Crude Observations

Trudeau has this cased…

I know I’m supposed to be on summer hiatus and preparing for my big Labour Day blog where I lay out some thoughts on what to look out for during the balance of the year, but unfortunately, some recent events have caused me to get off the floaty and come out of the pool and scribble a few words about the state of the world. In the spirit of Pool Boy and Hot Dad Summer, I will keep this short and pithy.


First off, let me address the obvious frog in the pool. Yes. I spend time during the summer floating in an above-ground trash pool, cooling off and drinking frosty beers. But it’s OK. The business case for the pool is strong. It cost a mere $900 and we aren’t on a water meter so filling it is free. My ROI on this monstrosity after 3 years is at least 10%. In addition, here at the Stormont M&A factory, we have realized that there is a strong business case for this type of leisurely day because it does tend to get extremely busy in the weeks and months after Labour Day. So we take steps to recharge in preparation for that, because our clients need us at our best!


Speaking of business cases


This past week we witnessed one of those watershed moments in Canadian history. A globe reshaping opportunity the likes of which only come around once every hundred years or so. I’m speaking of course about the official state visit by Germany’s new Chancellor, Olaf Scholz, the first such visit by a German leader since … well I don’t really remember one, surely there had to have been one since WW2? I mean, there must have been some compelling business case in the last few decades that would prompt such a visit?


Anyway, I digress. Here was Olaf Scholz, the leader of the most prominent economy in the EU, a country that provides a disproportionate number of luxury vehicles to idle, rich Canadians and sporty hatchbacks to teenage girls, visiting Canada of all places, during a shooting war between Ukraine and Russia no less! And why was he here? Well primarily because he wanted something. Something that we have. What was it again? Materials for car manufacturing? No, they have all they need of that. The business case for that is obvious.


I know! They were here to secure supplies of dark rye so they can continue making delicious pumpernickel bread! What? Not that? We bake bread here? And import from Germany as well? There’s a business case for that?


Stuff for batteries! Well, maybe a little bit – gotta diversify that supply chain, right? But why would the chancellor need to come here to source materials that the big boffo car companies in Bavaria could just order at will – that business case should have been settled years ago.


Oh, wait. Now I remember – Mr. Scholz came here because wanted to be used as a stage prop at a virtue signaling announcement about some electoral pork unicorn renewable fantasy project about exporting bulk green hydrogen (a business that doesn’t exist yet) to Germany to use for power (a market that doesn’t exist yet), all powered by an off-shore windfarm in Newfoundland (that hasn’t been built yet) and processed by a local company (that, you guessed it, doesn’t exist yet).


Now that’s a business case I can get behind! Fantasy industry supplies non-existent demand with product that is super inefficient to ship all at some future date that doesn’t tie us to any actual results but looks good on the world stage.


Although even that seems not really worth a whole three day trip to Canada, even if August is our best weather month. The business case just isn’t that strong.


Unless of course the whole point was something else?


Like energy? Material support from a long time NATO ally and kindred spirit liberal democracy sitting on an absurdly large bounty of resources that could go a long way to saving an ally and holding back the forces of darkness, at least a little bit?


I mean, it can’t be that energy and natural gas starved Germany expressly came to Canada looking for the 5th largest producer of said gas to maybe belly up to the bar and provide some of that bounty to good ole Europe. Because if that’s what he was here for, well he needs to give his head a shake, because as we all know, there is no business case for exporting LNG from a low-cost producer to a continent that is experiencing runaway energy inflation, is shutting down industrial plants that produce fertilizer, impacting crop production and the ability of the world to feed itself and is facing potentially life-altering energy poverty as winter approaches. And while much of the blame is due to Russian energy extortion because of sanctions, some is also a result of an over-zealous transition to renewables.


But whatever, a friend in need right? This should be Canada’s moment. Not only is helping Europe with our energy bounty the right thing to do, it can also be insanely lucrative for the treasury and the economy – for years! Like do you even need to do a business case to realize this?


Fortunately, Justin “the Warren Buffett of Canada” Trudeau, our prime minister saw fit to disabuse him of this cockamamie notion, stating for the whole world to hear that there was in fact no compelling business case for producing natural gas, responsibly and cheaply, shipping it by pipeline and then cooling it and putting it on a boat to Europe. Nope, no business case at all. To take something that costs about $1 per unit to produce and then sell it to energy starved Germany for, say, 75 times that price. No money to be made at all in that trade.


Thank goodness we have Justin Trudeau to save Canada from going down that dangerous road of producing and profitably exporting one of the most in demand commodities in the world. To our allies.


I mean it’s not like the United States of America, Qatar, Australia, Malaysia, Algeria, Nigeria, Russia, and Indonesia have created viable LNG businesses, right? What were their business cases?


I can’t even begin to say how infuriating hearing our prime minister spouting that pile of horse manure was.


Especially knowing that three export projects planned for the east coast have been proposed and dropped, not because the business case was weak, but because the federal government’s regulatory shit-storm that sits in the way of developing pretty much any project was too much for any business case to overcome. And that a project proposed for Quebec was dropped a mere two weeks before the Ukraine invasion because the province of Quebec didn‘t want it, or that of the 14 projects proposed for the West Coast, all of which had solid business cases, only one is currently moving forward, or, finally, that since the invasion of Crimea in 2014, the Canadian federal government has been advised repeatedly that LNG from Canada to Europe should be a geo-strategic priority and opportunity.


Yet here we are.


No. Business. Case.


You disingenuous moron.


Want to know what has a weak business case? Hydrogen.


It’s nice to know that when faced with the opportunity to help an ally with its immediate and medium term energy needs, instead of doing the hard work of fast-tracking approvals and encouraging industry to join in, our government chose to lecture said ally on business cases, spouted idiotic climate change platitudes, and signed a deal that was neither wanted or needed, will likely never happen and is 10 years in the future.


The energy pricing crisis unfolding in Europe is real (natural gas is selling for $500 WTI equivalent!), energy poverty will become endemic (power bills in the tens of thousands of Euros), it will change geopolitics for decades and deliver even more power to “the bad guys” and not only are we deliberately oblivious, it appears we aren’t even willing to try and help when asked.


Let them eat cake.


We are not a serious country and on behalf of Canada, I apologize to Europe.


Maybe you should just buy more socks and sweaters – we make and sell those. With no LNG coming, I’m sure there is a business case for that.


I’m going back in the pool. I can’t take this anymore.

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