GENERAL INTEREST / Response to enquiry on retail gasoline competition
CANADIAN PETROLEUM PRODUCTS INSTITUTE RESPONSE STATEMENT
''REPORT OF THE LIBERAL COMMITTEE ON GASOLINE PRICING IN CANADA''
OTTAWA, June 10 /CNW/ - The Canadian Petroleum Products Institute (CPPI)
says today it welcomes the report of the Liberal Caucus Committee on Gasoline
Pricing.
''As we have noted in all of our own communications, including reference
to the many studies conducted to date at the federal, provincial, and even
municipal level, the gasoline retailing business in Canada today is highly
competitive. The evidence is seen in the overall decline in gasoline prices
to consumers,'' says Alain Perez, President of the CPPI.
''In absolute terms, retail prices have declined four cents per litre
between 1989 - 1995, and by 10 cents per litre on an inflation adjusted basis,
according to a joint industry-government study issued last year (M.J. Ervin
Report can be accessed at www.gasprice. org). New entrants into the market
and expanded market offerings have increased, not diminished, competition,''
Perez observed.
''The Committee report is wide-ranging and reflects an interest in a
number of issues.'' says CPPI president Alain Perez. ''First and foremost,
the Committee and Mr. McTeague are to be commended for the scope of their
review and the effort undertaken to host the number of meetings that provided
input to the report. Secondly, we agree with the Committee report that we, as
an industry, ''...have a responsibility to the consuming public to ensure that
the price at the pump is a fair price and reflects a truly competitive
market.''
''The Committee Report includes several conclusions indicating that the
market is competitive and that government intervention would not benefit
consumers more than the current free market approach,'' Perez says.
The report notes the following:
- ''...that the Committee heard no compelling arguments for surrendering
true competition to attain price stability, or for governments to step
in and regulate gasoline prices (page 15)''
- ''...the Committee believes price-fixing and collusion does not occur
in the Canadian oil industry (page 21)''
- ''...Canadian consumers do have access to one of the world's lowest
prices for gasoline (page 55)''
''Increasing rationalization of unproductive retail sites, and cost
reduction measures during the period 1989-1996, actually reduced industry
operating margins by over six cents per litre, or over $2 billion annually,
which contributed significantly to helping to reduce retail prices,'' Perez
says.
''But the efficiency gains that have created benefits for consumers,''
Perez continues, ''have also demanded more innovation and investment on the
part of all retailers to compete successfully in the industry. This has
created a need for all retailers to divest themselves of unproductive sites in
favour of those with better market potential. Such competitive pressures are
evidenced in all retail businesses, gasoline retailing is no exception.''
Perez says the report contains several recommendations that the industry
could support. ''We are pleased that in its discussion of environmental
issues, that the Committee has recognized the importance of the current debate
concerning the review of a sulphur level standard for gasoline in Canada and
its direct impact on the competitiveness of all elements in the industry -
including the independent marketers. We also agree with the Committee, that
federal resources need to be made available to continue proper data collection
on the industry, to assist everyone in understanding the changing dynamics of
this important industrial sector of the economy.''
Perez observes that the report also contains a number of recommendations
for the federal government to consider studies of taxation matters, and
various aspects of the Competition Act. ''While these are matters for the
government to decide,'' says Perez, ''we would be very pleased to review these
various recommendations with the appropriate departments or ministries and
provide our perspective.''
We do believe, however, states Perez, that the current Competition Act
has all of the authorities in place to ensure the continued competitiveness of
industry. Even during the current debate on Bill C-235, which Mr. McTeague
has sponsored, representatives from the Liberal, Reform, Progressive
Conservative, and Bloc Qu‚b‚cois have expressed the view that the current Act
has been very effective in addressing competitive matters,'' says Perez.
In acknowledging the intensity of competition among all gasoline
retailers, Perez notes, the industry also acknowledges that independent
retailers are an important, even vital part of the fuel marketing system in
Canada. ''It is very important for all industry segments and consumers too
that the independent segment remains strong,'' says Perez. ''And this will
be accomplished by encouraging its ability to compete, but not by encouraging
the support or subsidy of inefficient businesses that would have the effect of
penalizing consumers with higher prices.''
''We would welcome any opportunity to review this report with the
government and comment on issues of interest about the evolving state of
competitiveness in the industry,'' Perez concludes.
The Canadian Petroleum Products Institute (CPPI) is a national trade
association of companies involved in oil refining and marketing of refined oil
products. The Institute has a national office in Ottawa, with regional
offices in Dartmouth, Montreal, Toronto, and Calgary.
-30-
For further information: Brendan Hawley, Vice-President, Public Affairs,
Tel (613) 232-3709 Ext. 202, Cell (613) 797-5352; Alain Perez, President, Tel
(613) 232-3709 |
