They Said It Couldn’t Be Done. The Energy Report 07/29/2025

Myra P. Saefong at MarketWatch wrote that, “President Donald Trump said the U.S. deal on tariffs and trade with the European Union includes Brussels’ agreement to buy $750 billion of U.S. energy products over the next three years, but industry analysts say the math doesn’t even remotely add up. Some energy experts have referred to that as a “wholly unrealistic,” and even “absurd,” number given that U.S. energy-product exports to the E.U. would have to more than triple to get there. But there are some ways to significantly boost U.S. sales of the commodities to Europe.

“While it is possible to imagine an increased level of [energy] exports to Europe, this would be a major upheaval in our energy trade,” said Michael Lynch, president of Strategic Energy & Economic Research. “How this is supposed to be accomplished is also unclear.”U.S. energy exports to the E.U. totaled $78.5 billion in 2024, which was just about the same as in 2023, according to data from the Energy Information Administration shared with MarketWatch on Monday. To get to that $750 billion figure, the E.U. would have to buy roughly $250 billion per year of energy products from the U.S. for the next three years — more than triple what it purchased in 2024 according to Marketwatch.

Before you write off these numbers, remember that Europe has become acutely aware of the risks posed to their economy by the ongoing conflict in Ukraine. This situation has served as an energy wake-up call, reminiscent of the oil embargo of the 1970s that shook the United States and the world. Back then, everyone was forced to rethink how they used energy, and, surprisingly, we managed to cut demand much more than anyone expected in just a few years. In fact, it took nearly three decades for energy consumption to climb back to previous levels after we made those efficiency improvements. Who’s to say what’s possible when necessity sparks innovation?

As I told MarketWatch, “Phil Flynn, senior market analyst at the Price Futures Group, also believes that the E.U.’s pledge to buy more U.S. energy products would be a “voluntary alignment,” acknowledging that it would be a “little bit hard to enforce.”  For its part, the E.U. could back off some of its moves toward the renewable energy sector — wind, solar and hydrogen — and replace that with U.S. oil and natural gas, he said. Some people, however, have underestimated Trump’s ability to push through deals there were previously said to be impossible, said Flynn.

The President has been pushing for a ceasefire deal between Russia and Ukraine, and his efforts have included threatening Russian President Vladimir Putin with losing one of his major export markets, which of course is the E.U.,” he said. The E.U. has already reduced its reliance on Russian energy imports from about 40% of its natural-gas supplies to 10%, he said. So another step that can be taken to bring the E.U. closer to its goal is the U.S. potentially filling in for some of that lost supply, Flynn said, adding that U.S. exports of LNG to Europe have climbed to record highs. The U.S. was the largest supplier of LNG to Europe in 2023, according to the EIA.

In a statement on the U.S.-E.U. trade deal, European Commission President Ursula von der Leyen said the E.U. will “replace Russian gas and oil with significant purchases of U.S. LNG, oil and nuclear fuels.”

Flynn highlighted the mention of that shift to U.S. nuclear fuels, which has the potential to make a significant impact. Nuclear power plants generated nearly 23% of total electricity produced in the E.U. in 2023, according to E.U. data. Russia, meanwhile, is among the world’s biggest producers of nuclear fuel. “If there are plans to more rapidly expand Europe’s nuclear power capacity by utilizing U.S.-based companies, and the power-plant construction, operation, long-term fuel fulfillment contracts, and future reactor services (some of which can be decades long) are all included in that $750 [billion] ‘headline number,’” then there could be a case made that the “pulled forward dollar-amount of future operations could boost the value of the deal,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. However, that scenario would require some “financial engineering” to achieve the $750 billion, which would “leave the realistic dollar amount of the deal carrying an asterisk based on the three-year timeline mentioned,” said Richey according to Marketwatch.

While it might be tempting to dismiss these possibilities right away, I encourage a bit of open-mindedness. In the past, I’ve spoken out early and strongly against the idea that tariffs directly cause inflation, arguing instead that government spending and the expansion of the money supply play the biggest roles. That said, President Trump’s approach—focusing on budget discipline, boosting revenue through more balanced trade, and attracting investment to the United States—is clearly producing some interesting results. It’s becoming evident that his economic strategies are having an impact. Of course, no policy is perfect, and I would prefer a world where we have  no tariffs but the reality is that’s not the world that we’ve lived in. While the US tried to stay true to its free trade principles our trade partners definitely did not. President Trump lives in the real world.

Or as Gerard Baker said in an opinion piece in the Wall Street Journal that, “Donald Trump’s trade policy is in danger of demonstrating the truth about one of those old definitions of an economist: someone who sees something working in practice and explains why it will never work in theory.”

So, what we’re seeing here is President Trump equaling the playing field once again and that has led to massive reinvestment in the United States. A Fox Business report from April 22, 2025, estimated private sector investments at over $1.8 trillion, contributing to a total of $5.2 trillion when combined with foreign investments.

Oil prices rose due to tight supply and ongoing geopolitical tensions. Oil’s morning rally followed reports that Iraq has given the Kurdistan Regional Government two days to start delivering 100,000 barrels of oil daily for August or risk losing the Baghdad-Erbil agreement and civil servant salary payments. The Kurdistan government faces an ultimatum to provide barrels or risk supply cuts, which could tighten the market and has led to a minor price rally.

Today, oil prices will be influenced by American Petroleum Institute inventory numbers and the rising US dollar, which is pressuring oil prices downward. The strong dollar suggests the Fed may be behind the curve, increasing pressure for an early interest rate cut.

Natural gas is still searching for a bottom and might get help with the weather as Fox Weather brings heat back into the equation for the second week of August. The Fox Forecast Center is also  monitoring two areas for possible tropical development over the next 10 days or so – one being in the Atlantic and one in the Gulf.

Reuters reported that, “Oxford Economics expects ample supply to keep Henry Hub gas prices below $3.80 per MMBtu through the decade, but warns that a prolonged oil price decline could curb associated gas output and tighten the U.S. market. Venture Global has finalized a $15.1 billion investment for the first phase of its CP2 LNG export facility, which will become the largest such facility in the U.S., with a peak annual capacity of 28 million tonnes and first LNG deliveries slated for 2027.

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