Biden & Trudeau To Europe: Drop Dead
Why are the U.S. and Canada refusing to ramp up oil and gas production?
In the weeks that immediately followed Russia’s invasion of Ukraine, President Joe Biden and Canadian Prime Minister Justin Trudeau appeared committed to expanding oil and gas production at home to help their allies abroad. Biden announced that the U.S. would increase the amount of liquefied natural gas (LNG) the U.S. sends to Europe to replace what it had been importing from Russia. And Trudeau said he was “looking at how we can deliver more oil and gas to Europe.”
But it’s now clear that neither Biden nor Trudeau have followed through on their promises. Backroom talks have broken down and European leaders are increasingly making public pleas to the U.S. and Canada to produce more oil and gas for export.
Last week, German Chancellor Olaf Scholz flew to Canada to beg Trudeau to export more natural gas to Europe. "As Germany is moving away from Russian energy at warp speed, Canada is our partner of choice," said Scholz in Toronto. "For now, this means increasing our LNG imports. We hope that Canadian LNG will play a major role in this."
But Trudeau rejected the idea, saying “there has never been a strong business case” for sending Canadian LNG to Europe. By contrast, he said, there is a strong business case for Canada to produce and export hydrogen gas to Germany. "German companies are already signing deals to buy made-in-Canada hydrogen," Trudeau said. "There is no doubt the demand is there."
Trudeau’s claims were ridiculous. Hydrogen (H2) accounts for less than 2% of Europe’s energy consumption, and 96% of it is made from natural gas (CH4). By contrast, Europe is facing energy, electricity, and fertilizer shortages due to the scarcity and high price of natural gas, which is 24% of the EU’s energy mix, and essential to European industries.
As for the business case, all one needs to know is that the price of natural gas in Europe is an astonishing 18 times higher than in Canada ($90/MMBtu vs $5/MMBtu).
“Canada just missed possibly one of the greatest opportunities in its history,” wrote the business columnist for Canada’s National Post, Tristan Hopper. “Canada could be helping to deal a body blow to Russian hegemony over Western European energy. Instead, on both fronts, Ottawa appears content to watch from the sidelines.”
It’s true that the U.S. and Canada are producing more natural gas than ever. The U.S. is the largest LNG exporter in the world. US natural gas production will increase from 95.1 billion cubic feet per day (Bcf/d) in October 2021 to 97.5 Bcf/d by December 2022, a record high. U.S. exports increased by 12% in the first half of 2022. Canada will likely see its natural gas production increase by 7% and exports by 10% in 2022.
But those increases were underway before Biden took office and are a tiny fraction of what either nation could be producing. The largest US natural gas producer, EQT, calculates that the US can easily produce four times more LNG, 569 billion cubic meters (Bcm) per year. To put that number in perspective, Germany imported a total 142 Bcm of nat gas in 2021 while the EU consumed a total of 412 Bcm (14.5 Trillion cubic feet) in 2021. The US consumed 30 Trillion cubic feet (Tcf) of natural gas in 2021.
Why, then, aren’t the U.S. and Canada massively ramping up natural gas and oil production to aid our allies? Why are Biden and Trudeau effectively telling Europe to drop dead?
Behold, Climate Nihilism
