Economy
The Cost to Western Canada if Steven Guilbeault Copies Biden’s Assault on LNG
From EnergyNow.ca
By Jim Warren
” if all of the gas exported by Canada to the US from 2014 to 2021, the years encompassing the price depression, had instead been exported to Europe at average European prices, Canadian natural gas revenues would have been US $100.7 billion higher “
What would it cost western Canada’s natural gas producers if the federal government does to them what it did to tidewater export opportunities for petroleum?
This question became topical last week when the Biden Democrats announced they would block construction of new LNG export facilities in the US. It makes sense to get a handle on the size of revenues at stake if future development of LNG export capacity in Canada is similarly at risk. Indeed, it seems quite reasonable to worry that Steven Guilbeault will take inspiration from the Biden decision and try to do something similarly silly in Canada.
Getting pipelines to tidewater is something Canada’s petroleum industry has been counting on to improve export revenues. This was a particularly urgent hope during the eight-year oil price depression that lasted from Fall 2014 until early Winter 2022. It was, and still is, assumed exporting Canadian diluted bitumen (dilbit) into new non-US markets will allow producers to avoid the costly differential charges assessed by American buyers and refiners.
What if scenarios floated during the eight-year price slump showed that had the Northern Gateway and Trans Mountain pipelines been completed, Canadian producers could have earned billions in additional revenues. Estimates of lost revenues ranged from a Fraser Institute estimate of $15.8 billion for 2018 alone to my own low-ball estimate for losses of $7 billion to $9 billion for that same year. Numerous back of the napkin “what if” calculations for lost revenues produced in coffee shops across the prairies helped fuel frustration and anger at federal government environmental policies intended to limit global warming by cancelling pipelines.
Fast forward to 2024 and we can see that similar conditions apply to western Canada’s natural gas sector. The US is virtually the sole export market for Canadian natural gas. Looking back at the period from 2010-2019 we find that the prices paid by US importers for Canadian natural gas were less than half what Europeans were paying. The price spread became exponentially wider beginning in 2016. It peaked in 2022 when the European price was six times higher than the US price. The European gas price will be five times higher than US prices for 2024.
All else being equal, if all of the gas exported by Canada to the US from 2014 to 2021, the years encompassing the price depression, had instead been exported to Europe at average European prices, Canadian natural gas revenues would have been US $100.7 billion higher than what they actually were.
Of course “all else” is far from being equal. The $100.7 billion figure does not account for the cost of converting natural gas to LNG or the added costs of ocean transportation. In addition, the estimate assumes enough Canadian pipelines and tidewater terminals could be built to accommodate all of the gas currently flowing to the US.
The yawning chasm between US and EU prices today is of course largely the result of Russia’s invasion of Ukraine in late February 2022. EU sanctions aimed at Russian energy exports and the destruction of the Nord Stream pipelines has put Europe firmly on track for developing new sources of natural gas.
Notwithstanding the bland platitudes and unreachable targets emanating from the most recent COP conference in the UAE, there are policy makers in many countries who recognize the important role natural gas can play in reducing global GHG emissions. For example, in December 2021 the European Commission made changes to its GHG emissions law. It now allows both nuclear energy and natural gas to be considered suitable transition fuels during the period while renewable options become more viable.
Lately, there has been a popular backlash in Europe and the UK over excessively zealous green transition initiatives. It turns out a lot of people are unwilling to accept additional increases to their cost of living even when told it is necessary to “save the planet.” People won’t stand for a prohibitively expensive green transition. And they never will be willing to freeze in the dark; especially when an acceptable option like natural gas is available.
Biden’s bizarre decision to block the expansion of US LNG export facilities was probably not motivated by a desperate desire or useful effort to curb GHG emissions. It is more likely a ham-handed attempt to staunch the Democrats’ loss of support among the young and the woke. Regardless of Biden’s motivation, we might reasonably worry that Canada’s environment minister will want to copy him. You might think the collapse in support for Canada’s Liberals and common sense would militate against the imposition of any additional half-baked environmental policy. But when has common sense ever intervened in the creation of environmentally virtuous policy on the part of the Liberals in Ottawa?
I have provided my data sources and relevant tables below
Hypothetical question: What if the exports to the US had been exported to Europe?
Source: derived by the author from the sources and data provided below
Natural gas prices for the US and Europe 2022 to 2024 in US$ per million British thermal units (BTUs) 2023 and 2024 figures are forecasts.*
Source: derived from Statist: Natual gas commodity prices in Europe and the United States from 1980 to 2022 with forecasts for 2023 and 2024.
https://www-statista-com.libproxy.uregina.ca/statistics/252791/natural-gas-prices/
Canadian natural gas exports in billion cubic metres (all to US)
Source: Statista. Natural gas exports by pipeline from Canada from 2010 to 2021 (in billion cubic metres).
https://www-statista-com.libproxy.uregina.ca/statistics/567703/natural-gas-exports-from-canada/
Natural gas prices for the US and Europe 2010 to 2024 in US$ per million British thermal units (BTUs) 2023 and 2024 figures are forecasts.*
Source: Statista: Natural gas commodity prices in Europe and the United States from 1980 to 2022 with forecasts for 2023 and 2024.
https://www-statista-com.libproxy.uregina.ca/statistics/252791/natural-gas-prices/
The Canadian Taxpayers Federation applauds Conservative Party Leader Pierre Poilievre’s income tax cut, which will save a two-income family up to an estimated $1,800.
“Poilievre is providing significant tax relief for people working hard to make ends meet,” said Franco Terrazzano, CTF Federal Director. “The best way the government can make life more affordable is to let people keep more of their own money and Poilievre’s tax cut would do just that.”
Today, Poilievre announced he would cut the lowest income tax bracket from 15 to 12.75 per cent. Poilievre estimates this would save a two-income family up to $1,800.
“We will free up money for this tax cut by eliminating waste, cutting bureaucracy and consultants and capping spending with a dollar-for-dollar law,” Poilievre said.
Poilievre’s tax cut is more than double the income tax cut promised by Liberal Party Leader Mark Carney.
Carney announced he would cut the lowest income tax bracket by one percentage point. Carney estimates that would save a two-income family up to $825.
“It’s great to see the two major parties dueling over who can cut taxes the most and Poilievre is providing twice as much income tax relief as Carney,” Terrazzano said. “Now we need to see big tax cuts for Canadian businesses to make them more competitive in the wake of American tariffs.
News release from The Coalition of Concerned Manufacturers and Businesses of Canada
“Trump Endorses Carney, Poilievre Endorses Canada”
The Coalition of Concerned Manufacturers and Businesses of Canada (CCMBC) strongly supports the election of Pierre Poilievre as the next Prime Minister of Canada. CCMBC President Catherine Swift stated “Canadian business has been undermined for 10 years by the post-national, anti-business Liberal agenda, and the ability of our members to create well-paying jobs has been seriously impaired. Mark Carney, who has been a key advisor to the Trudeau Liberals for years, will continue this destructive approach.”
International Monetary Fund data show Canada has had the worst growth per capita among developed nations for the last decade, directly as a result of Liberal government policies. Many analysts are referring to this period as Canada’s lost decade, which will merely be extended by a Carney-led government. Swift added “We have never seen any concern for the small- and medium-sized business (SME) community, which represents half of Canada’s GDP, from Carney. His globalist policies only involve large crony capitalists and top-down regulatory overload to the detriment of SMEs.”
It is not surprising that US President Trump recently stated that he would prefer to deal with a Liberal Prime Minister, as Trump would prefer the weaker economy the Liberals have created and which will continue under Carney’s anti-free market agenda. Poilievre has committed to unleashing Canada’s resource wealth and eliminating the industrial carbon tax, essential elements for a Canadian economic revival. Swift concluded “Where Trump endorses Carney, Pierre Poilievre endorses Canada. We firmly believe a Poilievre government will build a stronger Canada, where businesses can succeed and Canadians thrive. This is why we are endorsing Pierre Poilievre for Prime Minister.”
The CCMBC was formed in 2016 with a mandate to advocate for proactive and innovative policies that are conducive to manufacturing and business retention and safeguarding job growth in Canada.
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