Future Energy Shocks Already Baked In

Two different stories that attracted clicks the week of April 13, 2026 aren't capturing nearly the attention they would if politicians, business execs and the public truly comprehended their meaning. One story involves a precipitous change in source and route strategy for many oil tanker owners and operators. The other reflects a rapid decline in jet fuel reserves across the entire globe that appears to be on track to exhaust supply in six weeks.

First, a bit more detail on the two stories. Merchant marine expert Sal Mercogliano noted on his YouTube channel that 121 empty oil tankers that had been waiting for some sign of sanity to return to the Gulf region have suddenly begun moving on routes taking them to US ports.

Presumably, those owners have concluded there is little likelihood in the short term of being able to safely transit the Gulf so they have obtained new contracts to haul US crude and refined products to other customers. YEA! Great for America! More revenue for US oil companies!. Right?

Uhhhhhh... No.

The second story is related to the first. Numerous outlets have cited comments from officials in Europe and Asia regarding measures to ration jet fuel supplies in anticipation of even larger supply shortages in the coming weeks - as early as mid-May. Jet fuel prices have doubled, even though gasoline and diesel prices have risen less. When three different products from the same raw material rise by such different amounts, it's a sign that the positioning of refining capacity is not evenly distributed across all markets. First, locations along the Persian Gulf PRODUCE jet fuel so now that cannot reach markets. And the CRUDE oil produced in the gulf that is shipped to refineries in Asia often creates jet fuel as one of the output products but with no CRUDE arriving, those secondary sources of jet fuel aren't producing any either.

Oil, A Fungible Market for a Non-Fungible Product

The essence of Mercogliano's analysis is based upon a key truth that must be understood about oil markets. Media often simplifies discussions about energy markets and oil by talking about "the price of oil" which not only implies there is a single price but that oil is a single fungible commodity. Oil markets are incredibly vast which does help to even out most variations in price since producers are selling into a very large demand curve. However, shipment costs DO impact pricing.

More importantly, most politicians and business types tend to treat "crude oil" as a single homogeneous product. Crude oil is absolutely not a single homogeneous product. Economists and politicians who think otherwise clearly learned nothing about logistics from the issues America experienced with toilet paper during the pandemic or with steel via Trump's tariffs.

Toilet paper is not toilet paper. There's the kind Americans buy for their own butts and the kind that corporate America buys for the butts of its employees at work. The conceptual demand is the same by (ahem... "use") regardless of where people are actually located but actual demand is not the same if suddenly everyone is working 100% at home and not at work. That's a third of demand shifting from the cheap corporate TP to the plushy consumer TP. Totally different products, totally different plants, totally different distribution networks, etc. Of course, politicians and many economists blamed it on "hording" by consumers. No... A shift of one third of the market from variety X to variety Y.

Steel is not steel. There are DOZENS of significantly different types of steel produced for use in cars, appliances, construction, etc. American firms only had viably efficient operations in a HANDFUL of varieties and had ceded the market for most other flavors to overseas companies. Suddenly imposing tariffs on foreign steel as a measure to encourage on-shoring of more steel making is of ZERO value when there is literally NO production or expertise left for specific varieties and those firms have zero trust in the government holding a steady policy position over the DECADES required to justify a huge re-investment into fixed costs.

Like TP isn't TP and steel isn't steel, oil isn't oil. Trump and his clown cabinet keep acting as though America has energy independence from the craziness in the Middle East and the chaos America is creating in the Mideast. America has absolutely ZERO independence from Middle East oil. Since 1975, the four largest refineries built have been

• Galena Park, TX, built in 2014 with current capacity of 105,000 barrels
• Lake Charles, LA, built in 1977 with current capacity of 135,500 barrels
• Garyville, LA, built in 1976 with current capacity of 597,000 barrels
• Corpus Christi, TX, built in 1975 with current capacity of 290,500 barrels

As of January 1, 2025, there were 132 active refineries in America with a total production capacity of roughly 18.4 million barrels per day. However, seventy percent of that capacity can only process heavy crude from traditional oil wells rather than the "light sweet" (meaning low sulfur) crude produced by fracking which reflects most of the growth in US oil production.

America is the economic equivalent of a panda that claims it has achieved "food independence" after inventing a clever way to boost corn production fifty percent... but is still only capable of or interested in digesting bamboo shoots. Even after fracking took off in the 1990s, American producers invested virtually nothing in increasing refining capacity for "light sweet" crude. As a result, those firms ship much of America's fracking output to overseas refiners who HAVE capacity and American producers IMPORT vast quantities of heavy crude to continue refining in their ancient plants designed for traditional well output. If the supply of THAT oil is curtailed, American consumers IMMEDIATELY see increased prices at the pump. If the cost of THAT oil spikes because of longer supply routes and greater insurance costs for war zone risks, Americans feel those spikes immediately as well. That's not energy independence. That's economic co-dependence.

The analysis by Sal Mercogliano focuses on three key aspects of global crude shipments. One involves the daily volume of barrels that were previously shipped prior to the Strait being closed. Tanker routes might be twenty or thirty days long to get from point of origin to destination. If 100 full ships exited the Gulf prior to the lockdown, that means those ships arrived at their destination 20-30 days later and until that time, those destinations saw no reduction in volume. That creates a false impression of physical stability in supply. Wow, the world didn't end four days later, I guess the supply chain is more resilient than we thought.

No, those en route ships act like floating inventory and buffer destinations from shocks, until the parade of en route ships finishes arriving at the destinations with no ships behind them. The routes followed by VLCC class ships from the Persian Gulf to Asian ports can take 45 to 50 days to transit. April 16, 2026 is about 45 days after the original blockade began so those destinations are now beginning to see the last tankers arrive that escaped prior to February 28.

Mercogliano further explains those extra 121 ships will arrive at US ports tied to US oil production infrastructure that is already operating at 95% utilization for existing demand and reflects a certain balance between three distinct types of shipments:

• outgoing unrefined light sweet crude, tied to fracking production in the US
• outgoing unrefined heavy (high sulfur) crude, tied to traditional wells reflecting 1870s well technologies
• incoming refined oil products

Most of the outgoing capacity is geared towards light sweet crude since American refineries limited investments in the distinct equipment required to process it locally. The incoming capacity for refined oil products cannot be converted to handling unrefined crude. But even if it could, that incoming capacity is directly supporting domestic consumption and cannot be surrendered to outbound crude production to help world demand without completely unbalancing US domestic energy markets.

All of this makes more sense if the example is switched to the supply of fresh water in your home. If the plumbing in your house is of fixed size and already in use 100% for every hour of the day, volunteering to help local fire departments combat brush fires by filling their tanker at your home makes no sense. You don't have the parking space for dozens of trucks to park while filling and your plumbing is already 100% utilized filling your baths, dishwashers, clothes washers and sprinkler system. You can try to increase the pressure from the water company but your main was never spec'ed to handle that pressure.

Mercogliano's final point is that this large-scale redirection of empty tankers towards the US virtually guarantees at least one more supply shock, but possibly more. If ship owners have redirected ships to US ports, it confirms those owners no longer trust what Trump is saying on any particular day about whether the Strait will be "open" or whether that will mean anything regarding actual safety for crews and ships. Those parties have resigned themselves to longer routes, higher daily lease costs, higher energy bills for fuel and have accepted contracts that will pass those increases onto the buyer of the oil at the destination.

The change in the routes for existing ships also injects a square wave change in supply. Once redirected to the US, each such ship is dedicated to that route between source and destination. So each ship is now stuck on a longer interim route from its original "waiting lot" to the US as an "empty" then a MUCH LONGER route as a full load from the US to the destination. (As Mercogliano points out, none of the supertankers can use the Panama canal -- they all must sail east around Africa then back to southeast Asia.) Typical one-way routes from the Persian Gulf to Asia might be 22 days. One-way routes from US Gulf ports to Asia might be 45-50 days. This means once traffic temporarily adjusts to US sourcing, each "empty" ship committed to another US voyage pickup cannot revert to the shorter Persian Gulf trip for at least 90 days. This now means the damage done to oil supplies is now "baked in" for at least 90 days, yet we haven't even experienced the worse part of the impacts yet.

There's More Coming

The second story about jet fuel supplies is a microcosm of the larger crude supply chain ecosystem. The choice of attack targets by both the United States and Iran in attempts to make the other feel pain and concede damaged unique concentrations of refining capacity for jet fuel in Iran and Kuwait. The obvious reduction in crude volumes leaving the Persian Gulf further magnified jet fuel refining capacity at remote locations which now lack the crude required to refine it for local use.

Again, this would appear easy to explain to a child of ten just with a few diagrams and visual aids but this situation wasn't created by small children with fourth-grade math skills and a solid grasp of object permanence. Refineries take YEARS to build and require unique equipment designed to operate at massive scale that cannot be magically teleported out of a war zone or manufactured from thin air with zero notice. And energy companies in America in particular have never invested the money required to add extra capacity to sit idle waiting for disruptions like this. Instead, most American refineries operate at about 95% utilization with barely enough downtime for required maintenance.

As a final example of the folly of this thinking, ponder the response of American energy executives to Trump's coup in Venezuela and his goal of having US firms "invest" in refining capacity for Venezuelan crude to benefit the US. Only one firm (Chevron) has reach any deal to invest ANYTHING in Venezuela. No firm has agreed to build any additional refining capacity in the US for Venezuelan crude. Why? None of them trust that Venezuela is politically stable after Trump's coup. The same party is in control and Trump has already denigrated the opposition leader who actually won the most recent election. And those executives know refining investments have a 30-40 year payback and they already think fossil fuel consumption has peaked. Why modernize the buggy whip factory?

The forces at work in the jet fuel market are mirrored in the Liquid Natural Gas market as well. One of the largest production facilities in the world in Qatar was heavily damaged early on by attacks from Iran. The company that operates the plant expects repairs to take at least three years to complete, affecting up to 12.8 million tons per year of output capacity.

What does this mean for economies around the world? People are going to pay much larger fares to book flights for the holidays and will be at risk of serious disruptions even if they hold a ticket. LNG is one of the most widely used fuels for spot electrical generation required to balance supply and demand on electric grids. Higher LNG prices for the next few years combined with surging demand for AI bubble processing assures higher electric rates for business and consumers nearly everywhere. In short, inflationary forces will remain at work within nearly every economy for MONTHS after any settlement is reached.

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The vast majority of politicians, "news reporters" and financial experts speculating on what happens next do not provide this larger context. It's not political. It's physics. Supertankers cannot hit a hyperspace key and suddenly insert themselves into an alternate position in an alternate reality after political leaders claim they've solved a problem and eliminated a threat. Oil companies cannot instantly replicate a ten billion dollar investment in plant to replace equipment that's been blown up.

American voters are the only people on the planet that can stop this insanity. Republican Senators and Representatives at the Federal and State level who continue to give Trump cover for this immoral, disastrous war need to be voted out across the board. The blame cannot stop after Trump attempts to claim victory and move on to the next disaster. The blame needs to stick as long as the damage sticks. And the damage here is permanent.

WTH

The Divorce Is Final

For a brief moment, the title We Are Never Ever Getting Back Together was considered for this commentary but this outlet has avoided Taylor Swift references as much as possible for twenty plus years, it seems like a good idea to continue that practice. However, that sentiment among America's former allies is something American citizens need to thoroughly contemplate. And it is absolutely appropriate to reference American allies in the past tense. All of them.

The signs of America's lost alliances can be loosely grouped into four categories -- immediate hot war cooperation, long term military procurement strategy, toleration of financial and technology monopolies and culture. The events in these categories and their financial interactions and magnifications are complex and likely to be missed in the near term (the next year or two) but they will result in changes that will undermine the financial stability and future prospects of Americans in perpetuity. America has enough existential issues as it is. A looming fiscal catastrophe. Supplies of fresh water and hydroelectric power jeopardized by forty years of drought (actually, not drought but normal weather) in the West. Rising tides in coastal regions triggered by global warming. All issues that have been totally neglected as America instead focuses on a war of choice and dozens of ripple effects that will topple the economic hierarchy that put America at the top for the past half century.

Immediate Hot War Cooperation

In the Soviet era of post-WWII history, there was zero ambiguity among American allies about the motivation behind any requested collective action. Those motivations might have been unjustified paranoia in hindsight but, at the time, they were clearly understood and believed. That coherence became fuzzy for maybe fifteen years after the collapse of the Soviet Union but became more clear as Putin became more active in antagonizing neighbors in the 2000s.

American leaders benefited from and arguably abused that coherent sense of urgency, knowing that, for the most part, any time the United States chose to exert military force, American allies would eventually come around to support it. At a minimum, American allies might not lend their own forces to a conflict but they would always allow American forces operating out of bases in their territory to stage operations from those bases. At a BARE minimum, those allies would always allow American forces to fly over their airspace for staging missions or actual attacks.

That assumed level of cooperation can no longer be assumed. Spain has denied access to its airspace for any American military craft involved with the war in Iran. Italy has prohibited the use of an American air base on Sicily for use in missions related to Iran. Spain has banned any use of its bases or airspace for flights related to Iran. France has been accused by Trump in social media posts of banning use of its airspace but the French government denies any such outright ban has been enacted, saying military flights must obtain prior diplomatic clearance per French policy since the beginning of the war. Switzerland of course has a long history of neutrality so it's no surprise flyover requests have mostly been declined.

If the United States no longer gets the benefit of the doubt to fly its own missions over "allied" countries, it seems likely those "allies" also have concerns about sharing other intelligence with US security and military organizations and Israeli counterparts as well. Such reservations would seem particularly dangerous in an environment after attacking a nation that is arguably among the top three sponsors of terrorism in the world. Yet this prospect seems completely foreign to the Trump Administration, which frankly makes former allies even MORE fearful about sharing information.

This problem cannot be understated. The risks posed by terrorism to American citizens have been drastically increased by the arrogance and disrespect demonstrated by the American government to those that might have information to share and might have previously been willing to share it.

Long Term Military Procurement Strategy

America's former allies have begun unshackling themselves from tight integration strategies with American designed weapons systems and resulting dependencies on American defense contractors. This strategic shift has been driven by many factors. The war in Ukraine was an eye opener for many reasons:

• It showed how fickle the US could be in supplying missile defense systems and missiles themselves to its own "allies" while under actual attack.
• It demonstrated how long manufacturing intervals could be for the weapons American finally decided to sell.
• It demonstrated how newer, cheaper drone weapons could run circles around sixty year old military tactics used by the Russians.

Beyond the war in Ukraine, American posturing over tariff wars, threats against Greenland, threats against Canada and now a war in Iran that has crippled twenty percent of the world's oil and fifty percent of the world's LNG supply have shown America to be be completely irrational. It is no longer sound for any nation to willingly maintain dependence on a country stupid enough to be doing the things America is doing that actually cripple America's ability to manufacture the weapons it sells to other countries. Depending on America to sell you Tomahawk missiles or F-35 fighters when America has lost access to the semiconductors or special purpose steel varieties required to make those products seems insane, if not geopolitically suicidal.

Over the past few months, predating the war in Iran, this unraveling of the American monopoly on high-dollar weapons system design and manufacturing has been accelerating.

Canada has frozen the purchase of 72 of a total of 88 F-35 fighters, in part because it seems increasingly clear the F-35's capabilities may be overkill for defense needs in Canada but also due to Canada's unwillingness to provide business to a neighbor that has behaved so poorly to Canada.

Switzerland is also reviewing its $625 billion purchase program for F-35 planes.

In September 2025, Spain "indefinitely suspended" its plan to purchase F-35 planes in favor of investing in a European-made fighter plane. Spain committed to meeting its two percent GDP target for military spending but stated it is working to ensure eighty five percent of that spending stays in the European Union rather than enriching American contractors.

And if these concerns by former allies seem overblown, on April 1, 2026, Trump was quoted in a British paper musing that America may exit the NATO alliance because of the refusal of NATO allies to join the war in Iran. Frankly, it would be irrational for these countries to ignore the current reality and continue the current dynamic.

The fragmenting of military weapons system design strategies will hurt America more than any of its former allies. American defense contractors benefited the most from monolithic design and purchasing programs. American defense contractors have grown accustomed to "cost plus" contracts and have become extremely inefficient in the process of producing designs that are both too complicated and ill-suited for a modern war pitting a dinosaur $13 billion dollar aircraft carrier against a few hundred drones costing $20,000 each. There are hundreds of thousands of jobs scattered across every congressional district in the country that will be decimated when the rest of the world cooperates on new weapons system designs and leaves American firms completely out of the procurement.

Toleration of Financial and Technology Monopolies

The pattern of jettisoning American dominance is not limited to weapons systems. Foreign governments are now systematically doing what the American government has refused to do to enforce anti-trust laws and break up abusive monopolies.

For the past fifty years, credit card payment services have been dominated worldwide by the American firms Visa and Mastercard. (Note this issue revolves around the PAYMENT function, not the actual CREDIT and long term BORROWING function served by issuing banks. That's a totally different problem.) Visa and Mastercard quickly gained dominance as the credit card industry exploded in the 1970s in America and that dominance spread to foreign countries as well, if only because America led other countries in the concept of revolving credit cards so it was easiest for other countries to go with established players as the product concept spread to other economies.

While these monopolies were accepted, they were still unpopular. As newer digital payment processes became popular with smart phones and web commerce, newer companies created transaction models that were more flexible and easier to implement while the established firms were much slower to innovate. Many countries that never saw widespread adoption of revolving credit cards instead jumped straight into digital payment technologies and had the foresight to impose standards that avoided proprietary technologies and allowed actual competition, negating the ability of any firm to dominate. In Brazil, the central bank operates a digital platform supporting 150 million users without the high interest revolving credit card terms or sky-high transaction fees that get funneled into rebate programs, etc.

This should have been the financial landscape in the United States. At some point, it probably WILL be the landscape in the US after another financial collapse triggers more credit contraction and more people just abandon traditional credit cards. Long term, American firms will likely lose any dominance they had in this sector and other countries will work to keep American firms out, if not to avoid the financial abuse and dependency but to avoid American government access to private data of customers in other countries.

A similar revolution is underway in operating systems and "office productivity" software, for identical reasons. Foreign governments are increasingly fearful that the US government is forcing American software firms like Microsoft, Apple and Google to support "back doors" into their products that allow undetected access to customer data by the US government. Or, in some cases, the US government exerts undue force on American corporations to turn over customer data, regardless of where that customer lives in the world. These aren't "fears." They have happened.

In response, foreign governments have enacted regulations to ensure they stop feeding the monster by continuing to use suspect products. In 2024, the province of Schleswig-Holstein in Germany required all 30,000 of its desktop systems to migrate away from Microsoft Office 365 and Windows to LibreOffice and some flavor of Linux. In 2025, Denmark implemented a nearly identical rule. By late 2025, officials in Austria, Denmark, Germany, France, Italy confirmed identical rules affecting nearly 800,000 machines and users. These movements to dump American software are also extending to video conferencing services such as Teams and Zoom, for identical reasons. European governments have zero confidence American firms are honoring European law regarding privacy protections and have zero interest in funneling millions of dollars in licensing revenue towards American firms who are not honoring their demands.

As this mindset takes hold across all continents, prior assumptions about the financial payoff of tech startups in America will vanish, further contracting the financial benefits of America's technology industries going forward, further shrinking economic opportunity within the United States.

And finally, there is the collapse of the mother of all monopolies. The monopoly that benefits Americans the most and is understood by virtually NO Americans. The American monetary monopoly on the world, made possible by a fifty year old pact between the United States and Saudi Arabia that established the era of the so-called "petro dollar."

The purchasing power of the American dollar and the US government's ability to borrow at essentially subsidized rates for DECADES has been driven by a deal struck after the first OPEC embargo in 1973. In order to assure a steady supply of oil from the Middle East to a very energy-inefficient American economy, the US agreed to sell weapons and planes to Saudi Arabia and enter a pact for the defense of Saudi Arabia in exchange for the Saudis selling oil to America and requiring all oil sold by Saudi Arabia to ANYONE to be physically purchased in US dollars.

When a party agrees to REQUIRE all purchases of its products to be denominated in US dollars and its sells tens of billions of dollars of that product every day, that has the effect of drastically increasing the demand for US dollars. This increases their value relative to other currencies in the international economy. When that product demand is steady, day after day, month after month, this increases certainty in the value of those US dollars over long periods, making them more desirable to use in other transactions, including lending money to sovereign governments, including the United States.

The United States and its citizens have benefited far more than any other nation from this petro dollar arrangement. It lowered US government borrowing costs, disguising the true extent of the folly America's out-of-control government spending. That attracted more foreign investment in US government securities and corporate securities. That influx of investment expanded the US government's leverage during financial crises and led the rest of the world to follow the lead of the US during such crises, cuz after all, WE HAVE TRILLIONS OF YOUR MONEY. And since 1974, America has used that leverage for the most part to maintain stability and contain the damage of several crises as well. (Not avoid them, just stop them from getting worse.)

As of April 1, 2026, this last bit of monetary monopolistic control over the world is being abandoned by a corrupt President who couldn't explain the mechanism or its benefits if his life depended on it. Trump has essentially announced he is willing to walk away from his war in Iran with Iran in control of all ship traffic through the Strait of Hormuz. The largest single consumer of oil from the Middle East is China so it is highly likely they will demand all future oil contracts be settled in yuan rather than US dollars. That will shift demand for dollars into demand for yuan. A reduction in demand for dollars will immediately reduce the purchasing power of dollars, raising prices for EVERYTHING for all Americans. Lower demand for dollars will also weaken demand to invest in US treasuries, requiring higher interest rates to be paid on new debt to attract other lenders, causing the cost of servicing America's $39 trillion dollar cumulative debt to skyrocket.

America - The World's Apex Predator Asshole

There is no other way to put it. Since Trump took office the first time in 2017, the predominate impression America has created with people around the world is that of a big, dumb, arrogant ASSHOLE. This isn't an accidental, side-effect dynamic. It isn't the dynamic generated by eighty years of responsibility trying to lead the world after World War II and mostly trying to do the right thing. It isn't the dynamic generated by at least trying to do the right thing while deluded by obsolete geopolitical theories that trapped America and the world in pre-WWII patterns of thought that simply regenerated old struggles within new borders. It isn't the dynamic generated by eighty years of all the above that took place while America rigged every outcome to disproportionately benefit the American economy and reinforce American power as part of the "fee" charged for leading the free world.

No, the effect being seen now is one that results from the a-hole dynamic appearing to be the primary motivation behind American decisions. Decisions aimed at flexing American military and financial power by purposely engaging in actions with no obvious benefit to anyone including American citizens that knowingly harm our allies. Simply because we can. Simply because the American President requires constant affirmation that he has sole power to make any decision to settle any score for any slight he identifies or imagines anywhere in the world.

America's former allies are GONE. They are not watching current events, spotting America a world sized mulligan and holding their breath waiting for regime change in America. Regardless of who or what gains power next in America, its former allies have realized they should never have allowed America to dominate finance, technology and economics in general to the degree it has since World War II. No people, no culture, no form of government can amass that much financial power and technological prowess without being corrupted to the core. Once the blinders are removed and the corruption is seen in the daylight for what it is, there's no putting the blinders back on.

WTH