What Mark Carney should have said to Donald Trump
As a preamble to offering advice, we need to keep in mind that Carney was in the lion’s den, surrounded by lions just waiting for him to contradict Trump in any way, the threat of Zelensky 2.0 hanging tangibly in the air. Trump laid a dozen land mines that largely paralyzed Carney, who to his credit didn’t step on one. Nevertheless, it could have been done much better, as in:
“Mr. President, thank you for the invitation to meet in this historical room [side note: lavish praise is simply a prerequisite in this specific arena, this specific room]. First of all, I want to acknowledge that President Trump is a master at boiling down complex challenges to simple terms. He ran on a platform to re-shore industry to the US. His view and challenge and mandate are clear. He was elected on the pledge to fill American factories with workers again, to make the things in the US that American consumers consume. H ehas a vision and he is moving on it.
As Canadian prime minister, all I can tell you is what my job is. Canada is a massive country, the second largest in the world. We have a relatively small population. We produce far more than we consume, because Canada is a global powerhouse of natural resource potential. We sell products to happy customers. At present, many of our happy customers are American businesses and consumers. That may change over time in ways that are beyond our control, but at present, that is the situation.
Because we produce more than we use, we find customers for our production, and there are a lot of them. It makes sense to sell locally because it just works better, transportation is cheaper and easier…it is just much more efficient to sell to nearby customers.
Canadians don’t need anyone to tell them that their product is valued. I can pull up in two seconds on my phone live quotes of the market value of Canada’s top 10 exports. I know exactly what the world is willing to pay. My job is to find customers and build trade relationships.
So Canada’s trade vision can be boiled down just as simply as President Trump’s vision. We need to find customers for our products. It is a hungry world out there. Few if any countries have what Canada does resource wise, and we are pretty good at turning those natural resources into higher value products. We need to get better at that so as to appeal to more customers, to keep more of the value at home, to minimize shipping costs by selling finished products. This will help diversify our economy and open new markets.
At the end of the day, we will find buyers for our outputs. Historically this has been the US, which works well, because we actually do purchase an awful lot from the US as well. We simply are too small population wise to consume anywhere near what the US does.
Having said that, and this is where partnership comes in, North American security is of the utmost importance, and Canada is more than willing to work with the United States to ensure that enemies of North American security do not gain unwittingly from trade practices. Trade and security are intertwined in that way, and with our great friend the United States we will make North America stronger and more secure.
President Trump has his views; those are mine. Canada and the US, working together, have the potential to be much stronger pulling in the same direction. That goes for our economies, for our security, for the security of North America and the world. I look forward to working with President Trump in every manner possible to achieve these objectives.”
That’s not a perfect speech, but it sure would have been preferable to fidgeting and looking so uncomfortable at Trump’s positions.
Engaging Articles of the Week
Diamondback Energy, the huge US Permian producers, certainly caught everyone’s attention this week. To set the stage, recall that President Trump is quite busy telling everyone that “we don’t need Canada’s energy, we have more oil than anyone in the world.” He further emphasizes how he will drive down oil prices, and that US will still obliterate all comers, production wise. It is astonishing to watch him say stuff like this with the army of sycophants sitting silently around his feet, not one of them willing to step up and speak reality. Even the energy-wise ones like Chris Wright don’t offer even a hint of much-needed correction (that is, unless it is all a ploy, because people like Wright surely know these things, and know they are sacrificing their reputations as energy-wise by nodding along…so perhaps Trump has explained that he will peddle this nonsense with a means to an end, and that it would be wise for them, employment-wise, to pretend they are stupid for the time being). Public companies don’t have that option though, and the oil patch is nothing if not full of brave souls that speak their minds. Diamondback’s Letter to Stockholders declared loudly that Trump’s talk was vacuous, meaning either they aren’t in on the game if it is a game, or they are just not willing to allow the spread of gobbledygook on their watch (bless their souls). From the Letter: “…we believe we are at a tipping point for U.S. oil production at current commodity prices… it is likely that U.S. onshore oil production has peaked and will begin to decline this quarter. This will have a meaningful impact on our industry and our country.” No word yet on whether Diamondback has been declared “stupid” or “bad business people” or whatever other label counter-voices have been slapped with…but they are not wrong. Full letter here.
Interesting story out of Ukraine, or more specifically from over the waters near Ukraine. A few unmanned drone boats were launched into the Black Sea, where they cruised serenely for some period of time, before launching missiles that downed two Russian SU-30 fighter jets. These are serious planes, able to reach Mach 2, with a 3,000 km range. This marks the first time (that’s been made semi-public, anyway) that drones have been used to shoot down fighter jets (or, missiles via drone, anyway). These developments threaten to completely upend military strategic planning, such as where it is necessary to host military bases. For example, a few months ago the WSJ ran a story called “The U.S. Missile Launcher that is Enraging China”, the fury resulting from a new US missile system being deployed in the Philippines that “puts key Chinese military and commercial hubs within striking distance.” Well…if missiles can now be launched from little grey unmanned drone boats that can float around anywhere, and are apparently hard to detect…Consider that these drones cost thousands of dollars each, and call it a hundred thousand with a missile attached…whereas modern fighter jets cost around $100 million apiece. Drone technology is advancing far more rapidly than jet tech is, because a drone development program might last two months versus 15 years for a new jet design. Maybe WWIII won’t be so bad after all, just a bunch of drones shooting down other drones. If at least a part of military budgets can go towards adding fireworks to all this equipment, maybe it will all be quite spectacular. Ukrainian drone story here.
Bitcoin mining woes…Shortly after the US announced plans to create a strategic Bitcoin reserve using seized assets comes news that the cost of Bitcoin mining has risen dramatically, and exceeds the value of Bitcoin in many jurisdictions (even at a $90,000 BTC price). This isn’t entirely unexpected because it is part of the design – Bitcoin is meant to become progressively more difficult to ‘mine’ as more coins are issued. In the recent “halvening” or whatever the hell it’s called, which happened earlier this year, the amount of BTC issued per unit of work was cut in half, or in other words, it now requires twice as much work (= electricity, essentially) to mine BTC. Techspot estimates that in the US it now costs $107,000 in electricity to mine a single BTC. The range of costs varies widely around the world, from a low of $1,324 per BTC in Iran to $321,000 in Ireland. Iran’s costs are however subject to if a bomb lands on your equipment, so there’s that…anyway, BTC mining is now once again heading for low cost jurisdictions in the world, which often means low emissions standards. No word yet on whether the Trump administration wants to re-shore BTC mining or not, but presumably so, because why on earth would we expect otherwise. There may also be continued (or better) opportunities for oil/gas producers with flare or other natural gas streams that currently do not capture significant economic value. Story here.
In what might be just another “well it worked great in the lab” story, but let’s hope not, scientists at the US DOE last year discovered (yes, I’m behind on reading) a catalyst for ‘one-step conversion of methane to methanol. Apparently, the new process runs at a temperature “lower than required to make tea” and requires no additional byproducts. If it works, as with Bitcoin mining, this might offer the potential to make useful stranded gas reserves that are not economic to pipeline-connect, or gas streams that are now flared. A patent has been filed and the DOE’s commercial development manager are looking for “entrepreneurial partners to bring the technology to market.” Call those scientists! This would be an awesome development. Storyhere.
Come see the lighter side of energy, and think of it as you never have before in The End of Fossil Fuel Insanity – the energy story for those that don’t live in the energy world, but want to find out. And laugh. Available at Amazon.ca, Indigo.ca, or Amazon.com.
Read more insightful analysis from Terry Etam here, or email Terry here.