On low natural gas prices: Frontier Centre for Public Policy

From the Frontier Centre for Public Policy

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.

Related Topics:#FrontierCentreForPublicPolicy #OnLowNaturalGasPrices #TerryEtam

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Carbon Tax

Back Door Carbon Tax: Goal Of Climate Lawfare Movement To Drive Up Price Of Energy

Published on October 22, 2025

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From the Daily Caller News Foundation

By David Blackmon

The energy sector has long been a lightning rod for policy battles, but few moments crystallize the tension between environmental activism and economic reality quite like David Bookbinder’s recent admission. A veteran litigator who’s spent years spearheading lawsuits against major oil companies on behalf of Colorado municipalities — including Boulder — Bookbinder let the cat out of the bag during a recent Federalist Society panel.

In an all-too-rare acknowledgement of the lawfare campaign’s real goal, Bookbinder admitted that he views the lawsuits mainly as a proxy for a carbon tax. In other words, the winning or losing of any of the cases is irrelevant; in Bookbinder’s view, the process becomes the punishment as companies and ultimately consumers pay the price for using oil and gas and the industry’s refined products.

“Tort liability is an indirect carbon tax,” Bookbinder stated plainly. “You sue an oil company, an oil company is liable. The oil company then passes that liability on to the people who are buying its products … The people who buy those products are now going to be paying for the cost imposed by those products. … [This is] somewhat of a convoluted way to achieve the goals of a carbon tax.”

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The cynicism is so thick you could cut it with a knife.

On one hand, the fact that winning is irrelevant to the plaintiff firms who bring the cases has become obvious over the last two years as case after case has been dismissed by judges in at least ten separate jurisdictions. The fact that almost every case has been dismissed on the same legal grounds only serves to illustrate that reality.

Bookbinder’s frank admission lands with particular force at a pivotal juncture. In late September, the Department of Justice, along with 26 state attorneys general and more than 100 members of Congress, urged the Supreme Court to grant certiorari in one of the few remaining active cases in this lawfare effort, in Boulder, Colorado.

Their briefs contend that allowing these suits to proceed unchecked would “upend the constitutional balance” between federal and state authority, potentially “bankrupt[ing] the U.S. energy sector” by empowering local courts to override national energy policy.

For the companies named in the suits, these cases represent not just a tiresome form of legal Kabuki Theater, but a financial and time sink that cuts profits and inhibits capital investments in more productive enterprises. You know, like producing oil and gas to meet America’s ravenous energy needs in an age of explosive artificial intelligence growth.

“I’d prefer an actual carbon tax, but if we can’t get one of those, and I don’t think anyone on this panel would [dis]agree Congress is likely to take on climate change anytime soon—so this is a rather convoluted way to achieve the goals of a carbon tax,” Bookbinder elaborated in his panel discussion.

John Yoo, the eminent UC Berkeley law professor and former Bush-era official, didn’t hold back in his analysis for National Review. He described the lawfare campaign as a “backdoor” assault on the energy industry, circumventing the federal government’s established role in environmental regulation.

“There are a variety of cities and states that don’t agree with the federal government, and they would like to see the energy companies taxed,” Yoo explained. “Some of them probably like to see them go out of business. Since they can’t persuade through the normal political process of elections and legislation like the rest of the country, they’re using this back door,” he added.

What we see in action here is the fact that, although the climate alarm industry that is largely funded by an array of dark money NGOs and billionaire foundations finds itself on the defensive amid the aggressive policy actions of the Trump 47 administration, it is far from dead. Like the Democrat party in which they play an integral role, the alarmists are fighting the battle in their last bastion of power: The courts.

As long as there are city and county officials willing to play the role of plaintiffs in this long running Kabuki dance, and a Supreme Court unwilling to intercede, no one should doubt that this stealth carbon tax lawfare effort will keep marching right along.

Business

Emission regulations harm Canadians in exchange for no environmental benefit

Published on October 21, 2025

Todayville

From the Fraser Institute

By Julio Mejía and Elmira Aliakbari

The PBO estimates that the CFR will decrease Canada’s economic output by up to 0.3 per cent—or approximately $9.0 billion—in 2030. For context, that’s more than the entire output of Prince Edward Island in 2024, so the effects are roughly equivalent to wiping out the economy of a whole province.

The Carney government recently announced changes to the Clean Fuel Regulations (CFR), signalling stricter carbon content rules for gasoline and diesel—though few details were provided. While the prime minister expressed confidence that the changes will strengthen the Canadian economy, in reality, the CFR is designed to increase fuel prices in exchange for negligible environmental benefits. If the government is serious about prioritizing the wellbeing of Canadians, it shouldn’t tinker with the CFR—it should eliminate it.

The CFR, which came into effect in July 2023, aims to reduce greenhouse gas (GHG) emissions by requiring a gradual reduction in the carbon content of gasoline and diesel. By 2030, fuels must contain 15 per cent fewer GHG per unit of energy than in 2016. Those who don’t meet the target must buy compliance credits, which raises their costs. Ultimately, these costs are all passed on to Canadians at the pump.

According to a recent study by the Parliamentary Budget Officer (PBO), the CFR is expected to increase fuel prices by up to 17 cents per litre for gasoline and 16 cents for diesel by 2030. These costs will be added on top of already high, policy-driven fuel costs. In 2023, for example, the average price of gasoline in Canada was 157.3 Canadian cents per litre, compared to just 129.4 cents per litre in the United States—a 21 per cent difference, mainly the result of fuel taxes in Canada.

As fuel prices rise due to the CFR, the costs of running tractors, powering machinery, and producing and transporting goods and services will all increase, setting off ripple effects across our economy. The PBO estimates that the CFR will decrease Canada’s economic output by up to 0.3 per cent—or approximately $9.0 billion—in 2030. For context, that’s more than the entire output of Prince Edward Island in 2024, so the effects are roughly equivalent to wiping out the economy of a whole province.

Of course, increases in fuel prices also mean more pressure to household budgets. The PBO estimates that in 2030, the average Canadian household will incur $573 in additional costs because of the changes to the CFR, and lower-income households will bear a disproportionately larger burden because they spend more of their budget on energy.

The policy’s uneven impact across provinces is particularly significant for lower-income regions. For example, households in Nova Scotia and P.E.I.—two of the provinces with the lowest median household incomes—are expected to bear average annual costs of $635 and $569, respectively. In contrast, families in Ontario and British Columbia—two of the provinces with higher median household incomes—will pay less, $495 and $384 per year, respectively. Simply put, the CFR imposes more costs on those who make less.

To make matters worse, the expected environmental benefits of the CFR are negligible. Even if it delivers its full projected reduction of 26 million tonnes of GHG emissions by 2030, that represents only “two weeks of greenhouse gas emissions from the Canadian economy,” according to the federal government.

Given that GHG emissions cross all borders regardless of where they originate, in a broader perspective, that reduction represents just 0.04 per cent of projected global emissions by 2030. So, Canadians are being asked to pay a material price for a measure that will have virtually no environmental impact.

Toughening regulations on carbon content for gas and diesel won’t benefit Canadians, in fact, it will do the opposite. The CFR places a real financial burden on Canadian households while delivering no meaningful environmental benefit. When a policy’s costs vastly outweigh its benefits, the answer isn’t to adjust it, it’s to scrap it.