Letter to Natural Resources minister of Canada, Gary Lunn
Here's a copy of the letter I sent to Natural Resources Minister, Gary Lunn the other day. I figured i would list this one as a matter of interest to consumers in Canada and the United States.
Feel free to leave a comment...
Mr. Gary Lunn March 05, 2007
Minister of Natural Resources
Government of Canada
House of Commons
Ottawa, Ont.
K1A 0A6
Dear Mr. Lunn,
I am writing to you in the hope of expressing concern for the ongoing shortage of gasoline and related commodities and, in the hope I may be able to share my years of research with a small synopsis of the situation as well as possible solutions.
I also hope to share some possible solutions to the problem in the hope the Government of Canada may formulate policy to avoid such troubles in the future, as well as have the present problem solved. I have some nine years experience in learning about the workings of the oil companies as well as becoming quite knowledgeable on all aspects of how pricing to the consumer is performed.
As you well know by now, the Imperial Oil Nanticoke refinery in Ontario suffered a fire which drew Imperial’s refinery capacity out of an already stressed marketplace. That, in turn, has helped work pricing up on a consumer level that some find unbearable and others, like tourism industries, are showing concern for the summer season.
High prices, as we well know, not only hinder the economics of the country, they hurt the spending of the Canadian consumer. They show restraint and that’s not good for business in the country. Consumers want to know that there is “fairness’ in the marketplace and not an edge to one group or the other. We recognize the right of business to make a profit on an even playing field as well as recognize the need for petroleum-based product that the rest of the country may require in the future.
The problem that the Imperial Oil refinery closure caused was the straw that, effectively, broke the consumers back and it was a rude awakening to the capacity problem that the consumer faces in this country. While we lost a refinery in central Canada, prices have been affected in all reaches of the country and on world and North American markets.
While it wasn’t the only accident we saw in North America over the past couple of months, it was enough to add some stress to an already stressed price on the markets for refined gasoline product. This is the highest wintertime gasoline spot price I have recorded since first taking stock of price trends and the highest starting point for prices leading up to the summer driving season.
The writing is, effectively, on the wall for high pricing this season barring any unusual circumstance like economic collapse or very strong inventory builds.
What this refinery shutdown tells me are several things that I hope government will consider for future policy. These suggestions may seem to be controversial and will probably be susceptible to others who know slightly different. A lot of these suggestions will also work in the long term because they become the impetus by which consumers and industry get to both build, and conserve.
Here are several suggestions of which I hope you can consider:
The lessons of the shortages in gasoline have told us that this country has no grip on how much Canada consumes as a country. It also tells the consumer that we consume beyond our means and are only limited by how much Canada can produce. Bearing that in mind, the Government of Canada should immediately take steps to create Canada’s own “Energy Information Administration” that includes:
Mandatory reporting and publishing of available refined product by type.
Mandatory reporting and publishing of crude oil data and inventory.
A weekly summary of crude supplied to the markets.
Numbers to substantiate crude oil exports.
Numbers showing refined product exports by country and quantity.
Numbers that show available Canadian refinery capacity.
Numbers that show available refined inventory data by area of the country.
Show data for all petroleum products used in the country including natural gas.
Include daily postings via the Internet of cash petroleum pricing of all petroleum products.
These are just a few ideas for this new branch of the Natural Resources department should entail.
What effectively happens is that the country becomes more aware of what it consumes and the traders on the New York Mercantile Exchange and others, become sensitive to the availability of Canadian supplies of petroleum and related products. If Canada has ample inventories of product that is supplied to protect Canadian consumers’ needs, and there is extra on hand, then these refined products can become a wedge to drive prices down on the markets. Traders speculate on available inventory in Canada as well as their own market.
It would not be likely that, should Canadians see inventory of product in Canada protected for the interests of Canada and Canadian business, pricing would rise or be excessive to the consumer. If they saw on a weekly basis that inventories of product were dropping, and that pricing may be affected on the interim on the markets, they would be more likely to save and practice conservation to prevent any increase in product pricing. Mandatory reporting on the part of the oil companies in Canada, along with data gathering by personnel of the Natural Resources department, will also help oil companies gauge what and how much to produce from month to month. This has an immediate impact of saving a refinery’s energy and helping keep Canada’s environment a little cleaner.
Industry, particularly those that use heating oils and natural gas, will likely be able to track pricing and available petroleum inventory and make judgmental decisions on what type of heating fuels to use on a yearly basis as industry does in the United States. They make decisions on what type of fuel to use based on long term costs to their factories.
In closing, the government of Canada also has to put in place a mandatory moratorium on any further closures of refineries in Canada until it can figure out how much Canadians are consuming versus the refined product that is produced in this country and available to the Canadian consumer. Nothing else is asked of this country besides looking after the consumer environment as well as his or her future needs as well as those of Canadian industry. Ironically, it was a closure of the last refinery within Canada that may have put the industry itself on a tenuous road to problems for the consumer, that refinery having closed in Sarnia, Ontario just within the last two years.
The Government of Canada must take the steps to recognize its own citizen’s needs as well as those of future consumers of petroleum products. It also has the duty to protect as much of the resource as those citizens will need in the future. That responsibility should include environment concerns balanced with the needs of Canadians first and it has to become the lever against traders in the U.S marketplace.
These thoughts are also available in a report I made to the Standing Committee on Gasoline Pricing in Canada some years ago. If you desire a copy of that report, please let me know and I will forward a copy to you via mail or via email.
With best regards,
George Murphy
Group researcher/Member
Consumer Group for Fair Gas Prices
Minister of Natural Resources
Government of Canada
House of Commons
Ottawa, Ont.
K1A 0A6
Dear Mr. Lunn,
I am writing to you in the hope of expressing concern for the ongoing shortage of gasoline and related commodities and, in the hope I may be able to share my years of research with a small synopsis of the situation as well as possible solutions.
I also hope to share some possible solutions to the problem in the hope the Government of Canada may formulate policy to avoid such troubles in the future, as well as have the present problem solved. I have some nine years experience in learning about the workings of the oil companies as well as becoming quite knowledgeable on all aspects of how pricing to the consumer is performed.
As you well know by now, the Imperial Oil Nanticoke refinery in Ontario suffered a fire which drew Imperial’s refinery capacity out of an already stressed marketplace. That, in turn, has helped work pricing up on a consumer level that some find unbearable and others, like tourism industries, are showing concern for the summer season.
High prices, as we well know, not only hinder the economics of the country, they hurt the spending of the Canadian consumer. They show restraint and that’s not good for business in the country. Consumers want to know that there is “fairness’ in the marketplace and not an edge to one group or the other. We recognize the right of business to make a profit on an even playing field as well as recognize the need for petroleum-based product that the rest of the country may require in the future.
The problem that the Imperial Oil refinery closure caused was the straw that, effectively, broke the consumers back and it was a rude awakening to the capacity problem that the consumer faces in this country. While we lost a refinery in central Canada, prices have been affected in all reaches of the country and on world and North American markets.
While it wasn’t the only accident we saw in North America over the past couple of months, it was enough to add some stress to an already stressed price on the markets for refined gasoline product. This is the highest wintertime gasoline spot price I have recorded since first taking stock of price trends and the highest starting point for prices leading up to the summer driving season.
The writing is, effectively, on the wall for high pricing this season barring any unusual circumstance like economic collapse or very strong inventory builds.
What this refinery shutdown tells me are several things that I hope government will consider for future policy. These suggestions may seem to be controversial and will probably be susceptible to others who know slightly different. A lot of these suggestions will also work in the long term because they become the impetus by which consumers and industry get to both build, and conserve.
Here are several suggestions of which I hope you can consider:
The lessons of the shortages in gasoline have told us that this country has no grip on how much Canada consumes as a country. It also tells the consumer that we consume beyond our means and are only limited by how much Canada can produce. Bearing that in mind, the Government of Canada should immediately take steps to create Canada’s own “Energy Information Administration” that includes:
Mandatory reporting and publishing of available refined product by type.
Mandatory reporting and publishing of crude oil data and inventory.
A weekly summary of crude supplied to the markets.
Numbers to substantiate crude oil exports.
Numbers showing refined product exports by country and quantity.
Numbers that show available Canadian refinery capacity.
Numbers that show available refined inventory data by area of the country.
Show data for all petroleum products used in the country including natural gas.
Include daily postings via the Internet of cash petroleum pricing of all petroleum products.
These are just a few ideas for this new branch of the Natural Resources department should entail.
What effectively happens is that the country becomes more aware of what it consumes and the traders on the New York Mercantile Exchange and others, become sensitive to the availability of Canadian supplies of petroleum and related products. If Canada has ample inventories of product that is supplied to protect Canadian consumers’ needs, and there is extra on hand, then these refined products can become a wedge to drive prices down on the markets. Traders speculate on available inventory in Canada as well as their own market.
It would not be likely that, should Canadians see inventory of product in Canada protected for the interests of Canada and Canadian business, pricing would rise or be excessive to the consumer. If they saw on a weekly basis that inventories of product were dropping, and that pricing may be affected on the interim on the markets, they would be more likely to save and practice conservation to prevent any increase in product pricing. Mandatory reporting on the part of the oil companies in Canada, along with data gathering by personnel of the Natural Resources department, will also help oil companies gauge what and how much to produce from month to month. This has an immediate impact of saving a refinery’s energy and helping keep Canada’s environment a little cleaner.
Industry, particularly those that use heating oils and natural gas, will likely be able to track pricing and available petroleum inventory and make judgmental decisions on what type of heating fuels to use on a yearly basis as industry does in the United States. They make decisions on what type of fuel to use based on long term costs to their factories.
In closing, the government of Canada also has to put in place a mandatory moratorium on any further closures of refineries in Canada until it can figure out how much Canadians are consuming versus the refined product that is produced in this country and available to the Canadian consumer. Nothing else is asked of this country besides looking after the consumer environment as well as his or her future needs as well as those of Canadian industry. Ironically, it was a closure of the last refinery within Canada that may have put the industry itself on a tenuous road to problems for the consumer, that refinery having closed in Sarnia, Ontario just within the last two years.
The Government of Canada must take the steps to recognize its own citizen’s needs as well as those of future consumers of petroleum products. It also has the duty to protect as much of the resource as those citizens will need in the future. That responsibility should include environment concerns balanced with the needs of Canadians first and it has to become the lever against traders in the U.S marketplace.
These thoughts are also available in a report I made to the Standing Committee on Gasoline Pricing in Canada some years ago. If you desire a copy of that report, please let me know and I will forward a copy to you via mail or via email.
With best regards,
George Murphy
Group researcher/Member
Consumer Group for Fair Gas Prices
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