November 7, 1941 (19th Parliament, 2nd Session)

LIB

Clarence Decatur Howe (Minister of Munitions and Supply)

Liberal

Mr. HOWE:

Yes,-entirely. It comes in as crude and is broken down into all the components we use. From the crude we get fuel oil, gasoline, heavy lubricating oils, and all the various components of crude oil, as Canadian products.
In the Joy Oil open letter to the Prime Minister of Canada, as published in the form of an advertisement in certain Toronto newspapers, an attempt is evidently being made to create the impression that Canada at no time faced a shortage in petroleum products, that the shortage in ocean tank tonnage was not real, and that it was simply a scheme of major oil companies to gain their own ends. Nothing is farther from the truth.
The President of the United States, directly and indirectly through various government bodies, ordered the oil companies owning and operating tankers under charter to deliver tankers to Britain under the lease-lend arrangements. The oil companies of the United States had no alternative, and they had nothing to do with it, other than to comply with the demands which were made upon them. I have before me a copy of a memorandum in regard to a meeting held in Washington on May 14, between Sir Arthur Salter, head of the British shipping mission in the United States, and representatives of the United States maritime commission, and Mr. Wilgress of the Department of Trade and Commerce and Mr. A. L. M. MacCallum of the Canadian shipping board, at which time the supply of tankers to Britain from the Canadian service was discussed. I have also before me a memorandum setting forth Britain's petroleum supply position and tanker position, which was left with me by Sir Arthur Salter just about the first of July. This memorandum sets forth in detail, with supporting documents, Britain's petroleum stocks, tanker losses and urgent needs. I have also in my hand a copy of a letter written by Sir Arthur Salter to the oil controller for Canada dated July 2, 1941, in which Sir Arthur on behalf of Britain requested the following:
1. The immediate release for United Kingdom service of eight Norwegian tankers then chartered to Canadian oil companies.
2. The release of eight Canadian flag ocean-going tankers for service as soon as the St. Lawrence was closed to navigation.
The War-Oil Situation

These sixteen tankers, I may say, were all of the tankers owned or then under charter by Canadian companies.
3. The release to Britain of as many lake tankers as possible, said lake tankers to be used in the coastal service around Great Britain with a view to relieving ocean tanker tonnage which at the time was being employed in this coastal service.
In other words the urgent request which came at that time was for all of the tankers that Canada owned or had chartered, with a number of tankers that had never been previously operated other than on the great lakes. In fact it was suggested that arrangements might be made immediately to replace the eight Canadian-flag boats with United States-flag boats which were then in the shuttle service under the first arrangement made with the United States by Britain for the supply of tankers. We were asked immediately to change our boats for United States-flag tankers and to send all our fleet to Britain.
Following delivery of this memorandum of the facts by Sir Arthur Salter, and realizing the seriousness of the situation as far as Britain's supply of petroleum products was concerned, I immediately conferred with the oil controller, and it was decided to direct the companies having Norwegian tankers under charter to turn them over to Britain without delay. It was further agreed with Sir Arthur Salter that the eight Canadian-flag tankers could go into the United Kingdom service as soon as navigation in the St. Lawrence closed, provided of course that we would receive in return equal replacement tonnage out of the shuttle service.
As I have before stated, these sixteen tankers were all that were owned or controlled by Canadian importers. Nevertheless we figured that we could depend on replacements out of the shuttle service for our war needs.
To make the statement, therefore, or even cast the reflection that this tanker situation was the instrument of anyone other than the urgency of Britain, is an entire misrepresentation of the facts, is misleading, and damaging to our war effort.
Further, in the advertisement reference is made to the ocean and lake tanker tonnage available, that is, the Canadian-flag ocean tankers in the Canadian trade and the Canadian tanker tonnage available for ocean service. Associated with that statement is one setting out Canada's requirements, following which there is a definite statement that there is an excess of ocean tanker space over and above the requirements.

While an order in council was passed prohibiting the advertising by anyone of ships in the Canadian service, the Joy Oil company proceeds to give the information in a public statement. Neither the statement as to Canadian-flag ocean tankers nor the one in regard to small Canadian-flag lake tankers is correct. In the first place, the ocean tanker Canadalite is listed as available ocean tanker tonnage. This ship was lost in the battle zone in March of this year. Further than this, the advertisement incorrectly places the Tronto-lite. This tanker is listed with the lake tankers and is left out of the ocean figures. Even however, if the Trontolite were included in its proper category there is a discrepancy of 210,592 barrels, or the equivalent of two large ocean-going tankers. In other words, the cargo-carrying capacities of ocean tanker tonnage which remained available to us total 1,336,600 barrels and not 1,547,192 barrels as published. The figures shown in the advertisement indicate the deadweight capacity of each vessel and not the cargo carrying capacity. Fuel, water and ship's stores naturally reduce the deadweight capacity.
As regards the small Canadian-flag lake tankers referred to in the advertisement as available for ocean service, this list is not correct, neither is the tonnage correct. As before stated, it includes the Trontolite; further, however, it leaves out three small lake tankers of an aggregate capacity of approximately 56,000 barrels. The aggregate figures are wrong inasmuch as the Trontolite, which was included, has an aggregate capacity of
73,000 barrels; further, the inclusion of the Britamette as having a capacity of 21,000 barrels, when this ship's capacity is only 2,200 barrels. Regardless, however, as to the total tonnage of lake tankers available to us, it is an accepted fact that the majority of these vessels are not fit for ocean service. WThile they might be used in the Caribbean, there is grave doubt that they could be used in the north Atlantic winter run, as suggested.
Reference is made to ocean tanker requirements at 1,380,000 barrels. What period these requirements refer to is not stated. In the light, however, of the information I have already given, the statement can only be looked upon as intentionally misleading. You will recall that the tanker requirements by ocean tankers was 30,000,000 barrels. I do not know what the allusion to 1,380,000 barrels was intended to refer to.
As I have before stated, there is no excess ocean tanker space. There is a shortage, and that shortage is becoming greater every day, as was also shown in the inventory figures which I have given.

The War-Oil Situation
The letter to the Prime Minister as published states that unless the Joy Oil Company Limited can get its share of tanker space allocated to it by the government, its stations will run out of gasoline and it will be forced either to close down or to buy from the big oil companies and raise its price to the public four to five cents a gallon. It is clear from the figures I have given that there are no tankers to be made available from those in the Canadian service, unless we place the business of the Joy Oil company in three congested areas, selling motor gasoline to the motoring public, ahead of our national requirements. The Joy Oil Company Limited and/or anyone claiming to be associated with it has never been refused a permit to bring gasoline into Canada. It is free to buy gasoline wherever it wishes. If, on the other hand, gasoline is not now available at prices which will enable these companies to retail their gasoline at cheaper prices, that is no fault of ours.
That no doubt i3 a condition arising out of supplies of gasoline in the western hemisphere -in other words, arising out of war conditions.
The oil controller, or anyone associated with him, has at no time objected to the petroleum coordinator or the maritime commission of the United States supplying the Joy Oil company with tanker tonnage, excepting that the oil controller has refused to permit the requirements of the Joy Oil company in the way of tanker tonnage to take precedence over tanker tonnage which was being requested by him to take care of Canada's national war effort. The requests by the oil controller for tanker tonnage to build up reduced inventories have not as yet been satisfied, and in the light of the figures I have given the committee, it would not be otherwise than criminal to give the supply of motor fuel for the Joy Oil company precedence over that which we require in order to carry on our war effort.
Having regard to the gasoline purchased by the Joy Oil company in Trinidad, on the 24th June of this year, the office of the high commissioner for the United Kingdom in Ottawa informed the acting under-secretary of state for external affairs, by letter, that owing to a shortage of tankers it had become necessary to draw all supplies for the United Kingdom from the nearest sources, and sterling oil, which formerly came from Iran et cetera, had to be replaced by supplies from the west. I read the letter as follows:
My Dear Mr. Robertson:
The high commissioner has received a telegram from the secretary of state for dominion affairs on the following subject.
The petroleum department have stated that Trinidad Leaseholds Limited entered^ into negotiations with two Canadian companies, Austin of Joy Oil Company, and Sun Oil Company, to supply them with motor spirit from Trinidad.
Owing to the shortage of tanker tonnage it has become necessary to draw oil supplies for the United Kingdom from the nearest sources, and sterling oil, which formerly came from Iran, et cetera, has had to be replaced by supplies from the west. As a result Trinidad's former surplus of motor spirit has been absorbed and Trinidad Leaseholds Limited are now unable to implement their arrangements with the two Canadian companies.
The high commissioner has been asked to explain their position to the Canadian authorities and to stress that the offer of supplies made by Trinidad Leaseholds Limited was made in good faith, that their inability to implement it has arisen out of circumstances over which they have no control, and that they are in no way to blame for the present difficulty.
Yours sincerely,
W. C. Hankinson
One other Canadian company not negotiating with Trinidad Leaseholds Limited had arranged for their total supply of aviation base stock in Trinidad, aggregating more than eight million gallons. This supply was also cut off by the petroleum department of Great Britain.
Hon. members will therefore see that it was not the oil controller who denied the Joy Oil company the Trinidad gasoline; it was the petroleum board of Great Britain. They will see that the Joy Oil company was not the only company affected by this act. Two others operating in Canada were also affected.
Reference is also made in the advertisement to increased costs to the public and the government. I have been wholly in accord with the controller's policy to bring in our petroleum requirements even at increased costs, using every form of transportation that was available, and also in favour of the increased cost being added to the cost of the product. Had it not been for this policy, the inventory position of Canada, as I have already quoted, would not be as good as it is to-day. I approved the increase of one cent which was put on in July. This increase applied to all Canada, but as far as the prairie provinces are concerned, this increase went back to the producers of Alberta oil. In other words, in order to stimulate production, an increase of 27 cents a barrel was approved to the producers of Turner valley crude. A further increase of one cent as of October 1 last was made with the concurrence of the war-time prices and trade board. This was based on statements supplied by the distributing companies showing their increased costs. These statements were checked up by the oil controller's office.
Reference is also made in the Joy Oil letter to the loss of gasoline tax to the federal government through gasoline rationing. This cut
The War-Oil Situation

applied only to service stations and certainly did not, as suggested by the letter, cover all the gasoline sold in Canada.
Reference is also made to the loss of customs duties through excluding imports. This statement is characteristic of the whole advertisement. It is entirely misleading, because there has been no prohibition of imports that I know of.
While I am on the subject, I should like to say something about the price of gasoline. It has been suggested that every move made by the oil controller has put money into the pockets of the oil companies; that is, by stopping credit cards it was a saving to the oil companies-a fairly large saving. As I have said, there have been two increases, one in July of one cent a gallon and one in October of one cent a gallon. But I would point out that the increase on gasoline at the gulf, where all the gasoline comes from, has been more than two cents-that is, two cents based on the small United States gallon, which is somewhat more when translated into cost, in Canadian money, of the Canadian gallon. The price in New York city, which is a very large retailing centre, both tank wagon price and retail price have been advanced two and a half cents a gallon. We have kept rigid control of gasoline prices since the institution of the office of the oil controller. The refiners have had to contend with a very sharp rise in the price of crude oil, and they have had to contend also with greatly increased transportation costs. Strangely enough, the cost of obtaining oil from pipeline is considerably more than obtaining it by ocean tankers. [DOT]

Topic:   THE WAR
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