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Canadian Independent Petroleum Marketers Association
Supplying Canadian businesses & families with fuel from coast-to-coast-to-coast
Newsletter April 2015
When CIPMA Speaks,
Your Voice is Heard
In this issue...
Conference Summary
Advocacy Updates
Member Updates
News Updates
Upcoming Events
Table of Contents
Conference Summary ...........................................1
Advocacy Updates ................................................4
Member Updates ................................................5
Message from the
President
News Updates .....................................................6
Upcoming Event s ................................................9
It was a great pleasure to see so many CIPMA
Members, Associate Members and friends earlier this
month in Toronto at the 2015 Canadian Fuel Marketing
Conference, presented by CIPMA.
Our attendance was impressive at 200 registered
delegates, setting an all-time record for the conference.
Throughout the three days, we heard from a number
of speakers, on topics ranging from cap-and-trade
regimes, to loyalty programs for your businesses. We
have confirmed that next year’s conference will take place
in Montreal, a seemingly favourite city of our Members
and delegates. You can expect to hear details about the
conference in the fall, however, please do not hesitate to
contact me directly with speaker or panel suggestions in
the interim.
As we move into warmer weather, the CIPMA team is
busy finalizing an economic study with a well-known
economist from the University of Waterloo, which
examines the challenges faced by the sector in relation
to fuel supply. We will also be engaging in a number
of other projects that will continue to bring significant
awareness to the sector.
Our goal is to continue to elevate the brand of CIPMA to
bring the necessary government and public attention to
our sector and work to address a number of challenges
our sector faces. As always, please don’t hesitate to bring
forward issues that you feel are affecting your business,
and we will see where these can be incorporated into our
advocacy efforts.
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.
Conference Summary
The 2015 Canadian Fuel Marketing Conference
was a big success, with more than 200 delegates
joining us in Toronto from across Canada. We are
pleased to note that this year’s conference grew
by 12% from last year in terms of attendance.
We have no doubt that next year’s conference in
Montreal will only surpass this record.
Our sector is one that is constantly evolving, and
needs to be adaptive and nimble to change. We
need our finger on the pulse of regulatory advances
and economic developments that affect how our
sector does business today, and into the future.
• Ken Green, Senior Director, Natural Resource Studies,
Fraser Institute
• Mathieu Lefebvre, Supply Manager, Fuel Procurement, CN Rail
• Steve Allmen, Principal Consultant at Steve Allmen
Consulting
• John Wright, SVP and Managing Director for Ipsos
Public Affairs
• Bill Peters, Energy and Environment Journalist for
Argus Media
• James Spencer, Founder and CEO, Portland Fuel
The CIPMA team puts great emphasis on bringing
together speakers that would engage, inform and
inspire.
Our speakers covered various topics from their
respective areas of expertise, as follows:
Our esteemed guests speakers and workshop
leaders this year included:
The Future of Transportation Fuels (John
Eichberger, Executive Director, The Fuels Institute
and Vice-President Government Relations,
NACS)
• John Eichberger, Executive Director, The Fuels
Institute and Vice-President Government Relations,
NACS
• Peter Tertzakian, Chief Energy Economist at ARC
Financial
• Glen Hodgson, SVP and Chief Economist at the
Conference Board of Canada
• Peter Boag, President, Canadian Fuels Association
• David Bradley, President, Ontario Trucking
Association and CEO, Canadian Trucking Alliance
Eichberger engaged the audience with a thoughtprovoking talk on the future of the transportation
industry and how it affects fuel demand.
Eichberger’s talk highlighted some important
trends for Members, including evidence that young
people are increasingly embracing a new way of
living and not driving as much as their parents
did. He also reviewed various transportation fuels
trends and forecasted that petroleum-based fuels
will be a core element of the fuel mix for a number
of decades.
1 | CIPMA Newsletter
Canada’s Changing Energy Outlook (Peter
Tertzakian, Chief Energy Economist at ARC
Financial)
Tertzakian led attendees through a historical review
on changing technologies and advancements in
the oil drilling and manufacturing industry that
feeds our Members’ supply. He said that new global
price wars will affect demand and fuel supply into
the future. With industry cash flow down 72% this
year, Tertzakian warned that destabilizing trends
are going to continue to increase the volatility of
the industry.
sector. However, Boag said there is a global
trend towards fewer, larger refineries. “Refinery
location dynamics are now more complex; being
close to market is no longer the dominant location
criterion,” said Boag.
Logistics of Petroleum Products in Canada –
Challenges and Opportunities (Panel discussion
with David Bradley, President, Ontario Trucking
Association and CEO, Canadian Trucking
Alliance; Ken Green, Senior Director, Natural
Resource Studies, Fraser Institute; and Mathieu
Lefebvre, Supply Manager, Fuel Procurement, CN
Rail)
Making Sense of Carbon Regimes in Today’s
Economic Environment (Glen Hodgson, SVP
and Chief Economist at the Conference Board of
Canada)
Hodgson led an engaging discussion on the
economics of the world oil industry and how
current developments can be expected to affect
our Members into the future. He forecasted that
world oil will end up at about $80/barrel, but
warned that there will be a journey before the
dust settles and the market stabilizes. Hodgson
also introduced his work on Canada’s Ecofiscal
Commission, reviewed actions taken by various
governments worldwide on carbon pricing, and
reflected on the recently announced carbon
regimes in Canada.
Peter Boag, President, Canadian Fuels Association
Canada’s Refining Reality (Peter Boag,
President, Canadian Fuels Association)
Boag led an informative discussion on the
importance and current state of our refining
Green’s discussion focused on the economics of
the industry and problems Canada is currently
experiencing in getting crude exports to market.
Bradley and Lefebvre informed attendees on
the challenges facing the railway and trucking
industries and how this affects the process
of getting fuel products to the consumer – a
supply issue affecting many of our Members.
Bradley provided a stern warning about truck
transportation: “It’s estimated that by 2020, the
shortage of truck drivers in our industry will be at
upwards of 33,000.”
Loyalty: It’s Not Dead, It’s Just Changing
(Steve Allmen, Principal Consultant at Steve
Allmen Consulting)
Allmen took attendees through a detailed
discussion of the dynamics of loyalty programs
and the advantages they pose for fuel marketers
with retail operations. Allmen said that over 70%
of people belong to five or more loyalty programs.
2 | CIPMA Newsletter
credits and allowances, and the dynamics of
cross-border agreements (ie. California-Quebec,
Quebec-Ontario). Peters also suggested that the
floor price of carbon credits will progressively rise
over the years to ensure that emissions do decline,
but projected that there would be an eventual
price ceiling.
Fuel Hedging 101 (James Spencer, Founder and
CEO, Portland Fuel)
Peter Tertzakian, Chief Energy Economist at ARC Financial
“Loyalty programs are about the gathered data,
but they are also heavily dependent on proper
execution and communication with consumers,”
explains Allmen. No matter the program, he said
that providing truly good value to consumers has
proven the most important factor in programs’
success.
Demand Shift: Leading Canadian Business
in the 21st Century (John Wright, SVP and
Managing Director for Ipsos Public Affairs)
Wright engaged the audience with his keynote,
discussing the impact of the world’s changing
population on fuel demand into the future.
Wright said that 1993-94 saw the beginning of
changes towards the society of today – changes
in thought processes around societal security
and challenging the status quo. He said that
Canada is an interesting case, as it is one of
the countries in the world with the most growth,
helped along heavily through new immigration.
He said that every area of Canada is facing a
different demographic trend into the future, and
planning for this will be an important factor for the
success of the independent fuel marketing sector,
especially those operating retail stores.
Spencer led an engaging workshop on fuel
hedging and fuel industry mechanics. Hedging,
a financial instrument originally invented for the
farming community, allows you to fix the published
index prices for oil / refined grades, from one week
to 12 months out, Spencer explained. He outlined
that this strategy provides several benefits,
including more financial certainty, especially
important with oil and gas prices becoming more
and more unpredictable, and it allows one to treat
variable fuel costs like normal fixed overheads.
For those who attended the conference and would
like to see the full presentations, please complete
and return the feedback survey that was circulated
to Rita Molinari, [email protected] and we will
be happy to send you a link to the full package.
We look forward to seeing you all at next year’s
Canadian Fuel Marketing Conference, April 1113, 2016, in Montreal, Quebec. We will be sharing
more details with you later this year. However,
never hesitate to reach out to suggest topic ideas,
or speakers.
Until next time! The CIPMA team
Carbon Pricing Mechanisms and Standards
in the Fuel Sector (Bill Peters, Energy and
Environment Journalist for Argus Media)
Peters led an informative workshop around
low carbon fuel standards and the differences
between carbon tax regimes and cap-and-trade.
He weaved through the differences between
Gala Cocktail Event, co-sponsored by National Energy Equipment
Inc., ZCL Composites Inc., and Franklin Fueling Systems
3 | CIPMA Newsletter
THANK YOU TO OUR SPONSORS
p r e m i u m
c l a s s i c
b a s i c
s p o n s o r s
s p o n s o r s
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o t h e r
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Advocacy Updates
supply. It will also examine
pricing differentials between
comparable Canadian and U.S.
markets, and the impact of
lower prices in the U.S. on our
sector, the Canadian consumer,
and Canadian tax revenues.
CIPMA works hard on behalf
of its Membership to bring a
voice to issues and challenges
faced by our sector. Through
our efforts, we help educate
decision makers at all levels of
government, and generate more
awareness of our sector in an
effort to drive change.
Below is an overview of issues
we have been working on
recently:
Cap-and-trade
CIPMA has been vocal to
governments and stakeholders
on its position related to capand-trade. Specifically, we
submitted a proposal to the
Ontario Government outlining
our recommendation for a
carbon reduction strategy in
the form of a carbon tax. Our
proposal can be viewed on the
Members Only section of the
website.
We are currently reviewing
our position moving forward
on the issue, as it relates to
outreach with the Ontario
Government and plan to be part
of what we hope will be a robust
consultation process as the plan
is further fleshed out.
CIPMA President and CEO,
Tricia Anderson, and CIPMA
Board of Directors Past Chair
and President of MacEwen
Petroleum, Allan MacEwen,were
recently quoted in the Globe and
Mail on the topic, in an article
titled, ‘Ontario’s petroleum
marketers prefer carbon tax
to cap-and-trade.’ To read the
article, click here.
Economic Study
As noted in the president’s
message, CIPMA is finalizing an
economic study with Professor
Anindya Sen, Associate Chair
of Graduate Studies from the
University of Waterloo. Sen has
published several peer reviewed
studies, including work on behalf
of the Ontario Convenience
Stores Association: ‘The Beer
Store, Monopoly Profits and
the Potential for Government
Revenue: An Economic Analysis.’
The study will provide a holistic
view of the impact of industry
rationalization on reliable fuel
We are currently creating a
strategy for distribution of the
study on a national scale to
raise awareness and influence
decision makers and regulatory
bodies regarding the challenges
of the independent petroleum
sector related to fuel supply
and the broader impacts on
Canadian consumers.
Payment Costs
CIPMA Members are hit hard by
costs of processing credit card
payments and we have long
been advocating for government
action to reduce interchange
fees. CIPMA was a founding
member of Small Business
Matters, a coalition of industry
associations representing small and medium-sized businesses
working together for reduced
payment costs and other
common issues. As a result
of combined efforts,Visa and
MasterCard
committed
to
reduce credit card fees to an
average effective rate of 1.50%
for the next five years. An overall
reduction of 10% was promised
– all merchants were to receive
a reduction in credit card fees,
with reductions to commence
no later than April 2015.
4 | CIPMA Newsletter
As a result of the voluntary
proposals, the government
advised that that they do not
believe they need to regulate
interchange fees set by the
credit
card
networks–even
though rates in Canada are
among the highest in the
world. There is considerable
skepticism within the merchant
community
regarding
this
voluntary commitment. CIPMA
would like to hear from you
regarding what, if anything, you
are hearing on the subject of
credit card fees. A quick survey
will be sent to our Members at
the beginning of May.
Provincial Renewable Fuel
Mandates
CIPMA is in contact with provincial
governments
regarding
their
current or potential renewable fuel
mandates. We continue to advocate
for streamlined regulations between
the provinces to promote crossprovincial border transport of
fuel, in addition to small importer
flexibilities.
Provincial and Territorial
Monitoring
CIPMA
carefully
monitors
relevant regulatory bodies of
every province and territory
to identify issues of potential
concern or interest to CIPMA
Members. While we stay
abreast of industry initiatives
and regulatory changes, we do
appreciate Members bringing
forth issues to our attention.
Member Updates
Accesibility for Ontarians with Disabilities Act
The government enacted the Accessibility for Ontarians with
Disabilities Act (AODA) in 2005, with the goal of making Ontario
accessible by 2025. In addition to obligations as employers, Members
with retail operations have an obligation to ensure they are offering
suitable options for customers with disabilities.
This is a good time to assess your operations, particularly retail fuelling
sites where you are serving the broader public, to ensure that you do
have flexibility and mechanisms to serve customers with disabilities.
This is increasingly important as full-serve sites diminish in numbers
and disabled customers migrate to self-serve facilities.
Some factors to review include, for example, the positioning of the
“Call For Assistance” button on the pump island and establishing
and training staff on a protocol to help disabled customers fuel their
cars. Proactively considering options to ensure accessibility of all
customers will protect your business from any potential government
action, which could lead to an increase in operating costs.
For more information on the Act, click here.
New Associate Member
Chevron Canada Ltd.
We are pleased to welcome Chevron Canada Ltd. as a CIPMA Associate
Member effective April 2015. Chevron Canada Ltd. (Products Division)
is the subsidiary responsible for managing the Burnaby Refinery as
well as the Chevron retail and commercial fuelling operations in British
Columbia and Alberta. Initially owned and operated by Standard Oil
Company of British Columbia Limited starting in 1935, the refining
and marketing business has been owned and operated by Chevron
Canada Ltd. since 1976. For more information on Chevron Canada
Ltd., click here.
5 | CIPMA Newsletter
News Updates
Please note that all orange text in the following
sections is hyperlinked. If viewing electronically,
you may click to read full articles.
GLOBAL
Brent crude at nearly five-month high; U.S.
crude up for sixth week
• Brent crude settled up 43 cents at $65.28
per barrel after hitting a high of $65.80. U.S.
crude closed down 59 cents at $57.15 per
barrel, retreating from its 2015 high this month
of $58.41.
World’s biggest oil trader sees $50 floor
for crude prices
• Vitol Group, the world’s biggest independent
oil trader, said crude prices won’t drop below
$50 a barrel for sustained periods because
that’s the level some producers need in order to
invest in new supply.
Saudi Arabia leads OPEC oil boom as U.S.
shale oil growth slows
• Saudi Arabia, OPEC’s biggest member,
raised output 390,000 barrels a day, to 10.1
million a day in March, the highest since
September 2013 and close to record levels,
according to the International Energy Agency.
U.S. EIA releases new Annual Energy
Outlook with projections out to 2040
• The Annual Energy Outlook 2015 (AEO2015)
presents updated projections for U.S. energy
markets through 2040 based on six cases
(Reference, Low and High Economic Growth,
Low and High Oil Price, and High Oil and Gas
Resource), reflecting updated scenarios for
future crude oil prices.
U.S. gives Shell go-ahead to drill for oil in
Alaskan Arctic
• Royal Dutch Shell has received the goahead from the U.S. government to restart a
controversial oil exploration campaign in the
Chukchi Sea within the Arctic Circle despite
fears over the risk to the environment.
NATIONAL
Canadian regular gasoline price hits twomonth high
• At April month-end, the Canadian regular
gasoline price had increased by 1.7 cents
to 111.4 cents, a two-month high, while the
Canadian retail diesel price rose by 0.2 cents to
111.0 cents. For more information, click here.
UNITED STATES
At nearly $1B, cap-and-trade revenues last
year blew past predictions
• Revenues generated from California’s
signature climate-change program reached
approximately $969 million by the end of
last year – considerably higher than original
estimates.
6 | CIPMA Newsletter
Ottawa unveils new rules on credit card
fees, but more action urged
• Finance Minister Joe Oliver announced an
update to the Code of Conduct for the credit
and debit card industry that expands the
voluntary code to include mobile payments
involving smart phones. The code also requires
premium credit cards to be clearly branded and
for consumers to be informed of the fees that
cards impose on business owners. CIPMA will
be providing comments on the changes to the
Code of Conduct.
• Despite these updates, the Small Business
Matters Coalition, of which CIPMA is a founding
Member, responded that the fees charged by
Visa and MasterCard are still too high, which
is the major challenge facing businesses that
accept credit card payments.
Ottawa says most provinces falling short
on greenhouse gas cuts
• The federal environment minister, Leona
Aglukkaq, has sent a letter to the provinces
outlining how most of them are falling short of
their targets to cut greenhouse gas emissions
by 2020. British Columbia and Alberta are the
furthest behind. Ontario and Saskatchewan
follow, with Quebec rounding out the top five.
Canadian LNG projects at risk, new report
suggests
• A report released by Moody’s Investors
Services cited that the drop in oil prices was
“causing LNG suppliers to curtail their budgets
and will result in the cancellation of the vast
majority of the almost 30 proposals in the U.S.,
18 in Western Canada and four in Eastern
Canada.”
Canada aims to boost investment with 40year gas licenses
• Canada will extend natural gas export
licenses to 40 years. The extension of natural
gas export licenses from 25 years comes amid
a global race for liquefied natural gas projects.
Canadian pipeline regulator planning deep
budget cuts
• The National Energy Board is making
plans to cut its annual spending by 24% and
workforce by 15% over the next two years as a
pool of temporary funding runs dry, according
to a new report.
January Canadian crude oil exports up by
12%, new record high
• The National Energy Board released its
crude oil export data for January 2015, which
showed that Canadian exports in January 2015
were 12% higher than in January 2014,despite
the plunge in oil prices, rising 100,000 b/d to a
new record high of 3.125 million b/d.
WESTERN REGION
Alberta budget raises taxes on fuel
• Effective March 27, 2015, taxes on both
gasoline and diesel increased by 4 cents per
litre – from 9 cents to 13 cents for both fuels.
Propane taxes also increased by 2.9 cents per
litre, to 9.4 cents per litre. This is the first change
to the fuel tax since 1991.
Spring oilfield slump expected to last all
summer long
• With world oil prices stubbornly stuck at
around $50 USD per barrel, Western Canada’s
weather-related spring drilling slowdown could
easily last until next fall or longer, experts say.
Western Canadian crude leads North
American rally
• Canada has benefited the most from the
crude oil rally of the past month, with Western
Canadian Select the leader among eight major
North American grades, with a 48% gain.
7 | CIPMA Newsletter
ONTARIO / QUEBEC REGION
Kathleen Wynne signs cap-and-trade deal
with Quebec
• Wynne’s announcement lacked details
on the cost of introducing the system or how
much greenhouse gas would be reduced,
however early estimates show that Ontario’s
cap-and-trade program could raise as much as
$2 billion annually. To date there has been
no disclosure regarding where and how these
funds would be used. Wynne did acknowledge
that motorists can expect to pay 2.5 to three
cents per litre more at the pumps under the
proposed plan. For more details, click here.
Ontario’s petroleum marketers prefer
carbon tax to cap-and-trade
• CIPMA President, Tricia Anderson, and
Allan MacEwen, CIPMA Board of Directors Past
Chair, and President of MacEwen Petroleum,
shared their disappointment with Ontario’s capand-trade decision with the Globe and Mail. To
read the full article, click here.
Ontario government called on to support
10-year private-public sector energy plan
• Proponents of a proposed $10-billion
bitumen upgrader refinery expect to know
shortly whether the Ontario government will
throw its support behind the Sarnia-Lambton
project.
Quebec reduces gas tax near Ontario, N.B.
border
• The Quebec government has reduced
the gas tax by up to $0.08 at stations close
to Ontario and New Brunswick in an effort to
help businesses that have been struggling to
compete with lower prices across the border.
CN slows down oil trains through northern
Ontario
• CN put speed restrictions on trains carrying
more than 20 cars of flammable liquids and
increased track inspections. The change
applies only to the tracks between Capreol and
the Manitoba border and lasts for 60 days.
Energy East plan for oil port in Quebec
dropped: report
• TransCanada Corp. has cancelled plans to
build an oil port in Quebec as part of its Energy
East project, after objections that the plans
could affect a beluga habitat. The pipeline will
now reportedly go directly to N.B., with the
new completion date pushed back to 2020. For
more information, click here.
ATLANTIC REGION
New Brunswick deficit budget hikes taxes
on fuel
• In the new budget, fuel taxes on gasoline
will increase by 1.9 cents per litre and the cost
of diesel will rise by 2.3 cents per litre, bringing
the province in line with neighbouring Nova
Scotia.
New Brunswick bans fracking, plans
‘prudent’ impact study
• Lawmakers in New Brunswick voted to
prohibit fracking in the province and committing
to study the controversial method of extracting
oil and gas for one year before reconsidering
the ban in 2016.
Irving Oil receives approval to reopen
storage terminal in Nova Scotia
• Irving Oil has received approval to reopen
its petroleum storage terminal in Nova Scotia.
The facility was shut down over a decade ago,
but it was speculated that the 2013 closing of
Imperial Oil’s refinery in the same area spurred
Irving to form new plans for its terminal.
8 | CIPMA Newsletter
Upcoming Events
Western Members Meeting
Mark your calendars – the CIPMA Western
Members Meeting will take place on Tuesday,
June 23, 2015 in Vancouver, British Columbia at
Sutton Place Hotel.
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.
CIPMA 2016 Canadian Fuel Marketing
Conference
The 2016 Canadian Fuel Marketing Conference
will take place April 11-13, 2016, in Montreal,
Quebec. More details to come.
9 | CIPMA Newsletter
FUELLING CANADA’S FUTURE
Supplying Canadian businesses & families with fuel
from coast-to-coast-to-coast
www.cipma.org