but I think that's one of the things that you would want to look at, very much so. I would like to look at developing a long-term strategy, I think that we need some strategic ways of doing things and I think that we need to do that in the energy business in Nova Scotia. We have vast potential but how can we best get it and use it for the benefit of Nova Scotians first.
We want to take some lessons from the people of Newfoundland and Labrador. When they developed their offshore they didn't give it away to anyone, they saw to Newfoundlanders and Labradorians first. It's time that we in Nova Scotia start thinking of Nova Scotians first and that if we're going to develop something, we're going to develop it for Nova Scotians, in Nova Scotia.
MR. GERALD SAMPSON: Just one final comment . . .
MR. CHAIRMAN: Just one quick one Gerald, please.
MR. GERALD SAMPSON: I'll let it go then, as time is of the essence. Thank you.
MR. CHAIRMAN: I would like to recognize Howard Epstein.
[8:45 p.m.]
MR. EPSTEIN: Mr. Chairman, I guess my colleague, Mr. Sampson, kind of forgot that it was Premier Savage and Don Downe who negotiated that deal that saw our natural gas going to the Boston market. However, Mr. MacLeod, let me say how nice it is to meet a councillor for District 14 in the Cape Breton Regional Municipality. I used to be councillor for District 14 in the Halifax Regional Municipality, nice to meet my counterpart.
I have a question about municipal purchasing. I wonder, with respect to gasoline for municipal vehicles, can you just tell us how that works in the CBRM? Is there bulk purchasing? Is there any price advantage?
MR. MACLEOD: Bulk purchasing, yes.
MR. EPSTEIN: And is there a price advantage?
MR. MACLEOD: Yes, there is price advantage to it.
MR. EPSTEIN: So there is an example of the . . .
MR. MACLEOD: The group.
MR. EPSTEIN: . . . the group, the size and the marketplace actually making a difference. Great, thanks for that.
The other thing I wondered about the CBRM was whether the municipality had taken an approach with respect to its buildings to try to improve energy efficiency in those buildings. For example, there are a lot of private companies that come along and will look at your lighting, the insulation, and the efficiency of the heating plant inside a building and in fact work with you if you are the owner of these things, to try to produce energy savings and efficiencies. Has that been a program in the CBRM?
MR. MACLEOD: That's not a program but it's something we are very much looking at and we're certainly looking at replacing a building in the East Division that houses the police. We are looking at options on what to do in that particular instance and one of the things will be to make the building that they're going to occupy much more efficient than what they presently have. That's a really good point and it's something that we will be looking at. We are looking at things at the moment, we're getting to the stage where those things will come into play.
MR. EPSTEIN: Thanks for your comments.
MR. CHAIRMAN: I recognize Charlie Parker.
MR. PARKER: Councillor, it was a good presentation with some good ideas in there. I was particularly interested in your thoughts around seniors and people on a fixed income. One suggestion is, you said you belonged to a seniors group and maybe like a municipality or other groups go out for tender with your group to see if you can get a better price for the members within your own group.
You mentioned a petroleum products stabilization fund for heating oil and gasoline or both, I believe, with the idea that maybe above 80 cents there would be a rebate going back to those most in need. Just a couple of questions, I guess. Would you see that as revenue neutral for the province, extra taxes would pay for the rebate? Secondly, what level of income would people qualify do you think?
MR. MACLEOD: In answer to your first question, I would say that's revenue neutral to the province because it's additional revenue where you make a baseline, say it's 80 cents a litre, and anything above that, if the price rises to 98.9 cents then the revenue derived from there throughout the province would go in a fund that would be distributed to people on a fixed income who most deserve it. I don't know what the income would be, somewhere around $15,000 or below, they would be rebated. That's something this committee should look at closely because they are the people most in need.
On this Island of Cape Breton we're unique in many ways but one of the ways that we're unique is for the fact we have a lot of Devco employees who, through their former employer, were able to obtain a pretty good price on coal to heat their homes. They were doing that and they were getting a good break but what took place is the insurance industry came along and said there are whole areas in Glace Bay and New Waterford and other areas that because they're burning coal, we're not going to insure you. Those people are really in a hard way because they're very much on fixed incomes, they were on a budget where they were getting low fuel prices and now they have to get a new oil furnace and it's going to cost them through the roof; so that fund is very important. If you take some of that revenue that we're deriving and rather than putting it in the general revenues of the province, it's revenue neutral and it goes to this fund that would rebate those who most need it.
MR. CHAIRMAN: Well, councillor, we thank you for coming this evening and we've certainly listened to what you had to say to the committee. We would like to wish you well and we've enjoyed your presentation. Thank you, sir.
MR. MACLEOD: It is certainly a privilege to be here and I wish you all well in your journey tomorrow.
MR. CHAIRMAN: Gerald would like to make one quick statement.
MR. GERALD SAMPSON: We were talking about following the Newfoundland and Labrador approach and thinking of Newfoundland and Labrador first and whatnot, my knowledge - from what I've been told - tells me that our Think Cape Breton First stickers are printed in California.
MR. CHAIRMAN: Thank you, councillor. Ladies and gentlemen, before I ask for the next speaker to come up, I would like to inform the audience tonight that everyone who is scheduled or has asked Kim to put their name on the list will be heard tonight. Even though the time is getting somewhat late, we are here to listen so we will move along as quickly as possible and we appreciate your patience. After the next speaker we will enjoy a five minute recess so everyone can do what they have to do and come back, okay. So at this time I would recognize David MacRae, a service station owner. How are you tonight, sir?
MR. DAVID MACRAE: I'm fine, thank you.
MR. CHAIRMAN: Good. Sir, do I have to go through the rules or do you understand them?
MR. MACRAE: I understand them.
MR. CHAIRMAN: Very good. You have 15 minutes. State your name for the record and continue, please.
MR. MACRAE: My name is David MacRae and I want to thank you for this opportunity to speak on behalf of myself as well as some other gas station operators here tonight. We can see that these meetings you're hosting across the province are bringing to light the grave situation that we independent gas station operators are in in Nova Scotia and I guess I should apologize maybe for sounding a bit like a broken record. I own and operate an Esso branded station in Baddeck. When we started in 1970, there were five stations in the village. We are now the only one still in operation.
During this 34-year period, retail gas sales have been a large part of the success and viability of our business. The past 15 years have shown a steady and dramatic decline in the profitability of our gas sales. Prior to 1990, the oil company that we dealt with provided all the equipment and signage required to sell gas from our property. They would also pay a lease payment to us to compensate us for providing the property and locking into a sales agreement with them. We were also receiving a fair margin to sell gas. Today, after this 15-year erosion, most of the costs related to gas sales from our outlets have been downloaded to us - lease agreements that pay one-third or less the lease payments received 10 or 12 years ago and we are also receiving a much smaller margin to sell gas and at times are selling our fuel at a loss.
Probably the hardest part for us as independent retailers is the fact that we have no control over the situation. We are at the mercy of the oil company that supplies us. They determine our wholesale price, our retail price and, therefore, the profit we receive to sell gas.
Is there something that can be done to assure a fair profit for retailers? The most common suggestion we have heard is to have some form of minimum/maximum margins for retailers. This would allow us the flexibility to compete in our market and receive fair profit. In some markets around the province we have seen some very aggressive retail pricing. In the past few years I have been told by two oil company representatives that if I didn't want to go along with what they proposed, they could get very aggressive with their retail price in my area to gain market share and make it very difficult for me to stay in business. These threats and actions have already driven many independent operators out of business. Many more stations are on the verge of the same decision and I am one of them.
After serving our community and this industry successfully for over 34 years, it is very difficult for us to be forced out of business by this unfair predatory market condition. Major oil companies are controlling the market to drive it where they want. We, the small independent operator, are not in their plans. If we were, we would be given the ability to make profit in this business. Remember, they control what we make. Perhaps they would not have this control if they were not directly involved in every aspect of the gas business.
Having read the newspaper reports on your earlier meetings, it seems that one of the major issues facing your committee is the fact that most independent retailers are on the brink of closure. Representatives from the petroleum industry have stated that retail gas prices are fair and the huge profits the major oil company is reporting is fair considering that they had had a rough time in the early to mid-1990s. My profit decline in this business started in the early 1990s. Other submissions seem to tell the same story. It is clear that a good portion of these oil company profits have come on the back of independent retailers. I don't know how many independent gas retailers there are in Nova Scotia or how many people they employ. I also do not know what economic impact we have in the province. I do know that the economics of my business will not include gasoline sales if they cannot become profitable. Thank you.
MR. CHAIRMAN: Thank you, sir, open for questions?
MR. MACRAE: Certainly.
MR. CHAIRMAN: Yes, Russell MacKinnon has one.
MR. MACKINNON: Mr. Chairman, I want to thank our witness for his presentation. Twofold, one, am I to understand that you support some form of regulation?
MR. MACRAE: No. I'm regulated now by the oil company.
MR. MACKINNON: No, no, but I mean by government?
MR. MACRAE: I want a fair market where I can compete.
MR. MACKINNON: Well, isn't that what the deregulation from 1991 offered?
MR. MACRAE: We don't have a fair market.
MR. MACKINNON: Okay, well, how would you expect this committee to make a recommendation on that matter if it wouldn't involve some form of regulation?
MR. MACRAE: Well, the oil companies are involved in the wholesale and retail and if they're going to be involved in both, there will never be a fair market.
MR. MACKINNON: No, so there would have to be some form of regulation then?
MR. MACRAE: What are you calling regulation?
MR. MACKINNON: But you can't have laissez-faire . . .
MR. MACRAE: What are you calling regulation?
MR. MACKINNON: Yes, regulation by government to ensure that deviation . . .
MR. MACRAE: Oh, yes. And it will create a fair market.
MR. MACKINNON: Yes. So you do support some form of regulation, right?
MR. MACRAE: I guess so.
MR. MACKINNON: The answer is yes?
MR. CHAIRMAN: Yes or no, sir?
MR. MACRAE: Would you define regulation better for me, please.
MR. MACKINNON: Well, I just did. You need some form of government intervention to prevent that type of . . .
MR. MACRAE: Oh, we need some, maybe define intervention, I don't know, but we do need some intervention, yes, my answer is yes.
MR. MACKINNON: So the answer is yes. Okay, now we're making headway because the second part of my question is with regard to a presentation that was made on Friday by the representative from the Canadian Petroleum Products Institute and that is on the issue of customer satisfaction. They view all the retailers as being customers and, I suppose, to be user friendly, valued customers and I asked if there were any studies or have they done any type of analysis on that, you know, case studies with their membership, or all the retailers in the
province and how they measured that and they said, well, they draw up terms of reference, and I'm paraphrasing here, and that if they like the terms of reference of the contract, they sign up. If they don't, well, they don't. In other words, too bad, and that goes to this suggestion by yourself about the oppressive nature in the market. Are you aware of any studies on the issue of customer satisfaction, if not within the retailers association, what about the general public? What are you as a retailer hearing as the consumers come into your service station on the issue of gas prices or other fuel prices?
MR. MACRAE: They don't believe I'm not making money and all they scream about is the high price of gas, number one.
MR. MACKINNON: Thank you, Mr. Chairman.
MR. CHAIRMAN: Thank you, Russell. I recognize Gerald Sampson, please.
MR. GERALD SAMSON: Thank you, Mr. Chairman. Thanks for coming, David. It's a continuous story of what we have been hearing, as you said, and we asked the oil representatives, people made presentations that were in businesses and one gentleman started in 1955 and has been around ever since. He said, the oil representative at the time, that the number of years in business means nothing. When they negotiate a contract, that's it. It's brand new. If I went into a service station now and you've been into it for years, I will get treated the same as you or you will get treated the same as I will.
The number of independents in the province is less than 500. That has come to light. Some of them were talking between 400 and 500 so we know it's less than 500. Basically, we were talking about partial regulation and what about if we were to try to regulate a guaranteed 5 cents a litre for the gas station operators like yourself? The gentleman from the oil company said today there's no guarantees on anything. There are no guarantees for the oil company so there can't be any guarantees for the dealer, it's a world market with free trade so you're open to any and all competition.
Just one final thing, the fear factor comes in there when they said, do you realize that Nova Scotia is only one-tenth of the North American market and right now we enjoy a good supply of gas and furnace oil, and I guess the subtlety was there that if you make too many waves, and if you try to make a price that's a bit lower to help people out, the United States could get upset or other parts of Canada could get upset and because of the free trade market, come in and buy up the supplies that we're getting, and leave us where we would be wondering where the next truckload of gas is coming.
[9:00 p.m.]
So there's always that pressure that they're putting you under and then they let us know about the pressure in the supply market. So, you know, we could possibly become a market that wasn't very accountable or reliable. So that's just some of the information that
we've been getting and your story is one of, like I said, change the name and it's a commonality and they're saying the days of pumping gas and making money are gone. You have to have a car wash. You have to have a convenience store. Gas is only a part of the income of the station and whatnot and as we found out earlier in the presentation, and through the other previous nights, they are making money off the credit card sales also. So everything counts in the business except you, that's what I'm finding out. Thank you, Mr. Chairman.
MR. CHAIRMAN: Thank you, Gerald. Sir, not seeing any other questions, do you have a closing comment?
MR. MACRAE: No, I've said all I have to say.
MR. CHAIRMAN: Then we do thank you for your presentation, sir. Okay, we're going to have a five minute break.
[The committee recessed at 9:01 p.m.]
[The committee resumed at 9:10 p.m.]
MR. CHAIRMAN: I call the committee to order, the time being, we'll say 9:10 p.m. At this time I would call the witness Catherine Robertson. Madam, I would like to tell you that your comments will be recorded this evening, that you have 15 minutes for your presentation, and that if you would like to take questions, I will ask you and you can say yes or no. I also suggest that anyone who would like a presentation who has not been scheduled, please see Kim, standing here beside me, and she'll allow you that opportunity. So, Madam, state your name for the record and continue, please.
MS. CATHERINE ROBERTSON: My name is Catherine Robertson. I'm nervous, so bear with me, I hope this will be short.
MR. CHAIRMAN: You can feel very comfortable and pour yourself a glass of water because maybe that will help you a little bit. Now, are you okay with that? Okay.
MS. ROBERTSON: My husband owns a service station and we purchased the service station in 1987. The presentation I'm making is a comparison of what we were making in 1987 compared to what the government was making. I would have included the oil companies only I don't know their profit. I passed out information there and there are invoices on it. I went back to May 1, 1993, and invoiced, it was the oldest invoice I could find in my records. At that time the price of gas was 0.482 cents. Our retail profit was 0.045 cents and the government's profits, this is Nova Scotia and provincial profit, was 0.225 cents. Today, I took the price of gas today, July 18th, the price of gas has gone from 0.482 cents to 0.949 cents. The government's profit has gone from 0.225 cents per litre to 0.378 cents per litre. Our profit margin has gone down. It was 0.045 cents. Today it's 0.04 cents, but our average is about 3.5 cents.
The government profit has gone up 59.6 per cent in 17 years. So then I worked it out. In 1993, if our station sold $1.5 million, the government made $337,500. Today they would make $567,000. Our profit at $1.5 million in 1993 was $67,500 for the whole year without any expenses and at that time, as they stated before, some of the oil companies were picking up some of our expenses. Now we're doing it all ourselves. Today our profit would be approximately $60,000. Since 1987 our salary has increased 57.2 per cent because of the increase in salary/wages. Insurance has gone up 370 per cent since 1988. I'm using different years because it was the only figures I could find.
In 1993 credit cards were 1 per cent. When we took over the station in 1987, we were Esso. We didn't pay for anything, there was no credit card, but they charged us the 1 per cent on VISA and MasterCard and such. That would work out to 0.005 cents per litre. That's how much it would take away from our profit. Today they charge us 1.5 per cent and 1.75 per cent on their commercial cards. We lose 0.051 cents every time somebody uses a credit card. Your profit is 3.5 cents, you've just lost 1.5 cents. So we lose a large portion of our profit. Today with everybody trying to get Air Miles, I would say 60 per cent of our sales are credit cards where back in 1987 or even 1990 to 1993, people didn't use them as much because they weren't interested in that.
Our station is located in Howie Centre which is close to a Native reserve. Yesterday gas at that station was selling at 84.9 cents per litre, 10 cents less than us. So we not only have the oil companies, we also have the fact, and I'm not saying anything against the Natives, I'm just saying we can't compete when we don't make 10 cents a litre and they sell it for 10 cents less than we can even buy it. The government introduced the GST I think in 1991. The province at that time gave a small rebate for collecting their money and it was a simple calculation, you just took it off your tape at the end of the month and you submitted it to government. Now it's a much more costly operation or it costs more to do the bookkeeping, and the compensation is still, okay.
[9:15 p.m.]
What I'm trying to say is that salaries have gone up, insurance has gone up, day-to-day expenses have gone up, but our profit margin has gone down. We want competition, but the oil companies are squeezing out the independents. In the last month two stations have closed their pumps in the Sydney area. We've talked to several people who are looking at closing by the end of the year if something doesn't happen. We need to have a better margin. The oil companies control our margin, they control our price of gas. Our own prices go up. The government has increased their profit. I don't know about the oil companies, but I would bet they have. The only person I see that has gone down in 17 years is the independent.
Before we were deregulated, you couldn't get a licence to open up a service station unless you closed a service station. There was a limited number of licences. The day that deregulated, the oil companies could go out and put all the stations they wanted and that dramatically decreased what our service stations were worth. So that's all I have to say.
MR. CHAIRMAN: Thank you very much. I would like to recognize Howard for a question, please.
MR. EPSTEIN: Ms. Robertson, I think the one piece of information I didn't get in what I think is a very thorough presentation is what your volume is per year?
MS. ROBERTSON: Our volume is about 1.7.
MR. EPSTEIN: And 1.7 million litres a year, is that right?
MS. ROBERTSON: Yes, and we're to the point now where they don't want us. We're lucky, when we're finished with Ultramar, I don't know who's going to pick us up.
MR. EPSTEIN: How long a contract did you have with Ultramar?
MS. ROBERTSON: We have a five year and we have one year left.
MR. EPSTEIN: And what do you mean, they don't want you?
MS. ROBERTSON: I think the oil companies only want the larger stations. They want stations over 2 million, at least over 2 million. It's more profitable for them to deliver to one station in our area rather than three. So if they can close up two stations, then that's what they'll do. They seem like they don't care if they're in an area because they're all buying from the same people. They're all buying from Esso. In the end they feel it will all work out anyway. Everybody has to buy the gas.
MR. EPSTEIN: But have they indicated to you that they're likely not to renew?
MS. ROBERTSON: No, they have not.
MR. EPSTEIN: That's just your guess?
MS. ROBERTSON: Well, no, they may very well take us, I'm just saying we worry about it.
MR. EPSTEIN: Yes, and you're right, I think your volume is probably in the low end of what we've heard so far in terms of various stations except for ones that are in very rural areas.
MS. ROBERTSON: Right.
MR. CHAIRMAN: Not seeing any further questions, I would like to thank you for your presentation. Good luck to you; enjoy the rest of your evening.
MS. ROBERTSON: Thank you.
MR. CHAIRMAN: At this time I would like to call witnesses, Lloyd Palmer and Tom Taylor. These gentlemen have a presentation and they're going to use a flip chart, and the chairman has allowed that for greater clarity on their issue. If any committee members are having a problem seeing that, please feel comfortable in shifting. The same for the members of the audience, if you would like to move. Sir, even though you have a flip chart, your presentation is still only to be 15 minutes. At the end of that time, if you wish to accept questions, we'll certainly open it up for you.
MR. LLOYD PALMER: Mr. Chairman, maybe what we could do is when we use the flip chart, to show the committee first and then we could turn it after that so that the members of the audience can see it.
MR.CHAIRMAN: Sure, feel free. State your name for the record.
MR. PALMER: Mr. Chairman, we are members of the Kiwanis Ceilidh Golden K Club of North Sydney, Sydney Mines. Tom Taylor is our President and my name is Lloyd Palmer. We would like to welcome the committee to the Sydney area and hope your hearings will be fruitful. It's time for the residents of Nova Scotia to get a fair shake at the pumps. We want regulated gas prices in Nova Scotia now. P.E.I. has had regulated gas prices for the past ten years, and Newfoundland and Labrador has had regulated gas prices for the past two years.
This first graph covers the 12-month period of March 2003 to February 2004. You will see that P.E.I., in blue, has had consistently lower prices over that 12-month period by as much as 17 cents per litre, but usually 9 cents per litre. Gas prices in P.E.I. have been lower over the past two years, and it continues today. For example, on Friday, July 16th, the highest price of gas in Nova Scotia was 95.9 cents per litre, and the lowest price of gas in P.E.I. was 88.1 cents pre litre - between the two provinces, a difference of 8.8 cents per litre.
So what do Newfoundland and Labrador and P.E.I. have to do with Nova Scotia? All three provinces have different tax rates, and this does affect the price. P.E.I. does have a lower tax rate, but that still does not fully explain how the price of gas is consistently lower in P.E.I. than in Nova Scotia.
Federal and provincial tax on fuel is too high, and expressed as a percentage. We recommend that the tax at all levels be expressed as cents per litre instead of as a percentage. This would prevent the unnecessary windfall tax going into government coffers when the oil companies arbitrarily increase the price of fuel. Make no mistake, we are being gouged at the pumps by the big oil companies. Even the representation from the Canadian Petroleum Products Institute admits "that the current high prices are creating record profits for the oil companies." But he tries to make us feel sorry for them, because they didn't rip us off better in the late 1990s, with meagre profits.
Free enterprise and competitive pricing is not apparent when the four big oil companies put their prices up at the same time. The fact that the retailers want price controls means that they are not the bad guys in this situation. The issue we are dealing with here tonight however is the range of gas prices within the Province of Nova Scotia compared to P.E.I. and Newfoundland and Labrador.
You'll see from the graph, for the months of January and February 2004, the range of gas prices regulated in P.E.I. and Newfoundland and Labrador is less than 3 cents pre litre. In Nova Scotia, which is not regulated, the range between the highest and the lowest price within the province is 9 cents per litre, and this range has been even higher in the past. This continues today. For example on Friday, July 16th, the range of the price of gas in Nova Scotia was 8 cents per litre between the high and low price; in P.E.I., less than 1 cent per litre between the high and the low.
So what are the benefits of having regulated gas prices in Nova Scotia? First, with regulated gas prices, the range of the price of gas would be reduced to about 3 cents per litre instead of the now 8 cents or higher; second, the regulated price of gas is set, usually once per month, therefore citizens would know what they're going to pay for fuel for the next 30 days, and this will allow citizens and businesses to properly budget for their gas expenditures for that period; third, this would give the consumer fair value for the money and the service station operator a fair profit margin; and finally, this would also end gas price sticker shock at the pumps.
Some of you might wonder why the Kiwanis Club is getting involved with gas prices. Well, everyone burns gas in their cars. Many people, such as seniors, are on fixed incomes, and if the price of gas goes up this eats into their disposable income. Since fuel is such a basic commodity, any increase in fuel results in higher prices for everything we buy such as food, transportation, medicine, clothing, housing, municipal costs, electricity, and the list goes on. Higher fuel costs also have a large negative effect on tourism, where a key industry is being damaged and the workers are being laid off.
We want regulated gas prices in Nova Scotia now. The Kiwanis Club of North Sydney has had a signature petition campaign since March 2004. We have received over 3,500 signatures from a number of areas in the province, and we are continuing to receive more signatures on a weekly basis. We have sent half of those signatures to Premier Hamm's office and the remainder to Mr. Dexter's office. We are asking all citizens who want to get involved in this project to contact President Tom Taylor at 1-902-674-2855 or his e-mail address, ttaylor@istar.ca, and we will send you out petition information.
If you have not already done so, I would ask the committee to contact the following: Mr. George Murphy, Consumer Group for Fair Gas Prices in St. John's, Newfoundland, he was instrumental in convincing the Government of Newfoundland and Labrador to implement fuel price controls in that province; and Mr. Allison MacEwen, Assistant of Director of P.E.I. Regulatory and Appeals Commission.
At this time I would like to pass along some notes I made when I had a telephone conversation with Mr. MacEwen in March of this year: Mr. MacEwen, do the oil companies get a higher price for gasoline because of regulation? Answer, no, not as far as I know.
Does regulation result in higher than average gas prices for the consumer over time? No, we try to set a fair price for the product, one that gives the consumer fair value for the money and the service station operator a fair profit margin.
How much money does the operator make on a litre of gas? From 4 to 5.5 cents per litre.
How are your prices set and when? We set the prices usually at the first of the month for 30 days. We use the rack price, the price the oil refinery sells the product for, and the base price, the price the oil company is allowed to charge before taxes.
Based on your experience with regulation over the past number of years, have consumers been better off? Yes, we do not get any complaints.
Have the oil companies ever refused to supply product to service stations because of regulations? No, not that I know of. Sometimes if the world oil price has gone up, the oil companies will complain that they are losing money, and we will take that into consideration when we set the price next month.
Do you always wait until the end of the month to set gas prices? Most of the time we do, but if there's an extraordinary increase in world oil prices, the oil companies can request a mid-month increase, we analyse all of the information and on occasion we will grant an increase.
[9:30 p.m.]
What does it cost for you to administer fuel price regulation on P.E.I.? I don't know the exact figure, but there is a salary of 2.5 people and a computer program which is already set up.
If Nova Scotia went for regulated gas prices, could they use your system as a model? Yes, Newfoundland did before they started regulated gas prices.
In conclusion, we want the Government of Nova Scotia to implement gas price regulation now. We know we're not immune to price swings on the market, however, we're willing to pay a fair price for the product only when justification has been made to put the prices up or down. Just one final thing, I have a package for each one of you here, but the last page I wasn't able to put on a larger chart, but it shows the Canadian average in red, P.E.I. in green and Nova Scotia in blue. So, there's considerable difference between them.
MR. CHAIRMAN: Thank you for your presentation. We're going to open up for questions. I'd like to recognize Jim DeWolfe.
MR. DEWOLFE: Thank you, Mr. Chairman and thank you for representing your organization here tonight. We're very pleased to have citizens come forward with their thoughts and views.
Basically, I just wanted a point of clarification. Near the first of your presentation you mentioned you used the - correct me if I'm wrong - highest price in Nova Scotia and the lowest price in P.E.I. Is that correct?
MR. PALMER: Yes.
MR. DEWOLFE: Why wouldn't you compare apples to apples rather than apples to oranges? Was it around 89 cents in P.E.I. in July?
MR. PALMER: It was 88.1, the lowest in P.E.I.
MR. DEWOLFE: So 88.1 was the lowest in mid-July and I can tell you in my community in Pictou County where I live, it was 87.9 during that time. It was actually lower in my community than it was in P.E.I. - P.E.I.'s lowest price at that time. Every area in Nova Scotia is not the same price and you're indicating that one thing regulation does in P.E.I. is it controls the prices to within a cent.
MR. PALMER: Well, no. It does . . .
MR. DEWOLFE: Your retail prices over there, according to your charts, vary only about one cent.
MR. PALMER: No, what I did say was this month, this July, the difference is one cent.
MR. DEWOLFE: From the highest to the lowest on P.E.I.?
MR. PALMER: Yes. But, by regulation, it's usually 3 cents. It just happens to be only 1 cent now, it's not that it's regulated, the price just happens to be that.
MR. DEWOLFE: No, they have a high limit and they have a low limit.
MR. PALMER: They have a high and low range which is a 3 cent difference so they can't go any higher than 3 cents.
MR. DEWOLFE: We're quite aware of that. Anyway, it's interesting and I thank you for that. I just wanted to clarify that you're using one price in Nova Scotia - perhaps Halifax,
or wherever and there are other communities in Nova Scotia where the price varies.
MR. PALMER: No, this price I was using was a Nova Scotia average.
MR. DEWOLFE: Nova Scotia average. Right. Thank you very much for that.
MR. CHAIRMAN: Thank you, Mr. DeWolfe. At this time I'd like to recognize Howard Epstein.
MR. EPSTEIN: Thank you. Mr. Palmer, your call for regulation really focused on gasoline for vehicles at the pump. Another part of the necessary expenditures for consumers would be for home heating fuel. Unless I missed it, I didn't hear you talk about that issue. Do you have views about the utility of regulation with respect to home heating fuel?
MR. PALMER: Yes. Actually, we would expect that would be included. We just didn't want to muddy the waters with two things so we figured if the committee was going to go for regulation, they would automatically take fuel oil into consideration.
MR. EPSTEIN: Thank you.
MR. CHAIRMAN: Thank you, Howard. Now I'd like to recognize Gerald Sampson.
MR. GERALD SAMPSON: Just to give you some information on facts and figures - what the gas companies promoted to us when they were making their presentation because the P.E.I. regulation came up continually - they said that when the price goes up, it takes a longer time to go up which creates stability, but when the price drops suddenly, this price is locked in for close to a month therefore you suffer that way. You don't enjoy the lower price immediately and when they finished their figures showed us that on an average in 2003, P.E.I. residents paid one cent more than the residents of Nova Scotia. That's the figures they presented to us.
MR. PALMER: Yes, I've heard that.
MR. GERALD SAMPSON: Which are in direct conflict with what you're showing us there.
MR. PALMER: Yes, we've heard this propaganda from the oil companies for a long time. I'm originally from P.E.I. and I go back and forth to P.E.I. all the time. I don't know where they get the idea that P.E.I. pays more over time because I don't know if I've ever been over there where you went to the gas pump and you had to pay more. Sometimes, if you did, it was only for a week or so, but a lot of the time over there, sometimes it's cheaper than it is on the reserve. So, I don't know where they get this thing - I've heard this statement time and time again, P.E.I. pays more over time. I don't know where they get it.
MR. GERALD SAMPSON: Just one final thing, Mr. Chairman. I was asked this evening by some previous presenters, have there been any presentations made with regard to First Nations and I told them no. They were wondering if there was any information pertaining to their delivery of fuel and gasoline compared to the rest of the market.
MR. PALMER: We don't know anything about that.
MR. CHAIRMAN: Thank you, Gerald. I'd like to recognize Russell MacKinnon.
MR. MACKINNON: Thank you, Mr. Chairman. I want to compliment both our witnesses here this evening. They're very civic-minded - they've been working on this issue, long before it resonated with members of the Legislature. I wanted to put that on the record and congratulate not only themselves but the organization they represent.
MR. PALMER: Thank you.
MR. CHAIRMAN: Thank you. Tom, did you have a few comments?
MR. TOM TAYLOR: Just a very short question, a little apart from the subject. I'm looking forward here and I see nine pretty intelligent men. They all have one thing in common, they're all elected politicians.
We have heard a number of times from the retailers, wouldn't this committee have been better served with a retailer on it? Would the committee have been better served with a consumer off the street? As you say, we were at this much longer than you people in the sense that we were organizers, started organizing in January of 2004. You fellows are into it for a couple of months - thank God you're here and you're going to listen, but at the same time, I would wonder if perhaps it wouldn't be, but I wonder if the committee would be better served by people from the . . .
MR. CHAIRMAN: Sir, usually we don't take questions, but I'd like to respond and then I'm going to turn it to Russell MacKinnon as well.
This is a committee of the House of Assembly under a certain resolution. We enjoy certain powers pertaining to that resolution. We are representatives of the retailers, of the consumers, of all Nova Scotians. Sir, through our walk in life, I can assure you that we are aware of the gas prices and the effect on the economy. I can assure you that I want to find a certain level.
After we visit the communities, then we're privy to any and all types of information this committee would want. We will listen to provincial and federal regulators, we will be bringing in experts if so needed. So, the resources are provided under this resolution for us to have all the necessary information to make a solid decision on behalf of Nova Scotians.
I'd like to recognize Russell MacKinnon. Thank you.
MR. MACKINNON: Well, Mr. Chairman, you've captured the essence of what I was about to say. We are consumers, we are also - if you look around the table - business people and we represent a wide spectrum. But, I do appreciate the essence of the point that was made.
MR. TOM TAYLOR: To the Chair, given that, I would assume then that if this committee does decide regulation would be in the best interests of the consumer, does that mean government is going to adopt that?
MR. CHAIRMAN: Well, you're asking another question, but I think it's a question worth answering. What happens, sir, is this report will go back to the House of Assembly. At that time, any Party who wishes to use that report to do whatever they wish to do with it, they're able to get that and argue the point. Under this resolution, we were sent out. We're very serious in what we're doing. At the end of the day, the committee, collectively, together, will honour the decision that we make, hopefully.
MR. TOM TAYLOR: At no time have I questioned the sincerity of the committee. I believe in what you're doing here. I see everyone is listening. That's great.
MR. CHAIRMAN: We appreciate you today. Sir, thank you for coming and enjoy the rest of your evening. Gerald would like to have a quick snapper.
MR. GERALD SAMPSON: No, just a final comment. What came before us, Tom, in the very first meeting was that we all unanimously agreed that we would invite officials from P.E.I. and we would invite officials from the federal end of it to give us a presentation at a committee meeting in Halifax, so that we would get the facts straight from provincial and federal officials in regard to the pricing, regulation or not.
MR. TOM TAYLOR: Just one little note, and I think I'm in Halifax, Gerald, as much as you are, we're there about two to three times a month. I find that when prices are 93 cents or 94 cents in Halifax, they're 86 cents and 87 cents or 88 cents here, and then when ours goes to 93 cents, theirs comes down. So it's kind of like a carnival, they're moving around the province so as not to get too much flak from one particular area. These people are getting upset, let's move on.
MR. CHAIRMAN: Thank you kindly, gentlemen, for coming this evening. At this time I would like to call Scott Thomas. Scott, you've been with us, I believe, all evening. Is it necessary that I go through the rules? Thank you, sir. Would you please state your name for the record and continue with your presentation.
MR. SCOTT THOMAS: My name is Scott Thomas. I'm a resident of Sydney. Tonight I would like to talk about the university students' perspective. The university students have been silent on quite a few issues in terms of these meetings, I understand. I have not seen
anything in the newspaper. I am a student at the University College of Cape Breton, and last year I was the University College of Cape Breton's Student Union Vice-President, where I heard more horror stories than you can believe.
The University College of Cape Breton is a very unique university. It is unique in the sense that it is a commuter college. With close to 4,000 students attending the University College of Cape Breton, only 500 live in residence. So we have 3,500 students who drive their cars to school every day. Since I've been a student, three years ago, the price of gas has risen almost 50 per cent, the price of tuition continues to rise, and the rate of minimum wage has increased by 7 per cent. The rate of unemployment among students has decreased little. To get a summer job is like winning the 6/49 lotto, it's really a lotto, every year. Students pack gyms and wait for their names to be called, for three jobs. students waiting for less than 10 jobs.
I would like to show you what a university student faces. When we enter school in September, we face $5,200 for tuition, we face $500 for books per term, that's for four months, we face $50 for parking our car at our university, per term, which works out to be $100 a year, and the average student, if they're lucky, only pays $50 a week, but they're hard to come by. I spoke to a student today, when I knew I was coming, from Louisbourg, which is a far distance from here, as many know. They spend on average $75 a week, which works out to be, per term, close to $1,200. This student also indicated that last year her job, in one week, she cleared $115 after taxes. She put out $70 in gas. What does she have left? Nothing.
[9:45 p.m.]
Not to mention that one day, on her ride to school at 8:30 a.m., she hit a pothole, which caused her tire iron to break. We all know the cost of that. She can't afford it. So what did she do? Well, she called around and tried to find someone she could car pool with, but she couldn't. So she missed a week of class because she couldn't afford to get her car fixed. She hit a pothole, which hadn't been fixed in a couple of months, which should be fixed from the price of gas that we're paying, our taxes, the tax on gas is supposed to be paying to fix the roads, but this student who pays $75, close to, in a week for gas hit the pothole that she's supposed to be helping pay to fix. Not to mention that insurance keeps going up. Myself, alone, I pay $97 a month.
I don't get a full student loan. Like many of my fellow students, our average cost to go to university, to make something of ourselves, to support the economy, to buy gas, to help us all work, we're losing out. We're losing out a great deal because those Summer jobs are hard to find, and it kind of gets sickening when your Summer job, you make $2,000 in two months and you pay $2,500 for your academic term in gasoline. For those who can still remember going to university, you're in school usually from 8:30 a.m. sometimes until late at night. Those part-time jobs are hard to come by in Cape Breton.
I also want to bring to light the fact that there are many single parents at the University
College of Cape Breton, close to 400 to be exact. So not only do they face the cost of rising tuition, not only do they face the cost of gasoline, but they also face the rising cost of housing, because landlords tell them, guess what, your rent is going up because home heating is going up. We hear the same thing from our university when they tell us that tuition is going up because the cost of home heating is going up, which supplies heating at the school.
What I ask of this committee is, I hope that you do regulate gas, and I hope that there's a policy that goes into place to help students get ahead, to help the fellow students of Louisbourg, who are studying to be doctors, which will aid many of us, and I ask that when you go to regulate this gas and you think of this committee you think of the hundreds and thousands of students who have great ideas, who have just been shut out too many times and who are afraid to speak. Thank you.
MR. CHAIRMAN: An excellent presentation. Danny Graham, please.
MR. DANIEL GRAHAM: Mr. Chairman, mine is only a comment. We've waited for a number of the presentations that we've received tonight from different perspectives, Scott, and I want to commend you for articulately putting together the picture for the atypical but average Nova Scotian, a person whose hardship is greater than others. We had comments earlier about the challenges faced by people on fixed incomes, but not only do students face special challenges, especially here in Nova Scotia, but the students at UCCB are uniquely placed, because of the geography of the place and the makeup of residents and that sort of thing.
I just wanted to thank and commend you. Much of what you said is, in some respects, a reflection of what is being felt in rural parts of Nova Scotia, where people rely on transportation that much greater. I think the committee needs to recognize the extra challenges faced by people who aren't in urban or even town centres and who have to travel in order to do almost anything.
MR. CHAIRMAN: Mr. Jim DeWolfe.
MR. DEWOLFE: I, too, want to congratulate you and thank you for coming here today. You've given us another perspective of the situation as it relates to students in Nova Scotia, not just here at the University College of Cape Breton but, indeed, throughout the province. It's most helpful to hear those types of views. I can tell you I understand the plight of students. I had my own children going through university. I have one daughter, if you check the school records, you'll see that she graduated from the University College of Cape Breton, one of my daughters. It's a long drive from Pictou County, from New Glasgow to the University College of Cape Breton. We've done it many times in snowstorms, through St. Peter's and so on. It's interesting that you have more housing here than you did - student housing. I guess you have a new facility there. So, we won't get into that now, but thank you very much for your presentation.
MR. CHAIRMAN: Frank Corbett.
MR. CORBETT: First of all, it's good to see you again, Scott, and thanks for appearing before us. I'm not going to go over plowed ground with you, but the one thing I would like, if I could get you to bring it forward, is there's an option that doesn't exist in reality for the students at UCCB and that's public transit because, in essence, it doesn't work. I suspect, without knowing this directly, that you could probably give us some horror stories on students with public transit. I wonder if you could bring that to light. When we talk globally about gas prices and people say, well, better access to public transit, so if there was better access to public transit, what would that mean to the students, and how would you define better access for those students?
MR. THOMAS: Better access would be if the transit system could run to get the students to class at 8:30 a.m. Frank, you're probably well aware of this. We had 200 international students from China who had moved into housing in New Waterford. Many of them couldn't go to class at night because the bus doesn't run in New Waterford in the nighttime. Many of them couldn't get to class in the morning because the bus didn't run at 8:30 a.m. I did respectfully listen to many of the speakers tonight when they talked about public transit, but when public transit doesn't exist it becomes a problem. We've brought this problem up to the CBRM many times, and it continues to be a problem. I know that was at a different time and date but if public transit in Cape Breton, for example, was much better, a lot better, I think you would fewer students forking out hundreds of dollars to drive to school.
MR. CHAIRMAN: Howard, please.
MR. EPSTEIN: Could we just nail that one down a little bit, because the example you gave of a student who came a distance of, it must be, 40 kilometres to the university, is that typical? You said, for example, that there were only 500 of the 4,000 students who live in residence. I'm assuming that not everyone lives 40 kilometres away. Do you know where everyone manages to live?
MR. THOMAS: I can't give it to you exactly - it's not public knowledge to find out where everyone lives. For the most the part, the University College of Cape Breton relies on local students. For the greater part, there's probably a great deal of them living in Sydney - I can't give you the exact kilometres - and they're probably paying around $35 a week in gasoline. That would be the least. Then you have students from Whycocomagh, who drive to school every day from Baddeck, Beavers Cove, which is near Iona, you have people from Christmas Island, Chapel Island, St. Peter's. There was a girl in my class, she made it to class every day at 8:30 a.m. from St. Peter's.
MR. EPSTEIN: I'm sure the students are scattered, but I take it that the bulk of them who don't live on campus live in Sydney or in the immediate surrounding communities. What I'm wondering is what CBRM says when you talk with them about a better public transit
system. What do they say?
MR. THOMAS: They're working on it, which continues to be the consensus. They've been working on it since I was in the union for two years. I don't know if you're familiar, but they still have a bus that runs down to the steel plant. I don't think that has too many stops, I'm not sure, but we could use that one going to the university. (Interruptions)
MR. EPSTEIN: Good point. Thanks a lot.
MR. CHAIRMAN: Russell MacKinnon.
MR. MACKINNON: Mr. Chairman, it's hard to come back on that one. For students who receive student loans, I understand that approximately 60 per cent of the students, and my colleague, the member for Cape Breton Centre, may correct me if I'm wrong, or yourself, Scott, at UCCB receive student loans. Correct?
MR. THOMAS: Yes. We're definitely above the 50-plus per cent mark.
MR. MACKINNON: One of the factors in receiving a student loan, there's a certain allowance for transportation. That's how much a month?
MR. THOMAS: There's give and take. It's usually per term, to be exact, and that runs to about $300.
MR. MACKINNON: It works out to how much a week, $25?
MR. THOMAS: No, not even. A term is a 16-week term, so it's 16 divided by $300.
MR. MACKINNON: I guess the point I'm leading to, Mr. Chairman, is that with the increase in the cost of fuel, this rate is fixed . . .
MR. THOMAS: Yes, it is. It's regulated.
MR. MACKINNON: . . . and when the price of fuel, as you've indicated, has increased by 50 per cent, that rate has remained the same since you started university and perhaps even before. Correct?
MR. THOMAS: Yes, the student loan has not been revamped.
MR. MACKINNON: The second issue is with regard to the number of students who forgo going to class because of the escalating cost of fuel, insurance and whatever. How many would you estimate a day are now rearranging their schedules and not attending the full schedule because of the lack of resources?
MR. THOMAS: Just to give you an example, and perhaps I can answer your numbers. Last year I attended, as a support person, to go to talk to the deans. I went with 40 students who had no money, because their student loan ran out and they were unable to pay for gas, and chose not to go. So they were being jeopardized in class. So, 40 per term that I attended support for.
MR. CHAIRMAN: Scott, thank you for coming this evening. Thank you for a wonderful presentation. Good luck to you in your career and your life. At this time I would like to call Mr. John Shaw. John, you've been with us all night, with your lovely wife, and I know that you understand the rules of procedure. Is it necessary for me to repeat them for you, sir?
MR. JOHN SHAW: No, it's not. I suppose you're fishing for a compliment, saying Collette is lovely, too. (Laughter) I wasn't going to say anything. My name is John Shaw and I'm from Sydney. I had not intended to say anything, but two things came up tonight that prompted me to do this. One was a remark by MLA Gerald Sampson, something along the lines that if Nova Scotia did something that the oil companies didn't like, maybe our supply would be bought up. An implied threat, I suppose.
I'm really pessimistic that the Nova Scotia Legislature can really do much. I think the Legislature and the government would wind up being very much like the Aliant telephone workers are right now. Bell Telephone is going to use them as an example to their own workers in Ontario and Quebec, saying look what we did to Nova Scotia. We'll do the same to you. I think Nova Scotia, which consumes about 3 per cent of the gasoline sold in Canada could be used as an example. I'm pessimistic in that approach. So that was one of my comments.
Secondly, when I listened to the retailers from Cheticamp and Howie Centre and Baddeck, instead of sitting there in 2004, I almost felt that I had gone back in time to 1924. Instead of listening to Esso, it was almost like Besco. I'm sure that MLAs Sampson and DeWolfe and Corbett will know that it reminded me of the company stores. It took a Royal Commission then to undo that, and a strike.
I would like to suggest, and I have no background figures on it, but it just struck me that what happened to the coal companies then should happen to the gas companies right now. I think you people should consider seriously separating the retail and the wholesale. That's all I have to say.
MR. CHAIRMAN: Thank you, John, for your comments. Do we have any questions for John? We'll accept your comments, thank you very much.
Ladies and gentlemen, at this time, seeing no other speakers, I guess it brings the committee to a conclusion. I just want to make sure to tell you that everyone has had an opportunity to speak to this committee tonight.
Before I adjourn the committee, I would like to give a very special thanks to the staff who follow us around and gives us all the support we need. We thank you all kindly for that. Also, I want to explain once again that the committee members are very accomplished, very experienced, with different types of background, business, municipal politics, and have spent many years in provincial politics, and I can assure you that we're going to do the job for you that's necessary. Thank you and good evening.
[The committee adjourned at 10:00 p.m.]
