INST Committee Report

I am pleased to respond on behalf of the Government of Canada to the Fifth Report of the Standing Committee on Industry, Science and Technology entitled, “Gasoline Prices in Canada”, which was tabled in the House of Commons on November 7, 2003.

I would like to thank the Standing Committee for their work in examining gasoline pricing in Canada. The Committee is to be commended on a study which seeks to understand the pricing dynamics of gasoline pricing, including the competitiveness of the petroleum industry, and the reasons behind the price increases in the winter of 2003. The Government appreciates receiving the report from members of the Standing Committee which aims to alleviate the public’s concerns over gasoline pricing in Canada.

The Standing Committee offered a single recommendation: that the federal government create an independent petroleum agency that would undertake the collection and dissemination of gasoline prices and which would report annually to Parliament. The Committee’s position was that such an agency would help resolve public confusion and misconceptions on gasoline pricing issues while ensuring public supervision over all aspects of gasoline pricing.

The Government has given careful consideration to the recommendation contained in the Committee’s report. The Government agrees with the Committee on the importance of having publicly available information concerning the pricing of petroleum products in Canada. It also recognizes that broad public access to relevant data improves understanding and alleviates concerns regarding gasoline prices and their movements in Canada.

The Government believes, however, that its current activities, when combined with information collected and widely distributed by the private sector, other governments, and agencies, provide the most practical and cost-effective method of informing the consumer.

Natural Resources Canada (NRCan) maintains data analysis functions to monitor petroleum product prices and conducts market analysis. Together with Industry Canada, it also supports public access to a private sector data service that tracks gasoline prices in 44 Canadian markets. The Weekly Pump Price Survey is freely available on the Internet, with the service provider’s website receiving over 250,000 ‘hits’ annually. In light of the Committee’s recommendation, NRCan will continue its support for public access to third-party pricing data in the interest of promoting the availability of information and a better understanding of petroleum markets in Canada.

The Government also commits to further facilitating the public distribution and understanding of existing information on petroleum product prices. This will be achieved through the following changes to the NRCan website:

• the site will be reorganized to provide easier access to existing material;
  
  
• better links to other federal, provincial and public sources of information on crude oil and petroleum product prices will be added;
  
  
• internal analyses and papers will be made more available to the public;
  
  
• a Frequently Asked Questions section will be added; and
  
  
• some basic education tools to inform the public on the downstream industry will be developed.

In the past, NRCan gathered petroleum pricing data directly and developed expertise on the dynamics of petroleum markets. Those functions were eliminated during the 1995 Program Review exercise in favour of higher priorities. With their elimination of these functions, the private sector and some provinces stepped in to fill the gap, providing current, comprehensive and easily accessible information on gasoline pricing.

Both NRCan and Industry Canada continue to encourage the oil industry to play a more active role in explaining gasoline price mechanisms to consumers. The oil industry, particularly the downstream petroleum sector, has undertaken a number of initiatives to increase public awareness and be more transparent in its pricing practices by making information and market analysis available.

Furthermore, in the absence of a national emergency situation, the regulation of retail petroleum product pricing falls under provincial jurisdiction. A number of provinces currently monitor petroleum prices and make the information widely available to the public, including Prince Edward Island, Quebec and Newfoundland and Labrador, which control petroleum product prices in some manner. These endeavors, when combined with other federal activities and public sources of gasoline pricing information, provide the consumer with the ability to make informed choices in the marketplace.

The Government remains fully committed to ensuring that consumer prices are set by market forces and are not the result of anti-competitive behavior. This is achieved through the Competition Act and the Competition Bureau, which is responsible for identifying anti-competitive behavior and taking enforcement actions when necessary. While the Competition Act does not provide the federal government with the jurisdiction to regulate gasoline prices, it does permit the government to investigate some types of consumer complaints related to gasoline pricing. For example, the Act prohibits anti-competitive behavior such as price-fixing, price maintenance and abusive behavior by those in a dominant position.

In closing, we believe that the government activities outlined above, when combined with the efforts of other governments, organizations, and the private sector, represent an approach to informing the consumer that respects jurisdictions and provides the best value for money, properly balancing the need for broadly available information on gasoline pricing with demands for fiscal responsibility at the federal level.

I would like to once again thank the Committee for their excellent work and to take this opportunity to extend to the Committee our commitment to working together on matters of important interest to Canadians.

Yours sincerely,



The Honourable R. John Efford, P.C., M.P.

Enclosure

c.c.:   Mrs. Louise Thibault