Industry Issues: Were lessons learned during fuel shortage?
April 1, 2007
At the time of writing, in Central Canada, particularly in Ontario, the trucking industry was coping the best it could, with a shortage of diesel, brought on the oil producers say by a fire in the Nan...
At the time of writing, in Central Canada, particularly in Ontario, the trucking industry was coping the best it could, with a shortage of diesel, brought on the oil producers say by a fire in the Nanticoke refinery, the CN strike and cold weather.
Or maybe there were other factors at play. Regardless, the impact on supply was dramatic with desperate truckers literally roaming the highways looking for fuel. The impact on diesel fuel prices was equally dramatic and felt across the country.
With any luck, by the time you read this the critical nature of the shortage will have passed and while it was a scramble the trucking industry will have been able to find enough diesel so that no trucks had to be parked and it was able to make up for the increased price of diesel by increasing its fuel surcharges.
Whether you entirely buy the oil industry spin doctors’ version of why the fuel shortage occurred – the so-called perfect storm – the real issue it occurs to me is how this was allowed to happen; how there seemed to be no contingency plan in place to deal with a fuel shortage and to prevent a full-blown crisis. This is particularly troubling in that it is now over five years since 9/11 and millions of dollars and countless efforts have been undertaken supposedly to develop emergency responses to any contingency. This was our first challenge and it appears whatever plans were in place were ill-equipped to respond to the fuel shortage.
One problem is that the federal government appears to be hamstrung by a regulatory straight-jacket of its own creation. The fact is, even if it wanted to, even if circumstances warranted it, the federal government could not suspend its own regulations – even temporarily – to allow truckers to use 500 PPM diesel fuel as OTA had proposed and which was in plentiful supply and could be produced more quickly than ULSD. Unlike in the US where the federal government has the ability to implement waivers under certain conditions (as it did in the wake of Hurricane Katrina), the Government of Canada would have had to write a regulation, then publish in the Canada Gazette and adhere to a 60-day comment period. That would not have been of much help. Its other choice, which perhaps it could have done but in a minority parliament would not necessarily be a slam-dunk would have been to introduce legislation as it did to end the CN strike. The fact that the MPs were leaving on their winter break at the end of the first week of March surely complicated matters further.
Another oversight in Canadian emergency planning that reared its head during the fuel shortage is that this country does not have any stockpile of petroleum in reserve for emergency situations. Again, this is something that I have raised with both levels of government from time to time for years. Canada is apparently the only nation in the Organization of Economic Cooperation and Development (OECD) not to have such a reserve. The US has one. So does the European Union. The US and EU reserves are the equivalent of 60 days and 90 days of petroleum imports, respectively.
If the worst that the fuel shortage visited upon us is a temporary inconvenience and higher prices, then we will have gotten off easy. But, I hope we don’t have to roll the dice again in the future. Maybe now our government will move to ensure it has the flexibility to respond appropriately during a crisis and will establish a reserve supply of oil product.
– David Bradley is president of the Ontario Trucking Association and chief executive officer of the Canadian Trucking Alliance.