CIPMA Connection

June | 2019

FULL MEMBERS

ASSOCIATE MEMBERS

CONNECTION CONTENTS

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| MESSAGE FROM THE PRESIDENT

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| UPCOMING EVENTS

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| ADVOCACY UPDATES

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| NEWS UPDATES

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| MEMBER UPDATES

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| CIPMA MEMBER BENEFITS

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.

MESSAGE FROM THE PRESIDENT JENNIFER STEWART | PRESIDENT & CEO

Dear CIPMA Members and Associate Members Summer is finally here. With it, comes the rise of Parliament and legislatures across the country. However, with the October federal election just around the corner, the government arena is staying busy.

As many analysts attempt to look into the crystal ball to predict what may happen this coming October, the election truly remains too close for anyone to call.

What’s at stake? For our sector, a change in government has significant repercussions. As the Liberals move forward with the Clean Fuel Standard, there is a strong likelihood that this regulation will never see the light of day under a Conservative government.

A carbon tax, which has been a notion that has caused much division and controversy, would also likely be eliminated. While the election is too close to call, it’s clear that Canadians are divided going into the polls, and nothing is a sure bet.

As a non-partisan association, CIPMA continues to monitor the election, and assess regulatory impact for our members. We will be issuing a special election bulletin in September to keep our members up to date on political platforms related to the sector and at large.

I wish you all a very safe and healthy summer, and I look forward to seeing many of you at our Annual Golf Tournament (details inside)

Jennifer Stewart President and CEO Canadian Independent Petroleum Marketers Association Canadian Independent Petroleum Marketers Association | Connection 2019 |

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Registration Now Open REGISTER HERE

Canadian Independent Petroleum Marketers Association | Connection 2019 |

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UPCOMING EVENTS CIPMA CONNECTION | 2019 EVENTS

CIPMA GOLF CHALLENGE September 12, 2019 Registration now open

Canadian Independent Petroleum Marketers Association | Connection 2019 |

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ADVOCACY UPDATES Government advocacy is the main priority for the CIPMA team, and having a voice on important issues at the municipal, provincial and federal levels of government is one of the key reasons why Members join our organization. CIPMA Members receive quarterly updates on the association’s advocacy efforts, which are also posted on the Members Only section of cipma.org.

2019 | Canadian Independent Petroleum Marketers Association | Connection 2018

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NEWS UPDATES This section presents a series of media articles of interest to the sector. The headlines included below are taken directly from media sources and are not written by CIPMA or CIPMA team members.

GLOBAL NORWAY GAS STATION EXPLOSION STARTED WITH HYDROGEN LEAKAGE: PRELIMINARY REPORT Preliminary findings show that the explosion at a gas station in Norway last week started with a hydrogen leakage from the high-pressure hydrogen storage unit, hydrogen company Nel announced in a press release on [June 17].

SAUDI ENERGY MINISTER HOPES OPEC AGREES TO EXTEND PRODUCTION CUT ‘EARLY JULY Saudi Energy Minister Khalid al-Falih said on Sunday that OPEC would probably meet in the first week in July in Vienna and that he hoped it would reach consensus on extending its agreement to cut oil output.

US OIL IMPORTS FROM OPEC PLUNGE TO 30YEAR LOWS. CHINA’S ARE SURGING America’s long-addiction to oil from OPEC is fading -- even as China’s own reliance on the cartel’s crude has soared.

UNITED STATES TRUMP’S TARIFFS DISRUPT USMCA AND THE U.S. OIL & GAS BOOM The U.S.-Mexican energy partnership helps explains why approving the USMCA deal is such an urgent priority. Unfortunately, the Trump administration has announced plans to impose a 5% tax on all goods imported from Mexico and these tariffs would potentially rise to 25% by October.

Canadian Independent Petroleum Marketers Association | Connection 2019 |

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U.S. OIL DEMAND WAS SCORCHING HOT LAST YEAR -- BUT GAS-GUZZLING SUVS AREN’T TO BLAME

FEDS SPEND $275 MILLION ON $40-BILLION LNG CANADA PROJECT, INCLUDING CASH TO BUY GAS TURBINES

Overall, America accounted for 20.5% of the world’s oil and related liquid consumption last year.

(That includes liquid derivatives of coal and natural gas, as well as biodiesel and biogasoline products such as ethanol.) What was interesting, though, is that the amount of oil the U.S. used to make fuels like gasoline fell last year.

The contribution will include $220 million for LNG Canada to buy highly efficient gas turbines and $55 million to replace a bridge in Kitimat.

HERE’S WHY GASOLINE PRICES ARE DROPPING EVEN AS MIDDLE EAST TENSIONS ESCALATE

The federal Liberal government has accepted some substantial Senate changes to its environmental assessment overhaul legislation — but has rejected 90 per cent of those proposed by Conservative parliamentarians that environmental groups warned would weaken the review process.

The national average for a gallon of regular unleaded was $2.70 on Friday, according to AAA. U.S. REFINER GROUP SUES TRUMP EPA OVER HIGH-ETHANOL GASOLINE The main U.S. refining industry association said on [June 10] it sued to block the Trump administration’s effort to expand sales of higher ethanol blends of gasoline, arguing the move exceeded the administration’s authority.

NATIONAL

HERE’S WHY OIL’S OUTLOOK COULD BE EVEN BLEAKER THAN EVERYONE EXPECTED As storm clouds gather over the world’s top oilconsuming region, OPEC and its allies would be advised to pay close attention as they prepare to make a key decision on output curbs early next month.

CALGARY, CANADA SELECTED BY WORLD PETROLEUM COUNCIL TO HOST OIL AND GAS FORUM IN 2023 Calgary, Canada has been selected to host the World Petroleum Congress in 2023, beating out four other global cities in voting that took place in St. Petersburg, Russia.

FEDERAL GOVERNMENT ACCEPTS DOZENS OF AMENDMENTS TO ENVIRONMENTAL REVIEW BILL, REJECTS MOST OF THE TORY ONES

BILL C-69 DRAWING IRE FROM OIL INDUSTRY AND ENVIRONMENTALISTS ALIKE Environmental groups are expressing dismay with amendments made to Bill C-69 which sets out a new environmental assessment process for major development projects.

CANADA IS “CLOSED FOR BUSINESS” IS THE MESSAGE SENT BY THE TRUDEAU GOVERNMENT WITH BILLS C-69 AND C-48 The Petroleum Services Association of Canada (PSAC) is expressing extreme disappointment with the decision by the Trudeau government to not accept the full slate of amendments for Bill C-69 proposed by the Senate following lengthy consultation with Canadians.

WESTERN REGION

‘IT’S NOT CANADIAN TO DO THIS’: THOUSANDS RALLY AS FEDERAL RESOURCE BILLS, PIPELINE DELAYS ROIL THE WEST The rally, perhaps 4,000 people strong, was to show support for the Trans Mountain pipeline, and lay into the objects of their anger: bills C-69 and C-48.

Canadian Independent Petroleum Marketers Association | Connection 2019 |

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PETROLEUM ANALYST SAYS CARBON TAX ISN’T WORKING

The Federal Government says their version of the carbon tax is to hit the Alberta beginning in the new year, and drivers can expect to see gas prices go right back to where they were before the provincial tax was scrapped at the end of May.

OPPOSITION SAYS PROVINCE’S NEW CARBON TAX STICKERS FOR GAS PUMPS ARE ‘PROPAGANDA’ New carbon tax stickers distributed to gas stations across New Brunswick by the provincial government are being described by opposition parties as “propaganda” and “politically motivated.”

GAS IS UP TO 14 CENTS CHEAPER IN NOVA SCOTIA THAN NEW BRUNSWICK — HERE’S WHY

ONTARIO / QUÉBEC REGION

ONTARIO WANTS ANTI-CARBON TAX GAS PUMP STICKERS DISPLAYED BY END OF AUGUST

Tumbling U.S. petroleum markets, a rising Canadian dollar, quirks in Maritime retailing regulations and tax differences came together Friday to drive gasoline prices in Nova Scotia well below those in New Brunswick — a gap that is likely to remain for most of next week.

The Ontario government wants gas station operators to display its mandatory anti-carbon tax stickers by the end of the summer or face potential Provincial Offences Act charges.

COSTS OF ONTARIO CLIMATE PLAN WOULD BE DOUBLE LIBERAL CARBON TAX, RAISE HOUSEHOLD COSTS: REPORT Ontario’s climate plan would cost taxpayers twice as much as the federal Liberal carbon tax, a new report says, casting doubt on policies proposed by a handful of provinces as they mount a legal objection to Ottawa’s environmental ambitions.

ATLANTIC REGION

HUSKY RESTARTS PRODUCTION AT ANOTHER DRILL CENTRE FOLLOWING NOVEMBER OIL SPILL

Husky Energy has restarted production at its southern drill centre in the White Rose oil field following a major oil spill off the coast of Newfoundland last fall that halted all operations.

Canadian Independent Petroleum Marketers Association | Connection 2019 |

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MEMBER UPDATES CIPMA is pleased to welcome new Associate Member, Targray

ASSOCIATE MEMBER

TARGRAY Targray is a diversified multinational commodity and specialty materials company that markets a range of products and solutions for high-growth energy sectors. Established in 1989 in Montreal, Canada, our organization is a leading international provider of battery materials, solar and energy storage solutions, biofuels, and refined products.

Canadian Independent Petroleum Marketers Association | Connection 2019 |

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CIPMA MEMBER BENEFITS CIPMA members receive exclusive access to the annual Kent Group Ltd.’s 2018 National Retail Petroleum Site Census annual report. This unique study, a comprehensive enumeration of the petroleum retail outlet population in Canada, provides key insights into industry trends.

Key Findings As of December 31, 2018, there were 11,929 retail gasoline stations operating in Canada, or 3.2 outlets for every 10,000 persons. Our census illustrates a continued diversity of brands of gasoline in Canada (we measured 88 different “brands” of gas), although the physical product largely originates from 14 refineries in Canada, operated by a total of seven refining organizations. Similarly, we identified 67 companies involved in the marketing of gasoline, where they manage a network of two or more stations.

Generally, trends in the Canadian fuels marketplace over the last fifteen years show refiner-marketers are less involved in setting fuel prices, down from nearly a third of all sites in 2004. Remaining gas stations (some 77 percent) in Canada are price-controlled by a diverse mix of petroleum marketers, whose importance and influence is growing, particularly between two sub-types: Regional distributors and “big box” marketers. The latter has an influence on the retail petroleum market – particularly in terms of price competitiveness – that is far out of proportion to their relatively small number of outlets.

Canadian Independent Petroleum Marketers Association | Connection 2019 |

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23%

Sites under price control of refinermarketers in Canada

Sites under price control of all other marketers in Canada

77%

Canadian fuel marketers increasingly operate some or all of their network using a brand owned by another company. In 2018 this represented 36% of all sites in Canada, up considerably from 2004.

6%

in 2004

35%

in 2017

36%

in 2018

Canadian fuel marketers increasingly operate some or all of their network using a brand owned by another company. In 2018 this represented 36% of all sites in Canada, up considerably from 2004.

Other Topics Include: • Trends in site operation; • Retail gasoline outlet representation by province; • Provincial throughput efficiency; • Refiner-marketer and marketer-retailer relationships; • Retail landscape; • Retail relationships and control over assets; and • Outlet features and offerings.

Appendices show a detailed breakout of sites: • By brand; • By marketer; • Brand ownership; • Traditional vs. non-traditional listings; and • Price control listing For further information, contact Suzanne Gray at 519-672-7000 ext 108.

For nearly 50 years, Kent’s objective, timely and accurate data and its data-driven consulting expertise have placed it at the forefront of the downstream petroleum industry in Canada. Kent is recognized as an authority in marketing economics, performance measurement and benchmarking, price/margin reporting/analysis and regulation, and industry economic research and analysis. The company’s client base covers the spectrum of integrated and independent petroleum marketers, government and regulatory agencies, industry associations, and large-volume petroleum buyers.

Kent became part of the Kalibrate group of companies February 1, 2019.

The report is available to full members in the resources section of the CIPMA website.

Associate members can purchase the report at a discount.

Article originally from Kent Group LTD. Posted: Monday, June 10th, 2019.

Click here to view the full article.

Canadian Independent Petroleum Marketers Association | Connection 2019 |

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State of the

Vincent van Gogh - Starry Night, 1889 / Wayne Ovation™2 fuel dispenser

Learn more at www.wayne.com Austin, Texas, USA l Malmö, Sweden l Rio de Janerio, Brazil l Shanghai, China © 2019 Dover Fueling Solutions. All rights reserved. DOVER, the DOVER D Design, DOVER FUELING SOLUTIONS, and other trademarks referenced herein are trademarks of Delaware Capital Formation.

Inc./Dover Corporation, Dover Fueling Solutions UK Ltd. and their affiliated entities. 032819v5

Canadian Independent Petroleum Marketers Association | Connection 2019 |

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We want to share the successes of our members.

If you want to feature your company’s recent achievements, updates, or simply want to be featured, please reach out to Jennifer Stewart at jstewart@cipma.org

Jennifer Stewart, President and CEO jstewart@cipma.org | Cell: 613.915.5699

Rita Molinari, CMP, Operations Manager rmolinari@cipma.org | Cell: 416.358.5207

MAILING ADDRESS | 3-1750 The Queensway, Suite 115 - Toronto, ON., M9C 5H5