PINDER: There's a huge Canadian LNG opportunity — but we have to seize it

This is the fourth and last in a series of articles on the US-Canadian LNG industry.President Biden, like most politicians, does not understand the importance of capital formation and the need to minimize risk and uncertainty for capital providers. This is especially important for projects that are front-end loaded with significant investment and risk with the hope, but without the certainty, of returning the capital over the long term.Liquified Natural Gas (LNG} projects take years to recoup the original investment. Most people, not just politicians, do not understand the role of capital in creating prosperity — capital is a coward as you can only lose it once. Along with ideas, capital is the genesis of wealth creation and prosperity — but it requires regulatory certainty and trust.For most politicians, capital comes free simply by raising taxes or other government revenues. President Biden has had a lengthy political career with no exposure to the risks and rewards of capital investment. In his recent State of the Union address, he attacked rates of taxation for billionaires and large corporations, non-union shops, the deductibility of executive compensation, and other predictable socialist nostrums that create discomfort and repel investment.It says here that there is a direct line between the cancellation of Northern Gateway early in Trudeau’s tenure and the significant shift away from Canada as a desirable place to invest. Canada was a persistent recipient of foreign investment over time, but since Trudeau there has been a shift to a capital deficit, now about $500 billion annually.Enbridge, a pipeline pioneer and a great Canadian company (but now with more assets in the US than Canada,) spent almost a billion dollars over nearly 10 years to receive regulatory approval, including the federal cabinet. Newly elected Prime Minister Justin Trudeau withdrew it, poisoning Canada’s reputation as a safe place to invest.Even Canadians now prefer investing elsewhere, including our compulsory national and some provincial pension funds.Back to the US, the Biden pause and future actions — or non-actions — will also impact global natural gas investment, production, distribution, pricing, and more throughout North America.The president is also giddy about the misnamed Inflation Reduction Act (IRA) which attracts capital through subsidies. Investors love “free” projects, and governments as equity partners. But capital is never free and subsidies which benefit some citizens (or mostly foreigners with respect to the IRA) are financed by more debt, eventually the obligation of US taxpayers.The record of governments everywhere, taking capital from citizens for the benefit of political or economic recipients, assumes that politicians and civil servants know better than those who create the capital. Does anybody believe that?Biden's pause and his Inflation Reduction Act contradict the saying, usually true, that “governments are poor at picking winners, but losers are good at picking governments”.It is not acceptable in Ottawa for private energy sector entrepreneurs in western Canada to produce critical products for internal and foreign consumption, but the federal and other governments can subsidize foreigners for emission heavy projects such as battery manufacturing plants, which reside in central Canada.Would this be the policy of the current or any federal government if the upstream energy sector were based in Ontario or Quebec? As if.Socialism starts with the pretentious assumption that centralised decision making is better, emanating from the assumption of superiority. This thereby justifies directing the lives of others. More recently in Canada and elsewhere, this extends to also dictating our values.Does this pass any definition of freedom?The failures of socialism over time continue and today Venezuela, Cuba, and many of the Arab countries not blessed with oil, come to mind. Name one successful country where decisions are centralised versus establishing an entrepreneurial culture and letting the “magic of markets” create prosperity.China had a great run following Premier Deng’s policies of “socialism with Chinese characteristics” (code for free markets) but faces lower growth as Xi removes freedoms and loses the benefits of unencumbered markets. The incredible growth story appears to be over.There are reasons why US growth this year and next is forecast less than 2%. Canada is blessed with resources, all forms of energy, educated people and yet the OECD forecasts Canada last among the 38 members states, over both 10 and 40 years.Maybe our political masters are not as superior as they imagine?This brings us back to LNG which presents a spectacular opportunity for Canada to develop our world class resource to replace coal in Asia and elsewhere, while providing critical energy and reducing emissions.The US is a decade or more ahead of Canada in this regard, and its president wants to slam on the brakes. Hopefully this is only temporary, but if permanent, the opportunity for Canada becomes even more fruitful. Reducing future LNG exports may put downward pressure on North American pricing, further building the case for Canadian LNG exports.This also applies to Atlantic Canada even as the prime minister argues there is “no business case.” This attitude led the world's greatest investor, Warren Buffett, to withdraw billions of dollars of equity capital to fund a LNG project, which features a competitive travel advantage from its Atlantic Canada location.Here's a ridiculous question — who best to determine the merits of a business opportunity — Warren Buffett, or Justin Trudeau?LNG is a golden opportunity to benefit both Canada and the United States, while enabling customers elsewhere in the world to energize their economies and reduce emissions. As was pointed out at the outset of these four articles, this is a very big issue by itself, but also starkly highlights the willingness of Joe Biden and Justin Trudeau to accept narratives consistent with their beliefs, contrary to "The Science," and damaging to the future of their countries.How is this long term, strategic, and competent leadership?This concludes Herb Pinder's series of articles on the US-Canadian LNG industry

PINDER: There's a huge Canadian LNG opportunity — but we have to seize it

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