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As the United States’ latest military operation kicks off the worst global energy shock since the 1970s, Iran is doing everything it can to target Donald Trump’s greatest weakness: fossil fuels. The regime, responding in kind to the devastating strikes on its oil and gas facilities, is directly attacking energy infrastructure in the surrounding region and shutting down the Strait of Hormuz—a key transmission point for 20 percent of the world’s oil supply—until further notice. Gasoline prices are up. Strategic stocks are low. European and Asian countries with robust liquefied natural gas supply chains are again reconsidering whether they should stay dependent on that primary source of fuel, especially as Qatar halts all LNG exports and Gulf gas production slows dramatically.
Through it all, in a defining motif of this Trump term, a key U.S. nemesis stands to benefit most of all: China. No country on Earth is fully insulated from the Iran fallout, but China has a better shot than any other global superpower of weathering this crisis over the long term, as it drastically reduced its need for oil through a blitz of electrification and renewables development. The U.S., meanwhile, has done the exact opposite under Trump—to its detriment on the world stage, now and in the future.
Intuitively, it may seem the damages should have fallen differently: China is the world’s biggest net crude oil importer, and the U.S. is the biggest net crude exporter. But China’s rapid efforts to shrink its fossil-fuel dependence are paying off here. Electric and hybrid cars have overtaken the roadways. New power generation is largely covered by solar and wind sources, plus battery storage. Overall demand for oil and gas is projected to peak and decline by the next decade. For sectors where fossil fuels remain necessary (e.g., industrial factories, heavy-duty transportation), China prepared by stocking up on oil imports earlier in the year, filling up enough reserves to last it for months on end. The effect has been to increase China’s business appeal, even to its nemeses: Canada is welcoming Chinese electric vehicles, and India (which is particularly sensitive to high fuel prices) is softening its trade-warring to take in Chinese solar equipment.
The United States, on the other hand, is flailing mightily. Throughout his second term, Trump has done everything possible to sabotage the nation’s solar, wind, and EV developments, which had experienced an upswing thanks to their extremely cheap costs. In crushing government backing for massive green-tech projects while rebooting shuttered coal plants and keeping other countries—like the now-suffering Japan—hooked on pricey American LNG exports, Trump has left our fragile economy (and that of our allies) with a weaker buffer against this self-imposed energy crunch. Power costs were already increasing before this invasion, thanks in no small part to the rush of new data centers and their fossil-fuel hookups. But the effect of the Iran conflict has laid bare how any “energy dominance” agenda without clean tech is a sham. To make electrical generation dependent on fossil fuels, to keep buildings hooked to gas, to discard energy efficiency standards, to disparage the burgeoning EV sector—none of it has made America more secure or affordable in this moment.
Meanwhile, smaller countries have likewise benefited from an approach similar to China’s. Uruguay, whose concerted renewables push has granted almost total energy independence, sweated little during the 2022 energy shock, and now has the ability to export clean power to neighbors in need. Mass deployment of renewables, EVs, and heat pumps across European nations like Denmark, Norway, and the Netherlands has widely displaced the need for daytime fossil-fuel burning and made electricity far more cost-effective. There’s still room for improvement, as the relative paucity of battery storage leaves those states more vulnerable to nighttime spikes in natural gas combustion. Still, these European Union members have another big advantage over America’s gas-car dependence: networks of car-free and public transportation that carry more and more people while burning fewer and fewer fossils.
Dirty energy isn’t absent from the picture in all these cases. Norway still exports plenty of oil and gas to the rest of Europe, while China’s electric age has been backed by filthy coal. But the key factor here is that fossil fuels have been deployed in service of a greener future, directly fueling or financing emissions-free tech. And you can view the benefits in the immediate economic indicators. Uruguay is the envy of its fossil-fueled friends. In China, stock, bond, and currency values have broadly held steady, providing a rare spot of stability within international markets. For Norway, fully electric vehicles have almost totally beat out petroleum cars in the auto market, helping to make it the only nation whose growth will not slow down this year, as Oxford Economics projects.
And yet, the U.S. is doubling down. This week, Trump announced plans to build America’s first new crude refinery in 50 years, though industry executives profess skepticism that it will ever materialize. The president is also considering invoking the Defense Production Act to jump-start oil drilling off the West Coast, a move opposed by most of green-energy-dense California. And the much-touted takeover of Venezuela’s oil industry isn’t going to shore up supplies, since the South American petrostate’s reserves are way more difficult (and expensive) to extract and refine than American crude. The only real economic recourse for Trump, it seems, is to beg war partner Israel to stop bombing Iranian oil facilities and to make false reassurances about the conflict’s duration.
In the short term, unfortunately, other nations will need to ramp up their fossil fuels. To address immediate shortages, Eastern Hemisphere countries dependent on now-cut-off LNG imports (e.g., Pakistan, Thailand, South Korea) are likely to escalate coal-burning while drawing upon strategic oil reserves and forcing their populations to reduce overall energy consumption. The Strait of Hormuz blockade is also going to hamper clean-tech development as it induces a shortage of sulfur, an essential material for mining the metals used in EV batteries, solar cells, and semiconductors.
But these are all emergency constraints; the long-term trendlines are much sunnier. China’s habit of flooding energy-poor nations with low-cost solar cells, batteries, and EVs isn’t slowing down. The European Union is now establishing a green infrastructure fund as a strategic measure. The global perception of green energy as an economic cushion, spurred in the wake of Russia’s invasion of Ukraine, will only be reinforced by this war. The solutions are here with us, if only America can understand that.
