After a summer break, Peter and Jackie are back with their weekly podcast. This week, they catch up on the events and news headlines from the summer, including:

• Geoeconomics – recap examples where countries use economic tools to influence foreign affairs – as well as more moves towards state capitalism by the United States, where the government exercises more control over institutions and companies.
• Canadian oil patch M&A news.
• Updates regarding the federal government’s Bill C-5 and its plans for advancing nation-building projects.
• Tariff negotiation tactics, including news that Canada is removing countervailing tariffs on the United States.
• The United States is exerting more influence over the International Energy Agency (IEA), with the organization planning to reintroduce the Current Policies Scenario in the next World Energy Outlook to be released in the fall of 2025.

Content referenced in this podcast:

• CTV, “Hodgeson ‘hopeful’ first batch of major projects announcements to start in the fall” (August 20, 2025)
• Calgary Herald, “Varcoe: Carney has opened the door to Canadian LNG exports — one closed by Trudeau government, says Liberal natural resources minister” (August 27, 2025)
• The Vassy Kapelos Show, “I know there are buyers: Federal Energy Minister bullish on LNG as a nation-building project” (August 12, 2025) 
• Oilprice.com, “Republicans Move to Cut U.S. Funding for the IEA” (July 24, 2025)
• E&ENEWS by Politico, “Trump team pushes for ouster of top IEA official” (August 7, 2025)

Please review our disclaimer at: https://www.arcenergyinstitute.com/disclaimer/

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LinkedIn: @ARC Energy Research Institute

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Episode 293 transcript

Disclosure:

The information and opinions presented in this ARC Energy Ideas podcast are provided for informational purposes only and are subject to the disclaimer link in the show notes.

Announcer:

This is the ARC Energy Ideas podcast, with Peter Tertzakian and Jackie Forrest, exploring trends that influence the energy business.

Jackie Forrest:

Welcome to the ARC Energy Ideas Podcast. I’m Jackie Forrest.

Peter Tertzakian:

And I’m Peter Tertzakian. Well, we’re back. We are back after our short summer break. What was it? Four or five weeks?

Jackie Forrest:

Yeah, something like that. I think our last episode was the middle of July and it went fast for me. How about you, Peter?

Peter Tertzakian:

Yeah, it seems like a distant memory. Summer. It was a good one.

Jackie Forrest:

Yeah. Let’s hope we still have some summer coming.

Peter Tertzakian:

Yeah, I think we do.

Jackie Forrest:

It’s quite warm as we’re recording. Finally. It was a cool summer. I actually didn’t mind it though because I did a lot of hiking and biking and I didn’t mind the cool weather. I really enjoyed the summer.

Peter Tertzakian:

No, I think the temperatures were just fine. We needed the moisture, so I’ll be positive about that. And it looks like we’re headed into a nice fall, so there’s a lot to talk about. As always.

Jackie Forrest:

Yes. So I think we’re going to spend this time going over some of the headlines over the last six weeks, some of the things that caught our attention. When you think about all the news flow, it definitely slows down in the summer a little bit. What are some of your reflections?

Peter Tertzakian:

Well, I think that the big reflections from, let’s start from a big picture, macro point of view. Obviously there was the themes like trying to get a peace deal in Ukraine, and then the ongoing announcements by the U.S government vis-a-vis the tariffs culminating even over the last week or so with the 50% tariff on India, the tariffs on Brazil, negotiations ending up in sort of a handshake deal in Europe. I mean, it’s sort of this ongoing running theme and I put that into a broader category of recognizing what’s going on in the world. And that is that this whole theme that, I think, we brought up as we were signing off for the summer, the theme of geo-economic warfare where economic coercion is used to achieve geopolitical aims is a running theme in the world. And obviously we feel it most closely by our proximity to the United States and what the United States is doing. But if you actually look around the world, the use of economic muscle to influence geopolitics, whether it’s by China or other countries, it’s just a running theme.

And this is an important theme that I think we’re going to have to carry through the fall, winter and beyond because I don’t think this is going away. Some people say when Donald Trump exits the political scene, ultimately, that we’re going back to some sort of collegial world where free trade will reign once again. But I don’t think so. I think that we are in this world with unpredictable events which redefine the nature of how people think about risk and return and that redefinition of risk and return is consequential to boardroom decisions and ultimately to decisions like who’s going to pay for a pipeline or power lines or whatever energy infrastructure that we decide to build. So these are some of the themes that I want to touch on Jackie as we talk in the podcast, is the changing nature of risk, how it affects capital flows, how it affects the energy business, and ultimately, at a slightly higher level, how it affects Canada’s ability to compete in this global cage match, I’ll call it, of people throwing their economic weight around or nations throwing their economic weight around.

Jackie Forrest:

Yeah, we’re going to dive into these topics as we get into the fall podcast episodes and we have a number booked right now and we’ll tell you a little bit about that. But another thing that caught my eye, which is related, is some of the firings that have happened over the summer. So President Trump fired the boss of the Bureau of Labor Statistics after they released weaker than expected jobs data in early August and just recently, Federal Reserve Governor Lisa Cook looks like going to be fired or wants to fire them. And of course there’s been lots of threats against Jerome Powell, the Federal Reserve chair. So I bring this up because I think it’s quite concerning that important data about the economy could be wrong in a country like the US. So far, the stock markets have been quite resilient to all of this. The US Dow Jones is near a 52-week high at the time of recording, but not knowing or feeling that that Bureau of Labor Statistics data is not reliable.

I mean that doesn’t help investors feel trust and confidence in their investing. And then having a politicized central bank is also a big issue. I think there’s risks like inflation, capital flight, it’s not going to happen overnight, but people may start diversifying away from the US dollar if they think the central bank is unpredictable because political decisions are going to affect it, not just what’s the right thing to do in terms of managing the money supply. So it’s interesting to me, the equity markets have been so resilient.

And then we add to this, the tariffs. Now, there has been a few tariff deals over the summer like with Europe, so maybe a bit more certainty on some of the tariffs, but like you say, we just find out India’s getting slapped with a 50% tariff. So there’s still a lot of uncertainty in terms of how this will affect the economy, and it hasn’t really slowed the economy down yet, and maybe if interest rates are cut, that will help offset the potential for a slowdown in the economy and create more demand for products. But certainly there’s a lot of nervousness, I think, in terms of the future.

Peter Tertzakian:

I think that’s the right word. Nervousness, if not anxiety, about going forward and that leads to some sense of paralysis. I’ve noticed in boardrooms that I’ve attended meetings, there’s a level of anxiety, cautiousness. Ultimately leading to potential paralysis of making big dollar decisions going forward. So I think this is all concerning and getting back to the firing of some of these key people or potential firings. This points to get into a broader theme that I sense and that is the theme of state capitalism. In other words, that there’s now going be greater state control over agencies, if not even corporations.

I mean, if you look at the moves that the United States governments is making in terms of taking equity position in Intel, the type of deal it cut with Nvidia with a 15%, almost like an overriding royalty on their sales to China. I mean, I think that these are examples of increasing desire to have state control over things, and that is consistent with that theme of geoeconomic warfare that I talked about, economic coercion. Because for a state, a nation to be able to exert economic weight, it has to have alignment not only with its institutions but with its industries.

This is something that China and other countries are very much accustomed to, arguably even countries in the OPEC realm where a lot of their oil and gas businesses are state controlled outright or is heavily influenced by the state. So this is the type of era that we’re heading into. And like it or not, Canada has to recognize this because to stay economically relevant in this changing world is going to require some different kind of thinking.

Jackie Forrest:

Okay, well, let’s get to Canada in a minute here because we of course have these nation building projects and it’s been quiet this summer, but there has been some news and I want to review that. Before I get to that, let’s talk about Canadian oil Patch, M&A news. So 2025 has brought consolidation to Canada. There’s been some examples of big deals this year, like Whitecap combining with Veren, which was the former Crescent Point. Vermilion acquired Westbrick Energy. Tourmaline also made an acquisition. There’s also been some asset sales, but news on August 22nd was Cenovus is making a friendly offer for Meg. The company had another offer from Strathcona Resources earlier in the summer, but it was rejected by the Meg board. Now this deal for Cenovus to acquire Meg is not final. There’s going to be a shareholder vote still, but it looks like it has a higher chance of going forward for sure with support of the board. So of course there’s a lot of synergies just geographically. Meg, Christina Lake operation, their only operation is close proximity to the Cenovus Christina Lake, but not everyone’s happy with this deal, I guess.

Peter Tertzakian:

No, not everybody’s happy with the deals. Some would argue that they didn’t pay enough. Some would argue that the cash flow and share buybacks of Meg were compelling and therefore it was taken out too early. There’s all sorts of arguments. We’re going to talk about that more with an upcoming guest surprise. So we’ll keep you hanging on that one. But I’d like to talk more broadly again about the consolidation trend because there’s two sides to that coin. One side is that it’s necessary if our Canadian oil and gas industry is going to compete to have scale and size, because scale matters in terms of things like cost reduction and competitiveness.

So it’s interesting that even let’s just go back 20 years ago, you would say, well, how many companies are there in the Canadian oil and gas industry? You can probably say a few hundred, but now really there’s only the top 25 will account for probably 90 to 95% of what’s going on in the basin and the other companies. At most there is, if you really added it all up with the little company’s 150 to 200 companies, that’s all that’s really remaining. But it’s really a basin story about the top 20.

Jackie Forrest:

Right? Well, and it’s interesting, as you know, I looked at a list of the top 20 US companies and I took out Devon and ConocoPhillips, Chevron, the really, really big ones. Sort of looked at the top 20. If you take out what I would consider majors or really large companies. And I compared that to Canada’s top 20. In that top 20 list, the US had a whole range of companies, but the smallest companies were about 3 billion dollar market cap, and there was only a couple in that size range. Everything else was like four or five, six or even tens of billions of dollars. Canada’s top 20 smallest companies were about one and a half billion, and there were six in this. Six out of 20 were in that range. So our companies are still very small compared to the Americans. Now the American industry is larger, produces more, but I think in public markets, having that larger size is helpful. So.

Peter Tertzakian:

Yes, the larger size is important. It’s also important if we’re talking about building new infrastructure, whether it’s LNG facilities and the pipes to support it or more oil pipelines, the question remains, well, who’s going to pay for it? Well, ultimately, larger companies have a greater capacity to access capital to help pay for it, to backstop all the way from the long-term pipeline deals that have to be struck, the take or pay kind of deals. And so it’s, in that regard, the consolidation is a good thing if we want to build out the basin more. But from a competition standpoint, obviously there’s less of it. So that poses a different set of issues.

Jackie Forrest:

And competition has been something that has enabled companies to innovate and find new ways to extract oil and gas more efficiently. We should have a podcast in the future on this too, but this idea that we’re going to build a bunch of oil pipelines, we are going to need to grow supply too. And, I think, bigger companies will have a better chance of raising the equity that they might need to do that. Now, here’s the question I have been asking for two years. Are we ever going to start seeing US or foreign companies coming into Canada?

Up until now, we’ve really had a trend over the last decade, including the end of last year, where American companies are leaving and other foreign companies as well. So Chevron left at the end of 2024. Devon left, Shell left, Marathon BP. We could just go on and on. Right? Will we see some of those companies come back, especially the American companies? There’s talk that maybe the resource down there is getting a little thin and that maybe some of these companies need more well locations and Canada’s got ample resources. If we have a more supportive federal government, which it looks like the signposts are that we do, if we’re going to get new infrastructure including oil and gas export pipelines, could we start to see Americans come up here? We haven’t seen it yet, but maybe that will be a new trend over the next year or two.

Peter Tertzakian:

Yeah, I think if there’s stronger signals, and we’ll see this fall with a Bill C-5 what sort of projects get announced, but if there is increasing probability that there’s going to be more infrastructure built, then I think it will wake up international investors, including the American investors, but not limited to, that may come here and revisit. If you look at long-term involvement of foreign investors in the Canadian oil and gas industry, which spans a century, but just take it back to, say, the late seventies, early eighties, there is a cyclicality to companies coming in and out. And definitely over the course of the last 15 years, there’s been an exodus where the interests of a foreign multinational like Chevron or Shell, they’ve sold their interests and it’s been consolidated by Canadian companies like CNRL and Cenovus and Suncor and others. The question is, are they going to come back to a basin that’s now more mature, more consolidated? We’ll see. But I think that does depend upon whether or not there’s infrastructure that will allow the industry to grow.

Jackie Forrest:

And the policies.

Peter Tertzakian:

And the policies.

Jackie Forrest:

So let’s get to our next topic, nation-building projects. So of course we had Canada Day, the passing of Canada’s federal Bill C-5 that aims to fast-track projects. It has been a quieter summer, but there has been some news that I think we should review. In July, the First Nations consultations occurred on Bill C-5 and overall, there’s quite a few negative news headlines coming out of this process. I don’t know if you remember in July some of the media coverage and there’s even a legal challenge by some groups against the government on C-5. But what I take from this is the folks that are in the media and maybe unhappy with the situation are not necessarily the folks that we need on board. What really matters is when we have these nation-building projects that the indigenous communities that are in the area and directly impacted by these projects, what matters is that they are on board with the process. And so I think that that media coverage kind of missed the plot a bit in that it is not everyone in the country needs to be okay with this. It’s just the affected communities.

Peter Tertzakian:

Yeah. I think that that’s the themes that is being recognized in other parts of the world, including the United States and elsewhere. And not that we need to emulate others, but there’s no question, as I said earlier, that the various stakeholders have to align if we’re going to be relevant in this new geoeconomic type world. We can’t have industry paddling in one direction, provincial government in another, indigenous and other groups, different direction and the federal government and so on. There has to be some sense of direction and direction overall requires leadership, and the ultimate leadership has to come from a federal government because it is the overarching jurisdiction for our nation.

Jackie Forrest:

Right. And it will be on some of those projects specifically and with the groups that are affected that I think matters the most. Talking about leadership and getting these projects done, the major projects office. So this is this one window, this empowered office that’s going to help fast track and get these projects through the environmental review. Now, we are recording this right before the Labor Day weekend. This will be released after Labor Day weekend, but we have been told by Prime Minister Carney that we will see some announcements around this office being set up on Labor Day, including announcing a CEO, which would be announced in early September. So I think this is really important. We’re actually going to have a future podcast on this topic. We have learned over the summer that BC has been pretty successful with this approach. This was one of the ways that they got LNG Canada over the finish line.

Peter Tertzakian:

Right.

Jackie Forrest:

Okay. What to expect though, I think the big question on everyone’s mind as we enter the fall is we’ve been told we’re going to learn about these projects in the fall. What does that mean? The fall in the government’s definition could be right up until December it seems. And how will these announcements be made? There was some information on that. I will put a link to this in the show notes, but The Vassy Kapelos show did have an interview with Energy and natural resources minister Tim Hodgson, and there was some really good information in there, and I just want to highlight some of the things I learned by listening to that interview. First of all, minister Hodgson expects a range of potential projects. So he talked about natural gas and even actually on his recent trip to Germany, he was really plugging natural gas.

I don’t know if you saw that headline, Peter, but I want to read the quote because for many people in the industry, Justin Trudeau’s comments that there was no business case for LNG several years ago has just really stuck with people and made people pretty angry. But what did our minister Tim Hodgson say? He said, unlike the previous Canadian government, which closed the door to LNG exports, prime Minister Carney’s government has opened them. If the demand is here and the infrastructure is built, Canada will deliver. So finally we have a federal government that thinks there’s a business case for LNG.

Peter Tertzakian:

Yeah, it’s about time. I mean, I think the whole comment a couple years ago that there was no business case for LNG was really misguided. I mean, let the industry decide that. It’s not for the federal government to decide whether or not there’s a business case. As I said at the national level, it’s the question about whether or not we are willing to align with our allies in Europe to participate in this world that we’re facing with aggressors and so on. So I think it is a new day. I think there is going to be receptivity to this. I think the issues are, though, how do you get the gas to LNG terminals, which historically have been proposed in Atlantic Canada in particular the Maritimes. So we’ll see what happens. Or actually in Quebec, right?

Jackie Forrest:

Yeah, yeah. There was a project in Quebec, so you basically bring the tanker up to st. Lawrence. I mean the advantage of that location is you just need to extend the existing TransCanada gas system. There’s some greenfield, but it’s not too much to get it to that location.

Peter Tertzakian:

Lots of talk about Churchill too.

Jackie Forrest:

Yeah, so for sure, we learned on Prime Minister Carney’s recent trip to Germany that port expansions at Churchill and Montreal are going to be on the list and will be formally announced in the first few weeks of September. So we know that will be part of it. He did come to Stampede and talk about likelihood of an oil pipeline being on there, but he did say many times, and so did Minister Hodgson, that they want to see private capital support these. They want to have proponents behind these projects. So for an oil pipeline to happen, we need to see a project with a proponent, and we haven’t seen that yet.

I want to bring up another topic on this Vassy show. She really pushed Minister Hodgson that, would the feds commit to removing existing policy that could be a barrier to these nation-building projects. So she talked about things like the oil and gas emissions cap or the tanker ban or bill C-69 or even our overall emission goals for 2030, that if you actually wanted to reduce emissions at the rate that the federal government has committed to, it’d be very difficult to build a bunch of LNG terminals or oil export pipelines because it would make those 2030 goals very difficult to achieve.

And she really pushed him and Mr. Hodgson said he didn’t want to make any comments on scrapping policy in general, these specific policies. He said he doesn’t want to deal with a hypothetical, they’ll deal with these issues when the projects get announced. And so she pushed him quite a few times on this and kind of got the same answer each time. I mean, what do I take from that? These are not his words, but just sort of what I took from the discussion. It seems to me that maybe they’re going to give exceptions for these specific projects and maybe not deal with repealing some of this policy. I don’t believe that’s the right direction to go.

Peter Tertzakian:

No, you can’t pick the winners and losers. And with due respect to the minister, I’d key in on this word hypothetical. It’s not hypothetical, it’s real. It is. The emissions cap is not hypothetical. It’s out there, it’s lingering. It’s an uncertainty. It needs to go. It needs to go for the whole industry, not just whomever the potential proponents are for say an LNG facility, a pipeline, an oil. These are not hypothetical issues. They have been lingering for nearly five years for sure, if not a decade, some of these issues. So as it relates to carbon policy at large, and things like tanker bans, we need to think about plan B. It’s not that emissions aren’t an issue, it’s just that we have long said on this podcast, the legacy carbon policy set, which is dense and complex, so dense and complex, nobody can understand it. It is an impediment to investment and nobody is going to finance any of this stuff unless it goes away.

Jackie Forrest:

Yeah, I can understand for the tanker bans, for instance, you could build a pipeline to Prince Rupert and say, the tanker ban doesn’t apply to this project. Okay. I couldn’t live with that one. But when it comes to the oil and gas emissions cap, they’re going to build a million barrel a day oil pipeline. That emissions cap is going to mean that companies won’t be able to grow their supply to fill that pipeline. And if there isn’t growth in supply, there’s not going to be enough support for the pipeline. So I just don’t see how you can do that on a project by project basis. That’s one that affects the whole upstream system and puts it in a good chance of not going forward because it won’t get the support from producers.

And the same for the natural gas, LNG export terminals. You need to have the ability to grow on the upstream side. So we’ll wait and see. I mean, politically, they’re trying to walk a tightrope, in my opinion. They were trying to keep those climate voters and not wanting to repeal some kind of policy around climate, which maybe has some backlash, but they’re going to have to make some of those changes, I think if they really want to get us to be the fastest growing economy in the G7.

Peter Tertzakian:

Yeah, I think we just need to bring greater simplicity and clarity by overhauling or renovating, if you want to use that term, our whole policy regulatory construct around energy infrastructure. Which is largely dominated by legacy carbon policy. That needs to be re-thought because, and this is my opinion, it’s not working. It’s just not working. In fact, it’s not working, and it’s an impediment to investment, and it’s not just an impediment to investment in oil and gas. It’s an impediment to investment in all sorts of other industries that have significant emissions, including mining and all sorts of other businesses.

Jackie Forrest:

Right. And especially the export industries that have to compete on a global stage. And competing jurisdictions don’t require that. Okay. Well, this will be a topic that we will dive into many more times, I’m sure, over the fall. And onto the next topic, which is another one we’ll keep talking about for the rest of the year, I’m sure, is these tariff negotiations. So it has been a pretty quiet summer despite these big deadlines. We blew through them. July 21st deadline, August 1st, nothing really happened. There’s been a little bit of movement now on August 22nd. The Prime Minister announced the removal of some of Canada’s counter tariffs.

These were the tariffs that Canada was charging on things, goods we were importing for the US. So that was kind of hurting us at the grocery store and other places. Prime Minister Carney talked about removing those. Now, there’s been lots of commentary on this. Some people say it was the elbows down tactic and we need our elbows to stay up. Others say it was a smart move because it helps reduce friction in the negotiations. At the time of recording, last week of August, end of the last week of August, it looks like it’s working in that there seems to be more meetings going on between ministers and lots more Canadian officials down in DC talking about tariffs. So maybe it started the conversation going.

Peter Tertzakian:

Yeah, well, I think this elbows up thing, I guess it works if you’re playing hockey, human against human, but this is elbows up against a gorilla. So I favor the tactics that are being used now, which are, okay, let’s just take this calm and collectively and move it along. Because if we’re going to put up a fight against a 800 pound gorilla, it’s not going to work. We just do not have the economic leverage to be able to really fight this out.

Jackie Forrest:

Yeah. And I think the other thing is we’re doing better than most other countries.

Peter Tertzakian:

Well, we are.

Jackie Forrest:

Also, Prime Minister Carney’s press release, when he announced this on August 22nd. He talked about our average rate is 5.6% tariff across all goods. So yes, things like copper, steel, aluminum, they’re high. Like 50%. I think autos is something like 27% or 25%. But when you look across all the goods we send to the U.S. 5.6%, well that looks pretty good. Europe actually did agree to a trade deal over the summer, and they’re broadly getting about 15% tariffs on everything. There are some exceptions, but not really that many around some things like military and pharmaceuticals. And they still have those higher tariffs on things like steel, aluminum, copper and autos that we face.

So 5.6% is looking pretty good compared to what a lot of countries are getting. So we’ll wait and see what happens if we do get some movement on these sectorial tariffs. But I think really the talk needs to go towards what’s going to happen in 2026. Are we going to continue to get this favored zero, no tariff for many of our goods under the CUSMA or the USMCA as the Americans call it. I think that that really is the more consequential negotiation now for Canada, because with everyone else getting 15% tariffs, I think we can assume that maybe the deal we have today, it may not be around after 2026.

Peter Tertzakian:

Right. I want to bring back the idea that it’s not just the United States that’s throwing their weight around with economic coercion. There’s the Chinese tariffs against Canada on the canola.

Jackie Forrest:

Yeah, and we had that increased in August.

Peter Tertzakian:

75%.

Jackie Forrest:

75% on canola seed. This is an addition to the hundred percent on meal and oil put in place in March.

Peter Tertzakian:

So this is again an example where Canada has basically no leverage. We have no recourse. What elbows do you put up against this kind of thing? This is why it is so vital for us to have more economic relevance. In other words, to be able to take market share in, say, the Pacific basin with liquefied natural gas, our oil, agricultural products and others. So at least we have some kind of economic leverage against countries that put these sorts of tariffs against us in the future. This is not something that’s going away. The use of economic instruments to achieve geopolitical influence or to push other nations around is only new in the context of the last 20 to 30 years.

If you look back at the history of the use of economic instruments to, as I said, jockey for position in the world, I mean, this has been going on for a long time, and so we have to wake up to this and Bill C- in my opinion, is one step in the right direction. But we’ve got a long way to go to be able to be in a position where we can actually defend ourselves, have some kind of lever to pull, say if you put a tariff on us, we are going to do this as a recourse.

Jackie Forrest:

Well think about a hypothetical world now, but over the last decade, it would’ve been possible for us to build 2 million barrels a day of pipelines for oil off our west coast, probably seven to 10 BCF per day of gas. If in 2025 we were exporting that much to Asia, would that make us stronger versus the Chinese? Absolutely. Would it change how they’re treating us on canola? I don’t know for sure, but it would certainly increase the chances that they would treat us differently. And at the same time, the Americans probably would be treating us differently too, because we’d have more alternative markets too. So hindsight’s 2020, but hopefully in the next decade we can be in that position to have more leverage over our trading partners.

Peter Tertzakian:

All right, so boy, we’ve been talking for half an hour here. What’s next? And we wrap up.

Jackie Forrest:

Well, the last topic I thought would have some fun because another thing that happened over the summer was a series of stories around the IEA, the International Energy Agency. They have those long-term scenarios that we also love to beat up because we think they’re quite unrealistic. So they have different scenarios about how oil demand and energy will evolve between now and 2050. And the Americans have really worked hard over the summer to start to influence the IEA to be, as the Republicans might describe it, kind of more realistic. So there’s a number of events here. The Republicans actually approved a bill in kind of the end of July where a house committee wants to withdraw its funding to the IEA because the Republican lawmakers consider the IEA has strayed from its mission to safeguard energy security and been pushing the green energy policies too much. So this still hasn’t gone through Congress or anything, but this is a proposal for the 2026 budget that they would cut the funding for the IEA.

Peter Tertzakian:

I think we have to go back and look at what the IEA was first set up to do. So the International Energy Agency was set up, I think, in the seventies in response to the oil embargo, oil price shocks, and so on, because of the recognition that we needed energy security from the perspective of oil. And so the IEA was, I think it was 30 some countries, western countries was set up to provide independent data on energy trends and actually to encourage the growth in the production of oil in particular, and also to encourage the setting up of strategic petroleum reserves in the event of future oil price shocks that may affect dominantly the Western alliance. That’s why it was set up.

Jackie Forrest:

And also to create more transparency to the data because at that time of the oil embargoes, it wasn’t clear how much supply each country had. So having totally transparent, honest data around oil supply and demand and things like that.

Peter Tertzakian:

So it was set up in Paris and over the course of the years, I mean the many, many reports, many of them very high quality, excellent reports, particularly through the nineties when I started using the data and started crunching the numbers into the early two thousands. I mean, it was sort of the gold standard in terms of the data, not necessarily the gold standard in terms of some of the forecasts they were making, which were subject to debate, but certainly in terms of keeping the data and getting an objective idea of what was going on in the world of energy, it was good.

But then into the 2010s, and particularly the latter part of the 2010s, the whole climate movement got involved and the whole notion of energy transition. And so they started following necessarily in terms of the renewables coming into the system and how that affects the various supply chains competition between the various energy systems and so on and so forth.

But there was also a bias that was introduced that it was going to be the end of oil and all that sort of stuff. And there was heavily influenced. And so now what we see is sort of a backlash by the United States, which is the dominant funder of the International Energy Agency basically saying, well, wait a minute, we’re not seeing any sort of energy transition. Now everybody’s got a different opinion on that and how they interpret the data, but I’m just describing here what’s going on and what’s happening. So we are going to see an increasingly heavy influence, which by the way is another example of what I described earlier where the state influences agencies, institutions and industry to align with its interests.

So here we have the United States basically going to be dictating not only who runs this thing, but what they’re probably going to say. Now the data is the data and what they’re going to say for the forecasts is probably going to be skewed in a different direction, probably.

Jackie Forrest:

Yeah. Well, and that’s another piece of news. The U.S. wants to fire the second ranking person at the IEA, which has traditionally been filled by an American. So based on media reports, the official who was formerly at the State Department, Mary Warlick, is the main target for replacement. So yeah, changing out some of the people that are at the IEA, Chris Wright, the Secretary of US Energy said we want to do one of two things. We’ll reform the way the IEA operates or we will withdraw. Looks like Congress wants to withdraw at least the Republican Congress members. I do want to say one piece of news that I think is really constructive is the IEA did announce that they’re bringing back what they call the current policy scenario. So about four or five years ago, they withdrew that scenario. So they used to have one that was the policies that are actually in law today and what that would mean for oil gas demand as well as growth and clean energy.

And those four years ago or so showed actually ongoing growth of oil and gas. And then they had this stated policy scenario, kind of the base case they have now, and that includes policies the governments have stated as things they want to do, but aren’t necessarily put into legislation, for example, needing all your vehicles to be combustion engine vehicles by the late 2030s or something like that.

It’s a stated goal of the government, but it’s not necessarily something that’s achievable or policies in place to actually enforce that. And what they did is they got rid of that current policy one and just had the stated policy one. Which. Again, I think wasn’t objective because just because a country or a politician says that they want to do something, it doesn’t mean it’s actually going to happen. And so they took away that view of what would be sort of, I think the base case in my view, which is the current policies. So they announced in the 2025 World’s Energy Outlook, which will come out later this year, we’re actually going to see that. So there’s already been some changes. And I think that’s a welcomed change, to give people a view of, okay, well what does it look like with today’s policies? Which I think is more realistic.

Peter Tertzakian:

Yeah, well, what this all points to, whether it’s the firing of the Bureau of Labor Statistics person, I forgot their name or any other data collecting agency anywhere in the world, whether it’s in Russia, China, the US, or even Canada. You got to do your own research, because you have to dig deeper. It’s just we’re entering into this era where if you really want an objective view of what the data is, you really have to work at it. There’s a lot of skew selection biases, confirmation biases, other types of cognitive biases, and all this information that’s coming out at us to the point where we don’t even know what we believe anymore. The only way you can get comfortable with it as a decision maker is to actually go to the data and even in proxy types of data to be able to assess what’s going on. So that’s the era that we’re heading into.

Jackie Forrest:

Well, I would actually argue, though, when it comes to the IEA, you had to be doing that all along because the last five years or so where they’ve been promoting these, what I will call imaginary scenarios of the future, you couldn’t believe those either. They were skewed too much on the green side and not being realistic in terms of the rate of change.

Peter Tertzakian:

Well, I think it’s just like your stated policy scenario. I would hazard to say that it was the LSS, the lip service scenario. People were saying things but not necessarily following through even at a national level. And now, of course, in this new era where all of a sudden we’re in an era of fiscal policies like tariffs and the geo-economic warfare that’s going on, all that stuff becomes a secondary consideration, like it or not.

Jackie Forrest:

Right. Yeah. The chances of all of those stated goals actually happening or legislation coming in are lesser now because countries have a lot of other priorities as well, including energy affordability, security.

Peter Tertzakian:

Okay. Well, that’s a lot to digest. Glad we’re back.

Jackie Forrest:

Yeah, happy to be back. And thanks to our listeners for tuning in. I hope you had a great summer. And we’ll be back to our weekly cadence here. So lots to talk about as we go into the fall.

Peter Tertzakian:

All right, till next week, have a good week.

Jackie Forrest:

Have a good week, and thank you to our listeners. If you enjoyed this podcast, please write us on the app that you listen to and tell someone else about us.

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