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On low natural gas prices: Frontier Centre for Public Policy

Published

2 years ago

15 minute read

From the Frontier Centre for Public Policy

By Terry Etam

To say that “natural gas is a dying commodity” takes either some world-class mental dishonesty, disturbingly blind faith in policy over reality, or some kind of “clouds hate me” philosophical stance on life.

Is there any critical industrial material as bizarre as natural gas?

The stuff holds almost zero interest for the general public, for the same reason no one is interested in the sound of a washing machine. Both boring. Both ubiquitous. Natural gas isn’t even sold on Amazon. But forty-six percent of American homes use natural gas for heat, and surely more in Canada.

But consider the storm below the surface. Traders love it, because it is one of the most volatile commodities in existence, and volatility means trading profits. The volatility, at the slightest provocation, is almost unbelievable at times. The weather pattern shifts for three weeks out over a portion of the US and boom – the entire forward 18 months of prices can collapse or soar.

In the bigger picture though, natural gas today in North America trades at close to the same price it did a quarter century ago – not inflation adjusted, just the same old nominal dollar value, which is astonishing since global gas demand has increased by 60 percent in that time.

Natural gas is a critical fuel for much of the world, and usage is growing, particularly the relatively new field of LNG. According to the Global Gas Infrastructure Tracker website, which doesn’t even like the stuff, there are a total of 2,449 significant pipeline projects underway in the world for a total of 1.2 million kilometers (and that’s the big pipe, not the little straws that go to your house). There are 238 LNG import terminals and 189 export trains in development globally. One hundred and thirty countries either have natural gas systems or are constructing them.

Traders, consumers and businesses love the stuff even if they don’t say it often enough, while others loathe it because it is a ‘fossil fuel’. Natural gas is caught in an existential war whereby said opponents will do everything in their power to just make it go away (they really think they can). The Toronto Globe and Mail, “Canada’s news paper” (note to self: develop ethnocentric balloon head emoji, make millions), recently ran a pricelessly ludicrous opinion piece entitled ‘Natural gas is a dying commodity, and Canada needs to stop supporting it’. The article was written by one of those think tanks (International Institute for Sustainable Development) that produces nothing but ideological amplification, safely distanced from people that actually do stuff, and a mountain of impressive T4 income tax slips (latest fiscal year personnel/consultant expense: $33 million). There is no surprise that their team of political scientists would attack natural gas; their latest financials show that the Government of Canada granted them $40 million, a third of which is from climate activist/federal minister Guilbeault’s office. There’ll be no biting that little hand.

Many climate leadership icons of the world, the US, Canada, Western Europe, Japan… pretty much anyone that can, is building natural gas (LNG or non) infrastructure as fast as they can. Germany, home to the world’s most advanced green energy demolition derby, built an LNG import terminal in an astounding 5 months. Many that want to import LNG but weren’t able to last year because Europe hoovered up every molecule on the market are simply doing what it takes to attain energy security, and that can mean, lord tunderin’, coal. Pakistan is the most notable example – the country plans to quadruple coal fired power output and move away from gas only because it could not obtain it: “A shortage of natural gas, which accounts for over a third of the country’s power output, plunged large areas into hours of darkness last year.” The country’s energy minister went on, “We have some of the world’s most efficient regasified LNG-based power plants. But we don’t have the gas to run them.”

For those fortunate enough to line up LNG supplies, the ante is normally a 15-20 year contract.

To say that “natural gas is a dying commodity” takes either some world-class mental dishonesty, disturbingly blind faith in policy over reality, or some kind of “clouds hate me” philosophical stance on life.

Beyond the silly messaging looking to undermine natural gas though are some very powerful undercurrents that are shaping the world in ways most don’t consider, but they should.

Thanks to the shale revolution in the US and Canada, native natural gas production exploded onto a scene that couldn’t handle the excess, leading to persistently low prices. North America is turning into an LNG export powerhouse, but until that export capacity outpaces productive capability, natural gas prices in North America look set to remain far below global prices.

It is worth remembering how significant this scenario is for North America. Cheap natural gas is an industrial godsend, enabling many strata of industries and enterprises that simply would not exist without. In May of 2022, the head of the Western Equipment Dealers Association, said that the previous winter’s high natural gas prices were unsustainable for businesses that had to heat 30-40,000 square-foot shops. The 2021-22 winter of which he was discontented saw Henry Hub prices average $4.56/mmbtu – about a third of global prices, and a fraction of what the world was to face later that year.

The same article pointed out how the Industrial Energy Consumers of America, a trade group whose members include smelters, plastics and paper-goods makers, wanted the US to stop permitting new LNG export terminals because “The manufacturing sector cannot invest and create jobs without assurances that our natural gas and electricity prices will not be imperiled by excessive LNG exports.”

Those guys aren’t crazy. The US gas market is balanced on a knife edge. A change in next month’s forecast can create havoc in forward prices even up to several years out.

The rise of LNG is making things even more unstable. The Freeport LNG terminal had an 8 month outage due to an accident, removing 2 bcf/d of demand from the market (in a 100 bcf/d market); this single event caused a storage surplus in the US that has depressed natural gas prices ever since. All else being equal, the US natural gas storage scene would be in a deficit to the five year average as opposed to today’s surplus if Freeport had not gone down, and both spot and futures prices would most likely be significantly higher. The Freeport outage probably knocked US natural gas prices down by at least $1/mmbtu for a period of 8 months, and actually probably much more. But even at that level, in a 100 bcf/d market, where 1 bcf is equal to 1 million mmbtus, the cost savings to US consumers totaled $100 million per day. (Of course, had the price stayed higher, we might have seen far more drilling, which may have caused a collapse as well, just a bit further down the road.)

That $100 million per day cost saving came out of the hide of North American natural gas producers selling into that market, and you’d think they wouldn’t like that one little bit. And they don’t. But gas producers have their own realities and game plans which don’t generally involve sacrificing any of their sales for the good of all other producers, as economically sensible as that strategy may be.

US producers find themselves in an odd situation. Every one of the large producers knows that they could cut production by 5 percent and double their profits; the market is that tightly balanced. Doing so would single handedly drive up NG prices substantially – just observe how the gas market goes ape over a change in weather forecast.

But driving up prices, even if it is in their own self interest, will mean a spike in production, because at sustained $4 US gas, the market becomes flooded. EQT president Toby Rice, the largest US gas producer (EQT, not Toby), says at a sustained $4/mmbtu natural gas price, the US could export 60 bcf/d of natural gas. Keep in mind that $4 gas is a fraction, anywhere from a third to ten percent of global LNG prices.

Mr. Rice may very well be correct, but glosses over the reality of natural gas prices: we will never see a sensible sustained price like $4, even though we may average it – we will see 2 and 8 and 3 and 9 and so on and so on.

On top of this, solution gas from oil plays like Permian is providing massive amounts of gas in itself. The Permian, primarily an oil field, produces more solution gas than the entire country of Canada. Permian solution gas, if a stand alone country, would be one of the world’s top five largest producers.

So who cares? Well, you all do. We all do. The goofballs that wrote the Globe & Mail article do, though they either won’t admit it or simply refuse to understand.

Natural gas is the bedrock of most economies, and cheap natural gas is a special elixir to North America. It is absolutely crucial to the level of industrial activity we enjoy. There is no substitute for the clean burning capability of the stuff. Wander into a typical big box store or more crucially try to wander into an industrial building that you won’t be allowed to because it is unsafe… drive around an industrial park and look at all the magnificent industrial activity that gives us the life we live. Now imagine those being heated by wood stoves. Or solar panels in dead of winter. Geothermal? Sure, if you plan on drilling into the earth’s mantle. And if you live on an appropriate acreage. And have enough money. I guess there’s always coal.

And that sums up a lot of the world’s population’s situation: If countries aren’t building LNG, it’s likely because they are building coal, as in the countries that Europe outbid for LNG last winter in a shocking me-first display of hydrocarbon-swilling (accompanied by fossil-fuel-subsidizing self-loathing?) hypocrisy.

There are storm clouds on the horizon. The drilling efficiency that these companies boast about relentlessly in IR presentations and every 90 days in conference calls consists to a large degree on drilling longer horizontal wells. Do the math on that one. Reservoirs are finite in size. If you increase the length of wells by another mile or two, you’re just draining the reservoir faster. One day we will see true sweet spot exhaustion, which is not a laughing matter when one considers that three fields – Appalachia, Haynesville and Permian – account for more than 70 percent of US gas production, and about a fifth of global production.

But for now, North America reigns supreme with respect to the world’s most coveted heating and industrial fuel. The US, Canada and Mexico remain more or less isolated from global natural gas prices for now, which brings incalculable benefits to North American businesses and citizens, a benefit that shouldn’t be taken for granted.

Terry Etam is a columnist with the BOE Report, a leading energy industry newsletter based in Calgary.  He is the author of The End of Fossil Fuel Insanity.  You can watch his Policy on the Frontier session from May 5, 2022 here.

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Canada’s loyalty to globalism is bleeding our economy dry

Published on July 4, 2025

By

This article supplied by Troy Media.

Troy Media By Sylvain Charlebois

Trump’s controversial trade policies are delivering results. Canada keeps playing by global rules and losing

U.S. President Donald Trump’s brash trade agenda, though widely condemned, is delivering short-term economic results for the U.S. It’s also revealing the high cost of Canada’s blind loyalty to globalism.

While our leaders scold Trump and posture on the world stage, our economy is faltering, especially in sectors like food and farming, which have been sacrificed to international agendas that don’t serve Canadian interests.

The uncomfortable truth is that Trump’s unapologetic nationalism is working. Canada needs to take note.

Despite near-universal criticism, the U.S. economy is outperforming expectations. The Federal Reserve Bank of Atlanta projects 3.8 per cent second-quarter GDP growth.

Inflation remains tame, job creation is ahead of forecasts, and the trade deficit is shrinking fast, cut nearly in half. These results suggest that, at least in the short term, Trump’s economic nationalism is doing more than just stirring headlines.

Canada, by contrast, is slipping behind. The economy is contracting, manufacturing is under pressure from shifting U.S. trade priorities, and food
inflation is running higher than general inflation. One of our most essential sectors—agriculture and food production—is being squeezed by rising costs, policy burdens and vanishing market access. The contrast with the U.S. is striking and damning.

Worse, Canada had been pushed to the periphery. The Trump administration had paused trade negotiations with Ottawa over Canada’s proposed digital services tax. Talks have since resumed after Ottawa backed away from implementing it, but the episode underscored how little strategic value
Washington currently places on its relationship with Canada, especially under a Carney-led government more focused on courting Europe than securing stable access to our largest export market. But Europe, with its own protectionist agricultural policies and slower growth, is no substitute for the scale and proximity of the U.S. market. This drift has real consequences, particularly for
Canadian farmers and food producers.

The problem isn’t a trade war; it’s a global realignment. And while Canada clings to old assumptions, Trump is redrawing the map. He’s pulling back from institutions like the World Health Organization, threatening to sever ties with NATO, and defunding UN agencies like the Food and Agriculture Organization (FAO), the global body responsible for coordinating efforts to improve food security and support agricultural development worldwide. The message is blunt: global institutions will no longer enjoy U.S. support without measurable benefit.

To some, this sounds reckless. But it’s forcing accountability. A senior FAO official recently admitted that donors are now asking hard questions: why fund these agencies at all? What do they deliver at home? That scrutiny is spreading. Countries are quietly realigning their own policies in response, reconsidering the cost-benefit of multilateralism. It’s a shift long in the making and long resisted in Canada.

Nowhere is this resistance more damaging than in agriculture. Canada’s food producers have become casualties of global climate symbolism. The carbon tax, pushed in the name of international leadership, penalizes food producers for feeding people. Policies that should support the food and farming sector instead frame it as a problem. This is globalism at work: a one-size-fits-all policy that punishes the local for the sake of the international.

Trump’s rhetoric may be provocative, but his core point stands: national interest matters. Countries have different economic structures, priorities and vulnerabilities.

Pretending that a uniform global policy can serve them all equally is not just naïve, it’s harmful. America First may grate on Canadian ears, but it reflects a reality: effective policy begins at home.

Canada doesn’t need to mimic Trump. But we do need to wake up. The globalist consensus we’ve followed for decades is eroding. Multilateralism is no longer a guarantee of prosperity, especially for sectors like food and farming. We must stop anchoring ourselves to frameworks we can’t influence and start defining what works for Canadians: secure trade access, competitive food production, and policy that recognizes agriculture not as a liability but as a national asset.

If this moment of disruption spurs us to rethink how we balance international cooperation with domestic priorities, we’ll emerge stronger. But if we continue down our current path, governed by symbolism, not strategy, we’ll have no one to blame for our decline but ourselves.

Dr. Sylvain Charlebois is a Canadian professor and researcher in food distribution and policy. He is senior director of the Agri-Food Analytics Lab at Dalhousie University and co-host of The Food Professor Podcast. He is frequently cited in the media for his insights on food prices, agricultural trends, and the global food supply chain

Troy Media empowers Canadian community news outlets by providing independent, insightful analysis and commentary. Our mission is to support local media in helping Canadians stay informed and engaged by delivering reliable content that strengthens community connections and deepens understanding across the country

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Carney’s spending makes Trudeau look like a cheapskate

Published on July 4, 2025

By

This article supplied by Troy Media.

Troy Media By Gwyn Morgan

The Carney government’s spending plans will push Canada’s debt higher, balloon the deficit, and drive us straight toward a credit downgrade

Prime Minister Mark Carney was sold to Canadians as the grown-up in the room, the one who’d restore order after Justin Trudeau’s reckless deficits. Instead, he’s spending even more and steering Canada deeper into trouble. His newly unveiled fiscal plan will balloon the deficit, drive up
interest costs and put Canada’s credit rating and economic future in jeopardy.

When Trudeau first ran for office, he promised “modest short-term deficits” of under $10 billion annually and a balanced budget by 2019. Instead, he ran nine consecutive deficits, peaking at $62 billion in 2023–24, and nearly doubled the national debt, from $650 billion to $1.236 trillion. That
reckless spending should have been a warning.

Yet Carney, presented for years as a safe, globally respected economic steward, is proving to be anything but. The recently released Main Estimates (the federal government’s official spending blueprint) project program spending will rise 8.4 per cent in 2025–26 to $488 billion. Add in at least $50 billion to service the national debt, and the federal tab balloons to $538 billion.

Even assuming tax revenues stay flat, we’re looking at a $40-billion deficit. But that’s optimistic. The ongoing tariff war with the United States, now hitting everything from autos to metals to consumer goods, is cutting deep into economic output. That means weaker revenues and a much larger shortfall. Carney’s response? Spend even more.

And the Canadian dollar is already paying the price. Since 2015, the loonie has slipped from 78 cents U.S. to 73. Carney’s spending spree is likely
to drive it even lower, eroding the value of Canadians’ wages, savings and retirement funds. Inflation? Buckle up.

Franco Terrazzano of the Canadian Taxpayers Federation nailed it in a recent Financial Post column: “Mark Carney was right: He’s not like Justin Trudeau, he spends more,” Terrazzano argues. “The government will spend $49 billion on interest this year and the Parliamentary Budget Officer projects interest charges will be blowing a $70-billion hole in the budget by 2029. That means our kids and grandkids will be making payments on Ottawa’s debt for the rest of their lives.”

Meanwhile, Canada’s credit rating is under real threat. An April 29 report by Fitch Ratings warned that “Canada has experienced rapid and steep fiscal deterioration, driven by a sharply weaker economic outlook and increased government spending during the electoral cycle. If the Liberal program is implemented, higher deficits are likely to increase federal, provincial and local debt to above 90 per cent of GDP.”

That’s not just a red flag; it’s a fire alarm. A downgraded credit rating means Ottawa will pay more to borrow, which trickles down to higher interest rates on everything from provincial debt to mortgages and business loans.

But this decline didn’t start with tariffs. The rot runs deeper. One of the clearest signs of a faltering economy is falling business investment per worker. According to the C.D. Howe Institute, investment has been shrinking since 2015. Canadian businesses now invest just 66 cents of new capital for every dollar invested by their OECD counterparts; only 55 cents compared to U.S. firms. That means less productivity, fewer wage gains and stagnating living standards.

Why is investment collapsing? Policy. Regulation. Taxes. Uncertainty.

The C.D. Howe report laid out a straightforward to-do list, one the federal government continues to ignore:

Reform corporate taxes to attract capital investment.
Introduce early-stage investment incentives.
Tear down regulatory barriers delaying resource and infrastructure projects, especially in energy (maybe then Alberta won’t feel like seceding).
Promote IP investment with targeted tax credits.
Bring stability and predictability back to the regulatory process.

Instead, what Canadians get is policy chaos and endless virtue-signalling. That’s no substitute for economic growth. And let’s talk about Carney’s much-touted past. Voters were bombarded with reminders that he led the Bank of Canada during the 2008–09 financial crisis. But it was Jim Flaherty, Stephen Harper’s finance minister, who made the hard fiscal decisions that got the country through it. Carney’s tenure at the Bank of England? A different story. As former U.K. Prime Minister Liz Truss put it: “Mark Carney did a terrible job” at the Bank of England. “He printed money to a huge extent, creating inflation.”

Fast-forward to today, and Canada’s performance is nothing short of dismal. Our GDP per capita sits at just $53,431, compared to America’s $82,769. That’s not just a bragging-rights statistic. It reflects real differences in productivity, competitiveness and national prosperity. Worse, over the past 10 years, Canada’s per capita GDP has grown just 1.1 per cent, second worst in the OECD, ahead of only Luxembourg.

We remain a great country filled with capable people, but our most significant fault may be how easily we fall for image over substance. First with Trudeau’s sunny ways. Now with Carney’s global banker persona. The reality? His plan risks stripping Canadians of their prosperity, downgrading our creditworthiness and deepening long-term decline.

It pains me to say it, but unless something changes fast, Canadians face continued erosion in their standard of living and inflation-driven losses in their savings. The numbers are grim. The direction is wrong. And the consequences are generational.

Trudeau fooled voters with promises of restraint. Carney’s now asking for the same trust, with an even bigger bill attached. Canadians can’t afford to make the same mistake twice.

Gwyn Morgan is a retired business leader who has been a director of five global corporations

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