When oil and gas supplies get disrupted yet again – don’t attempt to solve fossil fuel vulnerability by deepening fossil fuel dependence.
Before discussing the risks of today’s energy system, it is worth recognising something that is often misremembered in the transition debate.
The fossil fuel system built the modern world — and in many ways it is still building it, adding reliance and exposure day by day.
Coal powered the industrial revolution. Oil enables global transport, aviation and modern logistics. Gas transformed heating, electricity generation and industrial production.
For more than a century these fuels delivered extraordinary economic expansion and rising living standards for billions of people.
Modern societies — from hospitals and universities to global trade and digital infrastructure — were built on the back of that energy system.
That achievement should not be dismissed lightly.
But its success has also carried substantial hidden costs.
The same system that powered modern prosperity also concentrated enormous strategic power in a handful of fuels, regions and supply routes.
Oil flows through a small number of shipping chokepoints.
Gas pipelines link economies to neighbours — and sometimes to distant suppliers.
Tankers move energy across oceans through narrow passages such as the Strait of Hormuz or the Suez Canal.
The modern fossil energy age is only about 125 years old, and the building of the infrastructure needed to move solid, liquid and gaseous hydrocarbons around (coal, oil, gas) has taken up most of that time, as economically exportable fuels reside in just a few parts of the globe.
So energy security policy for most of the past century has focused on managing these vulnerabilities rather than escaping them, as it has been accepted wisdom that there are very few alternatives.
And that fossil fuel assets such as oil fields, refineries and pipelines are built with the long-term revenues in mind – many of them over 60-70 years old.
So the security actions all centre around the fuel energy system as built.
Strategic petroleum reserves were created. Navies protected shipping routes.
Governments supported domestic exploration where possible.
All of this was rational in a world where the fuels themselves were unavoidable.Today, however, something subtle but profound is beginning to change.
Molecules and Electrons
Fossil fuels: coal, oil, gas, are chemical molecules.
Coal consists of large complex molecules and is solid.
Oil is liquid – an intricate blend of various molecular fractions.
Fossil gas (mostly methane) is a small, simple molecule and therefore gaseous.
This is their form, and we have to work with them recognising their fundamental nature.
So – they must be extracted from the ground, transported across continents and oceans, refined, stored, and delivered through a byzantine system of pipelines, tankers, terminals and processing plants before they can be used.
Every step in that chain introduces cost, complexity and vulnerability.
A disruption anywhere along that path — a blocked shipping lane, a damaged pipeline, a geopolitical conflict affecting a major producer — can ripple rapidly through the global system.
Electricity is different.
Molecules are storable but require continuous transport. Electrons are harder to store at scale but, once grid infrastructure exists, can be generated anywhere with the right conditions.
So, electrons do not require tankers or pipelines. Once the infrastructure exists, electricity can be generated locally from resources such as wind, daylight, water or nuclear energy and delivered directly through transmission networks.
The energy is not transported across the world in the same way.
It is increasingly manufactured where it is used.
This distinction — molecules versus electrons — may turn out to be one of the most important strategic shifts in the modern energy system.
For most of the twentieth century, energy security meant securing access to molecules: coal shipments, oil cargoes, gas pipelines.
In an electrifying energy system, security increasingly means something else: the ability to manufacture energy domestically and reliably – or buy the equipment to do so – to convert local assets such as water, wind and daylight into power for heat, light and transport – the holy trinity of energy usefulness.
Where we have today the stratification of fossil energy: coal and gas for heat and power, oil for transport, electricity is a universal energy carrier: it creates light, power and mobility.
And as the electricity grid moves more toward local energy sources: domestic wind, water and light, energy is created at home, and passed out to the wider energy system.
If this sounds fanciful, consider not Norway, nor even China as the most impressive part of the electric vehicle evolution – strong contenders though they are.
Consider instead Nepal and Ethiopia: they both now have over 50% sales of passenger cars as EVs, and rising quickly, and have grids powered over 95% by local hydro-electric power stations. A policy move, a tax incentive and a clean grid – and et voila, an energy transformation within a few years.
For sure this requires imported EVs (just as they import petrol cars) – but that is now a one-off investment for 15 years of mobility, no further fuel imports to be concerned about and all the adjacent foreign exchange risks.
And perhaps the bigger lesson – – If landlocked, developing economies with hydro-electric resources can achieve 50%+ EV sales penetration, the barrier isn’t technology or wealth. It’s choice.
The contrast between these two systems is not abstract. It shapes how vulnerability is distributed, where risk accumulates, and what strategy makes sense. The table below summarises the difference:
Table 1
Two energy systems now available at scale – molecules and electrons
We have choices.
Why “Drill More for Security” Rarely Works
The instinct to expand fossil fuel production in response to geopolitical risk is therefore understandable. If supply disruptions threaten global markets, producing more domestically appears to offer a buffer.
But the economics of oil markets complicate this logic.
Oil is not primarily a national market. It is a globally traded commodity priced on global supply and demand. A disruption in one part of the system — a conflict affecting Gulf exports, for example — raises prices everywhere.
Domestic production does not isolate a country from that price shock.
The United States illustrates this clearly. Over the past decade American oil production has surged due to shale development, turning the country into the world’s largest producer.
Yet American fuel prices still track global oil markets closely. When global oil prices rise, gasoline prices rise in the United States as well – in early March 2026, as crude prices rose over 40% due to the US-Iran conflict, regular gasoline prices in the US rose over 27%.
More fundamentally, oil is a traded commodity as Chart 1 shows: in fact the US imports more crude oil than it exports – this is because whilst the largest producer of oil in the world, it is also the largest consumer. Bottom line, the world fossil fuel energy system – as long as configured as this – is like a human circulatory system – stop the flow in one part, it impacts the whole body.
Chart 1 (source – Strategic Review of World Energy, 2025 p34)
The same dynamic therefore applies in Europe.
Even if new North Sea projects were developed, European fuel prices would still be determined largely by global markets.
Domestic production may reduce import volumes slightly, but it does not eliminate exposure to global price volatility.
Expanding fossil fuel supply does little to address the fundamental vulnerability of the system.
It merely increases supply within the existing structure without changing the structure itself.
Even if domestic production reduces imports, it doesn’t reduce price exposure.
And in a globally traded market, price spikes enrich producers everywhere—including adversaries.
The only way to break the link between geopolitical events and domestic fuel costs is to reduce the share of those exact fossil fuels in the energy mix.
The Shift That Has Already Begun
Electrification begins to change that equation.
Electrification is not as a break from strategic energy thinking but as its continuation, as the world adapts.
A car powered by electricity generated from domestic wind or solar is no longer intimately tied to global oil markets. The price of crude becomes largely irrelevant to its operation.
Similarly, power generation based on domestic renewable resources reduces reliance on continuous shipments of fuel.
None of this eliminates risk. Renewable technologies depend on minerals, manufacturing capacity and grid infrastructure that bring their own geopolitical considerations.
But the nature of the system is different.
Fossil energy systems rely on continuous flows of molecules through global supply chains. Electrified systems rely more heavily on infrastructure built once and operated for decades.
That distinction matters.
Global wind and solar capacity now exceeds roughly three terawatts — a scale comparable to the installed electricity generation capacity of several major industrial economies – and increasing at 15-20 % per year.
Electric vehicles are already beginning to displace 1-2 million barrels per day of oil demand globally – and have led to peaking gasoline sales in many countries including the US – ( see previous post on this topic, Observer or Predictor? )
These technologies are no longer marginal experiments.
They are beginning to reshape how energy systems function.
A Lesson from History
Energy strategy has always involved difficult trade-offs.
More than a century ago Winston Churchill, then First Lord of the Admiralty, made one of the most consequential decisions in British strategic history when he converted the Royal Navy from coal to oil. The change gave Britain faster ships and greater naval reach — a decisive technological advantage.
But it also tied British security to oil supplies from the Middle East for generations.
For the next century, global politics repeatedly revolved around securing those fuel flows: pipelines, shipping lanes and strategic chokepoints.
Today the strategic calculation may be shifting once again.
Electrification does not promise a perfect world. But it offers the possibility — gradual, uneven and incomplete — of reducing dependence on the same fuel supply chains that have defined geopolitical risk for decades.
For sure renewables require minerals with their own supply chains: True, but minerals are embodied once, not consumed continuously.
A solar farm’s dependence on Chinese polysilicon is a one-time import; an oil refinery’s dependence on Middle East crude is perpetual.
A Wider Perspective
Part of the reason this debate has become so emotionally charged is that the wider world feels increasingly unstable.
Eight billion people now share a planet shaped by geopolitical rivalry, technological disruption and political systems that do not always behave rationally.
Energy sits at the centre of those tensions because it underpins economic stability, industrial power and military capability.
It is therefore understandable that governments instinctively reach for familiar tools in moments of uncertainty.
But the uncomfortable truth is that many of the geopolitical vulnerabilities we worry about today were created by the fossil fuel system itself.
Oil supply routes have been strategic flashpoints for decades precisely because modern economies depended on them so completely.
The emergence of alternative energy technologies does not promise a perfect world.
It does, however, offer the possibility of building a system that is more distributed, more diverse and less dependent on decisions made by a handful of fuel exporters.
Instead of concentrating power in a small number of geological deposits, energy production increasingly becomes a function of technology, infrastructure and manufacturing.
In other words, the future energy system may be less about extracting fuels and more about manufacturing energy – which you might expect to be a feature of this sub-stack.
The Strategic Choice
Periods of geopolitical uncertainty often encourage policymakers to fall back on familiar systems.
Faced with risks to oil supply routes, the instinct is to reinforce the fossil fuel system — drill more wells, preserve refineries, expand gas infrastructure.
Yet this response contains a huge paradox: it attempts to solve fossil fuel vulnerability by deepening fossil fuel dependence.
Even if additional production is developed domestically, the global oil market remains globally priced. A disruption affecting major exporters still drives prices higher everywhere.
Producing more within the same system does not remove the vulnerability.
It merely redistributes it.
The strategic question therefore becomes clearer.
If the central fear is that fossil fuel supply routes may one day become constantly disrupted by conflict or instability, the durable solution is not simply to produce more of those fuels.
It is to build an energy system that depends on them less.
Which brings us back to the present moment.
Periods of uncertainty often tempt governments to retreat toward the familiar.
But if we are indeed walking through a difficult geopolitical moment, the answer is not to rebuild or reinforce the system that created those vulnerabilities in the first place.
It is to keep moving beyond it – as in many countries we are doing with a concerted move to alternative energy technologies.
As Churchill observed in an equally bleak moment: if you are walking through hell, the only rational strategy is to keep walking.
The alternative is to remain exactly where the danger is.
TL;DR – The Strategic Energy Shift
- The fossil energy system built modern prosperity — but concentrated power in a few fuels, regions and supply routes.
- Oil and gas are molecules that must be extracted, transported and continuously delivered through complex global logistics.
- Electricity increasingly relies on electrons manufactured domestically from resources such as wind, water and daylight.
- Expanding domestic fossil production does not eliminate energy insecurity because oil markets are global and price shocks transmit everywhere.
- Electrification does not eliminate risk — but it changes its structure, reducing dependence on vulnerable fuel supply chains.
- Energy strategy is therefore shifting from transporting fuels to manufacturing energy.
If energy insecurity is the concern, doubling down on fossil fuels is doubling down on energy risk – alternatives are now available.
Note – Previous post in this series: Observer or Predictor? The Four Numbers That Explain Peak Oil Demand
