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Canadian Independent Petroleum Marketers Association
Supplying Canadian businesses & families with fuel from coast-to-coast-to-coast
Newsletter March 2015
In this issue...
Guest Columnist:
John Eichberger
Executive Director
Fuels Institute
Advocacy Updates
News Updates
Upcoming Events
Table of Contents
Guest Column .....................................................1
Advocacy Updates ................................................3
News Updates .....................................................5
Upcoming Event s ................................................9
Message from the
President
Spring is around the corner after a very memorable
winter. While Eastern Canada suffered intense
cold and snow, our members in Western
Canada enjoyed magnolia blossoms in February.
Throughout the past season, the CIPMA team
has been hard at work delivering several new
features, products and discounts to our Members.
We launched our monthly newsletter, which
includes an update on our advocacy efforts, and
a synopsis of relevant news items from across
North America. We are finalizing details for our
annual conference, which continues to grow in
both size and scope annually. We continue to
expand upon our Member Benefit offerings, which
includes a series of relevant training opportunities
as well as CIPMA Member discounts.
We are also growing. CIPMA Members now
represent 36% of all gasoline sold across Canada,
and 30% of all fuels. We are confident that this
number will only continue to grow in the coming
years.
Our team welcomes feedback and comments,
and we look forward to seeing our Members,
Associate Members and industry colleagues in
April at the 2015 Fuel Marketing Conference.
Sincerely,
Tricia Anderson
President and CEO
CIPMA
MISSION
CIPMA’s mission is to ensure the sustainability and
growth of a healthy and viable independent fuel
marketing and distribution sector at both the wholesale
and retail levels in Canada. Our specific goals include:
Ensuring that independent fuel marketers thrive and
have the opportunity to earn a fair and reasonable return
that is proportionate to their business risk and capital
investment, and ensuring that Canadian consumers
and independent fuel marketers have access to a
competitively priced and readily available supply of fuel
products in all regions of the country.
Coming Soon
The 2015 Canadian Fuel
Marketing Conference
Presented by the Canadian Independent Petroleum Marketers Association
For more information, please visit | www.cipma.org
Guest Column
Tomorrow’s Customer Will Consume Far Less Fuel
improvement in fuel efficiency
over the model year 2013
standard. This should de facto
reduce overall demand for
petroleum products.
John Eichberger
Executive Director
Fuels Institute
The vehicle and fuels market
is changing, albeit slowly. This
change is being driven primarily
by two fundamental factors:
regulatory requirements and
consumer behavior. The two
are combining to create a
market in which the demand for
transportation fuels is declining
and the interests of tomorrow’s
core consumer are unlike any
before them.
In the United States, demand for
gasoline is projected to decline
by 22% by 2030 primarily due
to government requirements
for vehicles to improve their
fuel efficiency. The federal
requirement has set a target for
passenger cars to attain 54.5
miles per gallon by model year
2025. This represents a 51%
A potential counter to this
effect could be an increase
in miles traveled. One of the
historic arguments against
fuel efficiency standards is the
belief that by lowering the cost
per mile of travel the regulations
would spur additional driving,
thereby negating any reduction
in fuel consumption. Looking
at recent trends in consumer
behavior, however, this does
not seem to be an accurate
argument.
In fact, since the 1970s the
increase in U.S. vehicle
mile traveled has slowed
considerably. From 1974 1991,
Vehicle Miles Travelled (VMT)
grew 70%. Then, from 1991
2006, the rate of increase
dropped to 39% and the
current forecast for VMT from
20132030 is only 16% slightly
higher than the projected rate of
population growth. Considering
these trends in driving behavior,
combined with the requirements
to improve fuel efficiency, it is
clear that fuel demand in the
U.S. will decline significantly.
As demand drops, who will be
the primary customer? Much
has been written about the
millennial generation and its
tendency to delay or forego
acquiring a driver’s license or a
vehicle. Recent trends indicate
this might be true and the
effects could be significant.
The number of teens who
have obtained their driver’s
license has dropped from
67% in 1982 to just 51% in
2012. More surprising is the
fact that twenty and thirty year
olds have also reduced their
licensing rates, from 96% and
91% in1982 to 89% and 81%
in 2012. Meanwhile, teen VMT
has dropped 26% since 1990.
Many would counter somewhat
reasonably that these trends
will reverse as this generation
goes through its lifecyle. As
the millenials start families
and progress in their careers,
their driving behavior is
expected to change and VMT
to increase. However, history
shows that generations tend
to behave consistently over
time. This would indicate that
the diminished driving patterns
observed in the millennial
generation,
especially
as
compared to prior generations,
are likely to persist despite
lifecycle
influences.
This
generation is unlikely to match
the miles traveled and fuel
consumption of the preceding
1 | CIPMA Newsletter
and vehicle technologies, it
ultimately will be the millennial
generation who will determine
what succeeds and what
fails. Those young consumers
who are reliant upon modern
communication technology will
decide whether the future fuel
will be natural gas, hydrogen,
electricity or something not yet
introduced to the market.
generations meaning that the
effect of their behavior will be
felt for the forseeable future.
One of the contributing factors
to this reduced reliance on
transportation is the fact that
the majority of the millenials
have grown up in a technology
age that is characterized by the
internet and mobile devices.
These have facilitated a
lifestyle that can accommodate
interactions
without
the
previously required transport.
Individuals can network and
interact with each other from
the comfort of their own
homes. They can have basic
necessities
delivered
and
request a ride from a car share
service using a mobile app. In
addition, younger consumers
are increasingly relocating into
urban environments, where the
need for personal transportation
on a regular basis is significantly
reduced.
All of this not only affects
consumption patterns but
will
ultimately
influence
vehicle design and powertrain
availability. Understanding the
interests of these consumers
who are not enamored with the
car will be critical to developing
market solutions that will
work. As automakers invest
and experiment with new fuel
For fuel retailers, tapping into
this mindset will be an important
feature on longterm planning,
both on fuel availability and
overall store design and product
offers. The world is changing,
and the market has to change
with it.
2 | CIPMA Newsletter
Advocacy Updates
Sulphur in Gasoline
Regulations
Ontario Carbon Strategy
The
Ontario
Government
announced earlier this month
that it is seeking public input
on its climate change strategy.
One of the key areas under
discussion is how to implement
a carbon pricing regime, with
the
government
exploring
options including a cap-andtrade system and a carbon tax.
A 45-day consultation period
will see town hall meetings held
across the province, as well
as the opportunity for people
to give feedback online and
through social media.
CIPMA has formalized its
response, and is supporting
the introduction of a carbon
tax rather than a cap-and-trade
system.
Our position is that a carbon
tax is a more transparent,
broad reaching regime that
would achieve the Ontario
Government’s
objectives
of
reducing
greenhouse
gas emissions
without the
complexity and administrative
burden that would be created by a
cap-and-trade system. Further,
we believe that a carbon tax
provides for a fairer competitive
environment for distributors/
marketers and would cause less
risk to Ontario’s fuel supply. To
view the response submission,
please proceed to the Members
Only section of the CIPMA
website.
Transport Canada Consulting
Stakeholders on Transportation
of Dangerous Goods
Transport Canada is consulting
with stakeholders on proposed
security regulations to enhance
the transportation of dangerous
goods by rail. This could
have several impacts on our
Members, including, but not
limited to, new requirements for
awareness training, and new
requirements for security plans
and security plan training for
those shipping by rail. If you
wish to learn more about this
and how to get involved, please
contact Tricia Anderson directly.
CIPMA has advocated for the
inclusion of a small importer
exemption to current proposed
amendments to the Canadian
Sulphur in Gasoline Regulations.
We feel that the inclusion of
such an exemption will ensure
that Canadian independent
petroleum
marketers
can
source fuel from the U.S. free of
significant administrative burden
in times of short or restricted
domestic gasoline supply. We
believe such an exemption will
also contribute to increased
competitiveness in pricing at the
wholesale level for independent
petroleum marketers.
Ontario Retirement Pension
Plan
The Ontario Government is
proposing to introduce an
Ontario Retirement Pension
Plan in 2017 that would
require payment by employees
and a matching payment by
employers. The Government is
concerned that Ontarians are
not putting away enough money
for retirement, which will put
pressure on the social safety
net in the future. The program
proposes that workers would
contribute 1.9 percent of their
annual income up to $90,000
a year, a contribution which
employers would match. The
fund these contributions would
create would be invested by a
3 | CIPMA Newsletter
board operating “at arm’s length”
from government. The program
would be mandatory except
for the self-employed, those
already enrolled in workplace
pension plans, and those in
federally regulated industries,
such as banking. Workers could
start collecting benefits at age
65. The Government said the
program would be phased in
through stages and start with
the largest employers. The plan
would impact all employees
including those working on a
part time basis.
CIPMA is seeking your views
on the proposed Pension
Plan. While it is currently
Ontario specific, there is also
the potential for this to be a
trendsetting
development,
as other provinces have also
expressed concerns about the
adequacy of the CPP in light of
Canada’s demographic realities.
This item will be tabled at the
April CIPMA board meeting. We
would welcome comments from
Members. Please contact Tricia
Anderson or a Board Member
directly to share your comments
or concerns.
Member Resources / Benefits
In January’s newsletter, we
announced a number of
additional benefits for CIPMA
Members. These included a new
and more informative newsletter,
upgrades to the CIPMA website,
and discounts on industry
information sources including
Bloomberg, Argus Media and
Platts. We also announced
our collaboration with Energy
Management Institute, who is
offering CIPMA Members a $250
discount on any public course.
Check out course offerings at
www.emi.org and use promo
code CIPMAEMI to access the
best pricing. If you see a course
of interest, but can’t make
the date, please let me know.
We may be able to organize a
CIPMA specific training event if
there is sufficient support from
Members. CIPMA is also working
with the Canadian Convenience
Stores Association on a suite of
online retail site training tools.
Watch for updates in upcoming
newsletters.
Credit Card Fees
Last fall, Visa and Mastercard
agreed to reduce the fees
they charge merchants for
using credit cards to complete
transactions.
The voluntary agreements,
submitted to the government
separately
by
the
two
companies, would result in an
average effective card “swipe”
rate of 1.5% for the next five
years, according to the Federal
Finance Department. A 10%
rate reduction was promised. At
the time of the announcement,
CIPMA, in collaboration with the
Small Business Matters coalition,
voiced a number of concerns.
In particular, we noted to the
Federal Finance Department
that a voluntary reduction in
merchant interchange fees to an
average effective rate of 1.5%
is still well above the 0.5% rate
that exists in other jurisdictions.
We also noted that we remained
concerned that small and
medium sized businesses would
not truly benefit as a result of
the changes due to the opacity
and complexity of credit card
agreements / reporting and the
small percentage decrease that
was committed to.
The Small Business Matters
Coalition is meeting with Visa
in early April to discuss with
them the absence of a specific
‘Small Business’ focus in Visa’s
fee structure, which was part
of the overall commitment last
fall. You should be hearing this
spring from Visa and Mastercard
regarding credit card processing
fees. We encourage you to keep
us informed of developments
on this file and in specific, if you
believe you are seeing promised
fee reductions. We believe that
ongoing vigilance and feedback
to government will be needed
to ensure actual progress in this
area of significant importance to
many of our Members.
Manitoba Renewable Fuels
Mandates
CIPMA
has
had
initial
discussions
with
the
government of Manitoba, which
is considering changes to
its biodiesel mandate in the
future. CIPMA raised concerns
specific to further fragmentation
of fuel supply resulting from a
patchwork of regulations and
mandates at the provincial level,
and also flagged the importance
of ‘small importer exemptions’
to allow independent marketers
flexibility and afford them a
more level playing field when
competing with major refiners.
4 | CIPMA Newsletter
News Updates
GLOBAL
IEA sees global crude oil markets
rebalancing in months as demand rises
• The oil market will rebalance in the next
several months as a price collapse boosts
consumption and curbs supplies, says the
International Energy Agency. An oil price as low
as $45 a barrel is unsustainable, according to
Fatih Birol, IEA’s Chief Economist.
Autonomous cars will consume more
energy than cars with drivers: Study
• A University of Michigan study says
autonomous autos could actually reverse a
years-long trend of declining fuel consumption
due to the increased number of trips, which
would be enabled by driverless cars.
Global carbon emissions stalled in 2014,
International Energy Agency says
• The rise in global emissions of carbon
dioxide in the energy sector stalled in 2014,
breaking steady rises over the past four
decades, according to the International Energy
Agency.
UNITED STATES
Declining U.S. refining capacity affecting
gas prices at the pump
•According to Forbes energy and
environment contributor James Conca, refinery
closures have become a major problem in the
last 20 years and are being ignored.Constraints
in refinery production can translate to higher
prices at the retail level. Conca provides a
summary of refinery capacity and closures in
the U.S. and the impact on fuel prices.
U.S. crude supply surges to new high,
adding to global market pressure
• Crude oil inventories at U.S. storage
facilities have hit successive 80-year highs
recently, raising new fears about spillover
effects in Canada’s oil market.
U.S. Senate fails to override Obama’s veto
on Keystone pipeline bill
• Proponents of the Keystone bill have said
since its introduction that they didn’t have the
two-thirds of the Senate vote needed to override
Obama’s veto. They fell four votes short.
California bill would reduce sales tax on
‘green’ cars
• The California Legislature is considering a
bill that would cut the state sales tax on ‘green’
cars by more than half in an effort to spur sales
of clean vehicles.
State of Oregon is testing new system –
replacing gas taxes with per-mile road-use
fees
• Oregon is testing a new taxing system –
replacing gas taxes with per-mile road-use fees
for all cars. The new taxing system will be tested
with a pilot program of up to 5,000 volunteer
drivers to begin July 1.
NATIONAL
Canadian average retail prices decline
• Average regular gasoline prices across
Canada remain low although there has been
some recovery from mid March levels. Average
Canadian diesel prices declined for three
straight weeks in March.
5 | CIPMA Newsletter
Canada crude falls below U.S. $30 for first
time in six years
• Western Canadian Select fell 59 U.S. cents
to USD $29.85, the lowest since February 18,
2009, according to Bloomberg data.
Enbridge hoping for cross-border pipeline
presidential permit by end-2015
• Enbridge Inc. hopes to get a U.S.
presidential permit for its proposed Alberta
Clipper crude pipeline expansion through to
Superior Wisconsin by the end of 2015.
Petronas to decide on Canadian LNG
project by June
• Malaysia’s Petronas expects to make a
final investment decision on an $11 billion LNG
export terminal (USD) in British Columbia by the
end of June.
Canada cuts taxes for natural gas export
projects
• The federal government is slashing taxes on
LNG export projects in an attempt to incentivize
the industry. The tax breaks would mostly help
British Columbia, where a dozen LNG export
terminals have been proposed.
Canadian LNG export projects seen
overcoming energy price slump
• Terminals to ship liquefied natural gas from
British Columbia are poised to take advantage
of a global supply deficit of 120 million metric
tons a year by 2025, David Keane, president of
the BC LNG Alliance.
Canadian crude by rail growth slows as
low oil prices bite
• Canadian crude-by-rail exports dipped
from the previous three-month period, National
Energy Board data showed. Poor netbacks
have deterred some shippers from loading
barrels onto trains headed for U.S. markets.
Canada toughens liability standards after
oil train disaster
• Canada’s railways will have to pay for a
disaster relief fund under proposed legislation
introduced in response to the oil train explosion
that killed 47 people in Lac Megantic, QC in
2013.
Canadian government speeds up work to
develop safer tank cars
• The federal government is working in an
“expedited manner” with U.S. counterparts to
develop a new standard of tank car to carry
flammable liquids.
Suncor Energy Inc. and Bank of Canada
to address parliamentary committee on oil
price drop
• The committee reportedly now wants a
closer understanding of the impact of the oil
price drop by hearing from economists and
business leaders ahead of the federal budget.
Canadians favour taxes to curb emissions,
but not at the gas pump
• New survey by Nanos Research finds
that a majority of Canadians want the federal
government to take the lead in creating tax
policies for curbing emissions, however a much
smaller group said they wanted to see those
taxes reflected at the gas pumps or on home
heating bills.
Energy East Pipeline project sees 1,805
applications to intervene
• The National Energy Board has received
1,805 applications to participate in the hearing
for TransCanada Corp.’s proposed Energy East
Pipeline, including one from the New Brunswick
government.
6 | CIPMA Newsletter
WESTERN REGION
Gas prices shoot up in Winnipeg
• After months of rock bottom prices, the
cost of gasoline went up in Winnipeg, by more
than 10 cents. Gasoline shot up to 99.9 cents
per litre, up from 88.4 cents over the period of
one day.
Spiking gas prices in Vancouver highest in
North America
• Fuel costs in Vancouver tipped the scales
at more than $1.30 per litrein early March,
nearly 16 cents per litre higher than Quebec
City, reportedly the second-most expensive
Canadian city for gas. Jason Parent, vicepresident of consulting for MJ Ervin and
Associates provides commentary.
British Columbia reintroduces a Clean
Energy Vehicle incentive program in
budget
• $7.5 million was reintroduced into the B.C.
budget for a Clean Energy Vehicles Point of
Sale Incentive program, along with additional
funding for charging equipment incentives,
sales incentives and public outreach.
Alberta energy drillers pivot to natural gas
because of oil plunge
• The number of LNG development rigs in
Alberta almost doubled in December to 157,
the most for that month since at least 2010. The
number of crude development rigs fell by 4.3
percent to 134.
ONTARIO / QUEBEC REGION
Ontario, Quebec transportation ministers
urge Ottawa to improve rail safety
• Steven Del Duca and Robert Poeti —
transportation ministers for Ontario and Quebec,
respectively — sent a letter to Transport Minister
Lisa Raitt over what they call the growing
number of “very serious and unacceptable
train derailments” in the provinces and across
Canada.
Québec Carbon Market Auction Results
• On February 25, 2015, the Quebec
Government announced the results of the
greenhouse gas emission allowances auction,
which was held jointly with the State of
California. The auction generated a gross
revenue of approximately 190 million Canadian
dollars for Québec, making the cumulative total
income since the first auction held by Québec in
December 2013 more than 330 million Canadian
dollars. A similar situation could arise in Ontario
if a cap and trade program is implemented as
part of their Climate Change Program. CIPMA
is advocating for a simpler carbon tax. (Source:
Quebec Ministry of Sustainable Development,
Environment and the Fight against Climate
Change)
John Godfrey appointed as special adviser
to Ontario on climate change
• Former Liberal MP John Godfrey has been
appointed a special adviser to the Ontario
government on climate change, reporting on
ways for Ontario to meet its greenhouse gas
reduction targets.
Saskatchewan tables surplus budget
despite oil price plunge
• Despite a sharp plunge in oil revenue,
the Saskatchewan government has delivered
another surplus budget that contains no tax
increases and includes record spending on
infrastructure.
7 | CIPMA Newsletter
Toronto area gas stations run outs
symptomatic of chronic supply issues
• The oil companies that supply fuel in the
area have said it was a temporary situation,
caused by extreme winter weather and a
power outage. CIPMA Members face chronic
supply constraints after years of rationalization
in the refining sector CIPMA has met with
Ontario government officials as well as Natural
Resources Canada to flag this issue and
continues to advocate for measures to improve
liquidity of the fuel supply in Ontario and other
constrained regions.
Hydro-Quebec raises concerns about
Energy East pipeline
• One reported concern includes the
possibility that its high-voltage power lines
could corrode the pipeline.
ATLANTIC REGION
Fuel price interrupter clause prompts
diesel price change
• Nova Scotia Utility and Review Board
invoked a fuel price interrupter clause earlier this
month. The interrupter clause is a mechanism
used by the board to “respond to sudden and
significant spikes, up or down, in petroleum
product prices.”
Finance Minister Roger Melanson is ‘open’
to a New Brunswick carbon tax
• Finance Minister Roger Melanson says he’s
open to the idea of a carbon tax as a move to
help reduce the province’s deficit. The carbon
tax, a levy on large emitters of carbon dioxide,
was proposed by Green Party Leader David
Coon.
P.E.I. to start new oil recycling program
• The new P.E.I. program to recycle oil and
antifreeze will begin April 1. The program will
be similar to oil product stewardship programs
that operate in seven provinces across Canada.
8 | CIPMA Newsletter
Upcoming Events
Canadian Fuel Marketing Conference,
April 13-15, Toronto - Register Today!
At this year’s conference, we have an incredible
line-up of speakers and panelists that will cover
the most important aspects of your business—
including logistics, carbon regimes and the future
direction of transportation fuels.
Don’t miss a minute!
Conference highlights include:
•
Opening session: John Eichberger, Fuels
nstitute on The Future of Transportation
Fuel.
•
Keynote speakers including Peter
Tertzakian, ARC Financial, and Glen
Hodgson from The Conference Board of
Canada.
•
An update on Canada’s refining sector.
•
A panel discussion: Logistics of
Petroleum
Products
in
CanadaChallenges and Opportunities featuring
David
Bradley
(Canadian
Trucking
Alliance),Ken Green (Fraser Institute) and
Mathieu Lefebvre (CN).
•
The latest perspective on Customer
Loyalty programs.
•
Closing keynote speaker: John Wright,
Ipsos Public Affairs: Demand Shift: Leading
Canadian Business in the 21st Century.
•
An opportunity to meet CIPMA board
members and the CIPMA team at the
fantastic new Four Seasons Hotel.
Your Conference registration also includes one
of two informative post-conference workshops
running concurrently on Wednesday, April 15
from 9:15 a.m. – 10:15 a.m. If you have not yet
registered, please email Rita Molinari here
Post Conference Workshop A: Carbon Pricing
Mechanisms and Standards in the Fuel Sector
Presented by: Bill Peters, Argus Media
Carbon regimes are being implemented in several
provinces across Canada and will impact your
business sometime soon. This workshop gives
you an opportunity to learn about carbon pricing,
trading and intensity standards as they apply
to the fuel sector. Argus Media will present the
Quebec-California cap-and-trade program and
west coast carbon intensity standards and discuss
the impact of those programs on fuels distributors
and blenders to help you prepare for upcoming
carbon pricing regimes where you operate.
Post Conference Workshop B: Fuel Hedging 101
Presented by: James Spencer, Portland Fuels
Hedging eliminates price volatility. This informative
workshop takes an engaging approach to fuel
industry mechanics. You will see how world
events, currency fluctuations and other macro
elements combine with global and local supply and
demand factors creating fuel price fluctuations.
The workshop covers ‘swaps and options’ and
will conclude by utilizing market ready examples
for the simple process of hedging. Join Portland
Fuel for a very interesting review of the oil and
fuel industry and learn how hedging gives the fuel
seller competitive advantage by offering this value
added service to customers.
*There are still sponsorship opportunities
available.
9 | CIPMA Newsletter
For more information on the conference, including
agenda, sponsorship and registration, click here.
Western Members Meeting
Mark your calendars – the CIPMA Western
Members Meeting will take place on Tuesday,
June 23, 2015 in Vancouver, British Columbia. The
location of the meeting will be announced in the
near future.
CIPMA Golf Challenge
The 2015 CIPMA Golf Challenge will be held at a
new location this year. Please join us on Thursday,
September 17, 2015 at RattleSnake Point Golf
Club in Milton, Ontario.
CIPMA AGM and Eastern Members
Meeting
CIPMA’s AGM and Eastern Members Meeting
will take place on Tuesday, October 6, 2015 in
Moncton, New Brunswick.
10 | CIPMA Newsletter
FUELLING CANADA’S FUTURE
Supplying Canadian businesses & families with fuel
from coast-to-coast-to-coast
www.cipma.org