Trump’s Fake Energy Export Deal With Europe
By Tyson Slocum
Yesterday, in yet another example of pathetic, empty political theater, President Trump and EU Commission President Ursula Von Der Leyen announced a trade “deal” that calls for a massive increase in EU imports of U.S. fossil fuels that has no relationship whatsoever to reality or economics.
This so-called “deal” calls for the EU to buy $250 billion a year for three years in mainly fossil fuels like liquified natural gas (LNG). But don’t be fooled by the headlines – Reuters Asia Commodities and Energy Columnist wrote that the EU has virtually no chance of meeting this level of imports because the number is just make believe – another fiction imagined to satisfy Trump’s desire for substance-less splashy headlines. And, if it came anywhere close to reality, the fact is that American consumers would be exponentially worse off, facing higher prices and greater economic pressures than before Trump botched another negotiation. The head of commodities strategy at ING Bank told the Wall Street Journal that the trade deal numbers are “just not realistic. You’d essentially have to divert all energy trade. That’s just not possible.”
Reuters estimates that last year the EU imported about $65 billion worth of energy – or 26% of the $250 billion in annual energy imports that it just agreed to buy from the U.S. Other analysts like Anne-Sophie Corbeau of Columbia University estimate a higher annual number of ~$89 billion. Either way, the US cannot under any reasonable scenario supply $250 billion worth of fossil fuels annually to the EU without significant disruption of the American domestic market. If the Administration did or even tried to do so, it would expose U.S. families to even higher energy price burdens than we’re already suffering from due to record LNG exports.
Indeed, the White House has published a fact-sheet about the agreement with claims that directly contradict the European Commission’s version of events. This “deal” is phonier than a three dollar bill.
The reality of any trade deal that includes LNG at its core is that it will raise energy bills for U.S. families by shipping our supply overseas at cut rate prices. Already, LNG exports will dramatically increase in the next few years as new LNG terminals open. Because of the flood of LNG into the market in the last few years, U.S. households are paying much higher prices for natural gas due to the surge in LNG exports, and energy prices are likely to increase even further as Trump pushes for more exports. To top off this bad situation, China has been reselling its cargoes of US LNG on the open market rather than domestically consuming the fuel, resulting in massive windfall profits for the communist government, selling US gas to build their power while our bills go up.
Trump’s trade deals hurt American consumers, empower our rivals, and provide another profit stream to the oil and gas CEOs already counting their wins after scoring massive tax cuts. Trump’s promise of lowering prices seems to have been forgotten in the rush to churn out distracting headlines.
The primary aim of Trump’s unentertaining fantasy trade negotiation nonsense appears to focus on announcing an absurd, splashy headline dollar figure with zero details on how these unattainable goals will actually be met. Nevermind that a recent Institute for Energy Economics and Financial Analysis report found that Europe’s LNG imports have been declining due to the deployment of renewables and demand reduction policies. Additionally, US LNG export terminals typically take 3-5 years to build once they have obtained their permits and secured financing, which will do nothing to help Europe in the short term.
The EU is likely betting that Trump’s short attention span will mean that once this stupid announcement is in his rear-view mirror, he will have little interest in following up on any meaningful enforcement. Indeed, when Trump recently promoted massive financial energy commitments by the government of Japan, Japanese officials informed reporters that none of Trump’s claimed numbers were factually accurate.
Trump has no interest in actually negotiating deals or governing in any rational manner. It’s clear that he is solely interested in loudly announcing big numbers that have zero chance of becoming reality, even if it harms consumers by opening the floodgates for more costly LNG exports.