Ease smog rules or gas prices rise, oil giants warn

ANNE McILROY Parliamentary Bureau Chief Saturday, April 15, 2000

Ottawa -- A petroleum industry lobby group is pressing the federal government to weaken environmental regulations limiting the amount of sulphur in gasoline, warning that the rules could dramatically disrupt the supply of gas and lead to higher prices.

The Canadian Petroleum Products Institute, a lobby group for Imperial Oil, Petro-Canada and other companies, is warning of potentially dire consequences if rules put in place in June are not changed, according to documents obtained by The Globe and Mail.

Ottawa has ordered the industry to cut sulphur levels in gasoline by more than 90 per cent, part of an effort to reduce the smog that plagues Southern Ontario, Quebec and British Columbia every year.

Canada has some of the highest levels of the gasoline contaminant among major industrialized countries. The reduction, to be done in two steps, is to match the world's most stringent standards by 2005.

Although some refiners, like Irving, are well on their way to meeting the new standards, Imperial Oil and Petro-Canada are not, the documents say. If they are required to do so, they warn, it will mean a dramatic drop in domestic production, a greater reliance on imported oil and higher prices for consumers.

"Domestic production could be reduced by about one-third in Ontario, somewhat more in the West and less in the East," says one CPPI document.

"Disruption of supply will lead to prolonged periods of price instability affecting gasoline, diesel and other products. There is uncertainty that all refiners will be successful in finding the necessary volumes to replace curtailed production and certainly not at current prices."

In an interview, Alain Perez, president of the CPPI, said that there could be partial shutdown of some refineries. Petro-Canada and Imperial Oil produce about half of the gasoline supply for Ontario and Quebec, he said. He said he couldn't deny that they are having trouble meeting the new standard.

He said he was disturbed that the documents had been leaked, because that would look as though his organization was trying to use the media to press the federal government to back down.

Environmentalists see the documents as proof of hardball tactics to weaken important regulations.

"They are threatening Armageddon," said Beatrice Olivastri, chief executive officer of Friends of the Earth. She said the companies would be far better off explaining to shareholders how they intend to implement the new regulations.

Gasoline, on average, now has about 360 parts of sulphur per million. The regulations require refiners to reduce that 150 parts per million, averaged over the period from July, 2002, to Dec. 31, 2004. By 2005, only 30 ppm will be allowed.

The CPPI, to which Irving does not belong, has been pushing for more than year to have the rules made more flexible. It says that some companies will not be able to meet the first step of the cuts, and will not be able to meet the 150-ppm deadline. As an alternative, it proposes to meet the tougher standard of 30 ppm by the end of 2004, one year earlier, and eliminate the averaging requirement. They say they would make up the difference with other pollution-control measures.

Mr. Perez said Health Canada's assessment that the CPPI proposal would mean fewer health benefits for Canadians is based on faulty methodology.

The government brought in the regulations to reduce deaths, hospital emissions, emergency room visits, chronic respiratory disease and asthma in children.

Mr. Perez insists that his organization is simply trying to solve a problem, and that its members will comply with the rules if they aren't changed.

He said that Industry Canada, the Department of Natural Resources and the Privy Council Office are studying the issue, and at some point "will have their say. I think there is still a chance we will get to some kind of conclusion."

Velma McColl, press secretary to Environment Minister David Anderson, said the government has no intention of giving in.

"We are committed to the health benefits of reducing sulphur in gasoline, and it is a major part of our clean-air agenda," she said.

The petroleum industry has said it will have to spend $1.8-billion to meet the new standard, adding about 1 cent a litre to the price of gasoline, or about $20 a year for the average driver, according to federal estimates.

The new standard had appeared to end a bitter and highly public battle between Canada's car makers and its petroleum refineries.

The automobile makers wanted a quick move to lower sulphur levels; while the petroleum sector lobbied against this course, as did health and environmental groups.

Sulphur is a contaminant found naturally in crude oil. Environmentalists and car manufacturers want sulphur cut because it increases the amount of air pollution caused when gasoline is burned, reduces the effectiveness of vehicle emission-control equipment and might undermine the introduction into Canada of new, high-efficiency cars that cannot run effectively on the low-quality fuel now in use.

http://www.theglobeandmail.com/gam/National/20000415/UGASSN.html

-- Martin Thompson (mthom1927@aol.com), April 16, 2000

Answers

Martin, this story makes me sick! Blackmail, plain and simple. "The petroleum industry has said it will have to spend $1.8-billion to meet the new standard...." An industry far from suffering with the oil price increases we've seen lately; an industry that has made many billions over the years from this natural resource!! A neanderthal industry that still has the nerve to bar women from being in their association's building in Calgary.

(Rant mode off.)

Move to alternative fuels, now!

-- Rachel Gibson (rgibson@hotmail.com), April 17, 2000.