Latest / Look Forward / Inflection Points: Is it a New Energy World? | Look Forward Ep. 34

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Inflection Points: Is it a New Energy World? | Look Forward Ep. 34 · Look Forward

0:05
Hello, and welcome to the Look Forward podcast from S&P Global.
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I'm Naki Mendoza with S&P Global Energy.
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I'm Executive Conference Director for CERAWeek, and I'll be your host today.
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In today's rapidly shifting markets, success depends on
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anticipating what's next.
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The professionals who excel are those who can spot emerging trends
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before they fully materialize.
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The Look Forward podcast delivers exactly that, insights to help you prepare for
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tomorrow's challenges and opportunities.
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We bring you expert perspectives on macroeconomic trends, capital markets,
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energy transition, and global trade with a sharp focus on what these
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developments mean for the decisions that will shape your tomorrow.
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Together, we are committed to
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providing you the forward-looking intelligence you need to navigate
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uncertainty with confidence
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We're zooming out and taking a look at the big picture of energy in today's episode.
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Six months in, 2026 has already been one of the most volatile years
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ever for energy, marked of course, by conflict in the Middle East and
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ensuing shocks to the global economy.
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But there are other broad and deep trends at play across the industry, from surging
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AI demand to the diversity of supplies, deployment of capital, convergence of
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business models, and the resilience of supply chains to meet that growth.
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So what are the various pathways that operators and investors
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are having to navigate?
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And if the geopolitics of energy are placing markets and industry at an
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inflection point, well then what's next?
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To explore these themes, we're joined today by Daniel Yergin, vice chair of
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S&P Global and the founder and chair of CERAWeek, and resoundingly, one
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of the world's leading analysts and authorities on the global energy industry.
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He's a Pulitzer Prize winning author, author of "The Prize," "The Quest,"
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and most recently, "The New Map." For decades, Dan has chronicled the
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evolution of the world's energy systems and the forces that transform it, from
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markets to technology to politics.
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In short, he is precisely the person to help us unpack these topics.
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Dan, welcome to the Look Forward podcast.
2:13
Well, thank you, Nakki, and very glad to be with you.
2:17
Thank you, Dan.
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It's our pleasure to have you.
2:20
So we're speaking today in late June, roughly the midway point of the year,
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so it's a fitting time to take stock of the state of energy, if you will.
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You and I were both here in Washington, where down the street
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presidents annually give a State of the Union and often emphatically
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characterize it in one or two words.
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So in, in a similar exercise, I'm curious on your take, the
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state of world energy is…
2:44
Uh, that's a big question, but I guess we would say is world energy, uh, is in flux.
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At the beginning of the year of 2026, there was much hand -wringing
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and concern about, uh, oversupply and too much, uh, energy and what
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was going to happen to prices.
3:00
And then of course, you had first Venezuela, and then you had, uh, the
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biggest disruption in history, which was the Persian Gulf, uh, disruption,
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closing the Strait of Hormuz.
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So I would say today, uh, on the agenda is sorting out as perhaps as a conclusion
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or, or some temporary conclusion to the crisis comes what that means for global
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markets, what it means for players, where, what it means for where investment goes.
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At the same time, I think there's going to be a greater emphasis on energy security,
3:32
uh, on resilience, and of course, we'll be still focusing on that very big question
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about, uh, finding the electricity that's required for, uh, for AI and data centers,
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which, uh, is certainly, uh, you know, maybe not as quite as visible as it was a
3:48
few months ago, but very much out there.
3:51
Thank you, Dan.
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That's a lot to unpack, so let's get into some of that, starting,
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of course, with the lessons and the experience from the Strait of Hormuz.
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It is, of course, the defining issue that is shaping new trend lines across
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the world and the state of energy.
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Uh, since February, you've described the events that have taken place as the
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biggest energy crisis that we've seen.
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And to be sure, it's caused pain disproportionately around the
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world, yet by and large, the long -envisaged catastrophic scenarios
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have relatively been contained.
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Why is that?
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I wrote an article, Naki, at the beginning of the crisis, uh, saying, "Is this the
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nightmare scenario?" Because, of course, for decades when people had, uh, done
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scenario work, it was the nightmare, the closing of the Strait of Hormuz.
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It's certainly been a very big impact, particularly in Asia, but it hasn't
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been, uh, the catastrophe, as you say, that might have been expected.
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And I think it's because, uh, while the strait, you know, 20% of world
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oil, 20% of world LNG passed through it, uh, there were alternatives.
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The Saudis, uh, had built a pipeline system, uh, as a result of the energy,
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uh, tanker wars of the 1980s, uh, which was able to move substantial oil.
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Uh, the UAE, Abu Dhabi had also built a pipeline that moved supplies out.
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Uh, it turned out that, um, that the growth of the US was such a big difference
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from previous crises, and the US became an exporter of, uh, both crude and product.
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And then another big factor which wasn't appreciated in the first couple of weeks
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is what was happening to Chapan-- uh, China's demand for, uh, for imports, which
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went down, and a question how much of that was coming from commercial, uh, inventory
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draw, how much was coming from, uh, their huge strategic stocks they built up, and
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how much was come from repressing demand.
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So all of those factors were there.
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And then on top of that, the International Energy Agency arranged
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a kind of coordinated, uh, release among its members of oil that also,
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uh, took some of the pressure off.
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So the world was basically missing like 1.2 billion barrels, but, um,
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but, you know, there was alternatives.
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And so I think that kind of resilience, uh, as well as some demand destruction
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and demand repression is what kept this from shooting up into those higher numbers
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that people had, uh, very much feared
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There's buffers in the system.
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It's a very resilient system, as you're saying.
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But still, major shocks like these can tend to have long tails.
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So even with the Strait so-called reopened and a ceasefire currently in place, again,
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we're recording this at the-- on June 23rd, what disruptions can still manifest?
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Well, first of all, if, uh, if the ceasefire, if it falls apart, if
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conflict renews, if, uh, Iran once again closes the strait, that's out there.
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And then if you talk about long tails, there's certainly an undercurrent of
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concern about if Iran turns what was a open navigation, uh, freedom of seas
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into an Iranian canal, what will that do for other choke points around the
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world and what other countries do?
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So that, uh, could certainly be one of the implications.
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I think another one that's important, well, this was a
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Persian Gulf Iran war crisis.
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It also amplified the crisis and tensions within NATO between
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Europe, uh, and the United States
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Pain points have certainly manifested to date, and you wrote a piece in Time
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magazine recently about one of the pain points about gas prices, not oil
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prices, but the price at the pump and how it reflects a global market despite
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whatever volumes are produced at home.
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You wrote, quote, "When Americans fill up their cars, they are not just
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looking at the price as it ticks up on the pump. They are looking at a
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reflection of America's role in the world and the changes in global politics."
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So speak to us about that, Dan.
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Talk about the, the, the psyche of oil-- of gas prices, price at the pump, and
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their historic politiz-politization in, in the American economy.
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Well, there's no price in America, I think, that's more political than the
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price of gasoline because people see it every day when they drive to work or,
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uh, uh, you know, get out on the highway.
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Uh, the, the numbers are posted.
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Uh, and what happened this time is that gasoline prices went up about 50%, and
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it was, you know, for several days or weeks there, that was, you know, led the
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news on television, prices at the pump.
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And it is the most sensitive price, uh, that, uh, that is so visible,
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the politics converge on it.
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What is interesting to me is when I was writing "The Prize," the earliest
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congressional hearing I could find on, uh, on gasoline prices was
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actually 1923, and very similar to the ones that happened all since then.
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Uh, you know, predictions that the price would go up to a huge amount
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and a fury and rage, and then new discoveries came along, uh, new
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technologies came along, and the price of, uh, gasoline ended up about
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one-tenth of what had been predicted.
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And similarly, I mentioned in the article participating in a, in a
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con-- big congressional hearing in twen-2008 when gasoline reached
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$4.10 in the dollars of those days.
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And again, uh, outrage and, uh, and calls for action and people not wanting to
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pay much attention to supply and demand.
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And then what happened?
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Uh, within four months, the price had fallen in half.
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So, you know, but we-- there's, there's sort of the economic cycles
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around gasoline prices, and obviously politics have a big impact on them,
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and then the political cycles as well.
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And I think, um, you know, if, if gasoline prices had reached $5 instead of $4.50 as
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an average around the country, we would've heard a lot more political rancor about it
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You've written a lot throughout your career about the concept of energy
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security, both pre-shale revolution in the US and now energy security that
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is, as you've described, is coming back in vogue in a world in conflict.
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How should we see the concept of energy security through
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the lens of gasoline prices?
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Is, is it true energy security if our economic security from energy prices
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is determined by global politics?
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Well, I think it is obviously these prices, uh, uh, and the price of energy
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flows through so many other things.
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At one point, our agricultural economist said 70% of the cost of food in the
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United States, for instance, is energy.
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Everything from fertilizer and diesel fuel for the tractors to processing and moving
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the food to the market and so forth.
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So energy prices permeate the economy in ways that people don't see
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that's quite different from see…
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the signs you see, uh, hoisted above gasoline stations.
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And, uh, and that does obviously get into economic security,
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and it gets into inflation.
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And I think one of the key things that we're gonna see probably over the next
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couple of months is to what degree these heightened prices, which have
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come down now, but, uh, flow into the kind of general inflation in the economy
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So there are tails to crises, and then there's also another ramification are
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there are resets and transformations.
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And you've spoken on, on various interviews and since
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February about a different world emerging from the Hormuz crisis.
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Add onto that your thesis of "The New Map of Energy," your latest book.
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So what changes from here?
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What strategic rethinks has the Strait of Hormuz crisis forced?
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Well, I think a lot is gonna depend upon what is the position of Iran and what
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is its relations with its neighbors.
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I mean, almost, uh, Iran sent, what?
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Almost 3,000 projectiles, give or take, uh, just to the UAE, the damage.
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But, you know, on the other hand, these countries share a body of water
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and have to live together in some way.
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Uh, so ju-just how that, how that's gonna work out is gonna be critical,
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and I think, you know, I, I don't think the country's really…
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That it's clear yet how, what the arrangements will be.
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So, uh, that's one big change.
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I think secondly, this is a big impetus to, to two other things.
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One, to build more resilience, and for countries, I think that
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means storage outside the Gulf.
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I think we're gonna see more of that.
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We're seeing countries in Southeast Asia now talk about strategic petroleum
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reserves, and I think this gives a new impetus to investment, uh,
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exploration in other parts of the world.
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Uh, what one hears from the industry is looking much more intensively at Africa.
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The Eastern Mediterranean, uh, I think is- gets more, you know, more focus,
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and Latin America and, uh, the sense of the US, uh, being part of this Western
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Hemisphere energy picture, which, you know, have been talked about in the
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past, but people hadn't really seen.
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I mean, people, you know, would be surprised to know right now
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Brazil probably produces four times as much oil as Venezuela.
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Uh, I think one of the best-kept secrets in the entire energy world
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is that Canada is the fourth largest producer of oil in the world.
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Uh, uh, what's happening now in Argentina, the growth of the shale development
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in a region called the Vaca Muerta.
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So I think, um, I think there's gonna be More reorientation to capital,
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uh, to the Western Hemisphere.
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And we certainly see what a change in Canada, uh, from the previous government
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to the current government in terms of s- seeking to solidify, uh, Canada's
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position as an exporter, and particularly p- well-positioned to be an exporter
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to, uh, East Asia through waters that take about eight days to get there
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and don't go through any choke points.
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So those are some of the changes that I think… Uh, you know, I was just
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yesterday talking to kind of a major international company that was more of
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a, of a trading company, and it's just striking the amount of investment that
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they're putting in now into production, into new resources in the United States.
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That wasn't part of their playbook a couple of years ago.
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And what does it mean for the future of non-hydrocarbon sources, i.e., renewables?
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Should, should we expect more of a doubling down on diversity of hydrocarbon
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sources, or is this a watershed moment away from a hydrocarbon-based system?
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Well, I'm not sure watershed because there wasn't a sense, uh, of backing away.
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Europe, for instance, having to come to terms with its loss of economic
14:54
competitiveness because of the energy policies it was promoting.
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I do think there's kind of a rebranding or repositioning of renewables
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as, um, as in terms of energy security rather than climate, and
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I certainly s- see that happening.
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Um, uh, obviously, unless you have lots of electric cars, and we can talk about
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electric cars in a minute, uh, you don't, uh… Wind and solar don't really
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address, uh, oil, uh, you know, or they compete with natural gas, of course.
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Uh, but I think that, uh, this is a-- For renewables, their role in energy
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security diversification is very important, and if we look around the
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world, uh, about something like 90% of the new electric generating capacity
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that was added last year was renewables
15:47
I want to move to a separate but related theme to, to the last points
15:51
that you've been making, the theme of power, power in the electron sense, and
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the massive mobilization of industries, policies, and capital that is giving
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rise to not just AI, but a broader system elect- of electrification.
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The theme of CERAWeek 2026, which you chair, of course, was largely built around
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AI and power and the idea that traditional energy is fusing with the power industry
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and the tech industry to drive M&A, capital spend, vertical integration.
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You've studied major structural shifts in global energy.
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How does this convergence between power and AI compare to other historical
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energy shifts that you've chronicled?
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Well,
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well, I think we can even go farther than that.
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I mean, that convergence-- I mean, CERAWeek really was
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like big tech hyperscalers, AI meets the energy industry.
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You know, that was the really the… I mean, obviously there
16:43
were many other themes there, but that was a dominant theme.
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And when you had, you know, a delegation from Nvidia there, uh, we wouldn't
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have seen a delegation from Nvidia at CERAWeek a couple of years ago.
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That tells you, uh, the change that's happening and these different,
16:59
different sectors learning to talk to each other and how to work together.
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And one of the big projects that, uh, that I'm, uh, helping to lead is ex-
17:08
specifically on, you know, the, the, the supply chains for the data centers.
17:14
'Cause you're talking about what is the biggest, in inflation-adjusted
17:19
terms, the biggest infrastructure investment in American history.
17:24
You know, this is-- Some say this is the seventh of such of those,
17:28
uh, going back to canals and highways and et cetera, et cetera.
17:34
But, uh, it's very big, and I think it's happening fast, and there's so
17:38
much money going into it and not-- And, you know, understanding the supply.
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When things happen at this scale and this fast, there's, you know, there's
17:46
not a lot of clarity, particularly when industries that haven't talked
17:49
to each other are suddenly coming together, uh, trying to work together.
17:53
So, uh, that's part of this remarkable period that we're in right now.
17:58
And I would say that, you know, na- uh, natural gas, oil, we
18:04
talk about energy security.
18:06
I think rather than reliability, we really have to talk about energy security in
18:09
terms of electricity as well, making sure that the electricity is there and that
18:14
it's competitive and that it's affordable
18:18
As you said, at CERAWeek, you were on stage both, um, in-- on stage
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and behind doors in, in your private conversations with the executives of these
18:27
conversion communities, power, tech, AI.
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What were some of your main takeaways or some of the, the light bulb moments that
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made you think that this-- we really are living in a different converging world?
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Well, well, what struck me is the difference between a software engineer and
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a, uh, somebody, I don't know, we would say a, uh, an energy industry engineer.
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A software engineer, I don't know, might think a couple of months is the timeframe.
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Uh, somebody in energy where you're building infrastructure,
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you may be thinking about a project that's gonna take seven years.
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And so I think there's just a, a gap of understanding
19:03
there in how to work together.
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And then there are a lot of regulatory issues.
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Uh, uh, and then there's local opposition that we're seeing to data centers.
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So I think it's, uh, becoming
19:19
Even as more money is being appropriated for it or, uh, committed,
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uh, it's getting more complicated.
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And that's why, that's why I think really trying to get a handle on how
19:30
the supply chains are actually working and where the bottlenecks will be,
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that's going to be kind of a, a mission for us over the next six months.
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Yeah, that takes me perfectly to the next question I wanted to ask you,
19:42
and that AI is-- it's very prevalent now and already very well baked
19:46
into the trajectory of expectations of where this world is headed.
19:50
But as you say, there are real choke points to building out an
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electrified and fully AI system.
19:55
So what are those risks?
19:56
Elaborate on those, please.
19:58
Uh, well, well, I mean, there's the AI risks themselves, you know, which
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we're seeing with, uh, new models and, uh, and the power and the potential
20:09
and the anxiety they're call- causing.
20:12
And we see governments really struggling with the degree of
20:16
regulation or not regulation of, uh, AI.
20:20
I mean, it's, it's ha- I mean, obviously AI didn't just happen overnight, but it's
20:26
now the rapidity with which it's moving.
20:28
And of course, it's also being characterized as a race between
20:32
China and the United States, which we hear so much about.
20:36
And then it's a race among companies as well as to who will
20:39
be the, the dominant providers.
20:42
Affordability and the economics of energy security, as we were talking
20:45
about before, no longer is applicable to gas prices, but electricity prices.
20:51
There is a, a, a very wide debate and a, a politicization going on around AI
20:56
and data centers, especially in the US leading up to the midterm elections.
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How do you see the narratives that are transforming around AI and power?
21:03
What, what's getting, what's being-- what does the narrative
21:07
have right or, or what's missing?
21:09
Well, well, I, I think a lot of, you know, clearly we're seeing increases in electric
21:14
power prices in many parts of the country.
21:17
Um, you know, what's not-- But, you know, more of that is being attributed
21:23
to the data centers at this point than it, than seems appropriate.
21:29
There are a lot of other reasons that utilities have had to put
21:32
in a lot of, uh, infrastructure.
21:35
There was a, uh, of course the, all the requirements in terms of renewables and
21:41
dealing with the intermittency of it.
21:43
So there are a lot of factors that I think have driven up costs, and then
21:46
there's just the inflation in the system that the, the cost of the inputs, the
21:51
cost of transformers, the capacity to manufacture them has, uh, increased.
21:56
And then it's complicated because, you know, five or six years ago, people
22:01
would've just very easily turned to China for low-cost, uh, equipment.
22:07
But that is gonna get harder and harder to do, uh, given the overall, uh- Do
22:13
we say competition, tension, whatever we want to say in the relationship,
22:17
uh, between China and the United States
22:21
One key and very critical upstream component to AI and the chip
22:26
economy are critical minerals.
22:29
And you chaired a very authoritative study that was released earlier this
22:32
year about copper in the age of AI.
22:36
What are some of those key findings and conclusions about the, the convergence?
22:40
Copper-- I mean, we start off that copper is the metal of electrification,
22:45
and it's absolutely essential.
22:48
But if we, if we'd done that study 10 years ago, we would've just talked
22:51
about, well, it's, it's the lighting in the room, it's the machinery out
22:55
there, it's, uh, the wiring in cars and, uh, and, uh, other things.
23:00
Uh, it's construction.
23:03
And so-- But now what's happened is where we had kind of one very big vector.
23:10
And, uh, and that's why copper was called Dr. Copper because the, uh, its
23:15
price and the demand for it seemed to reflect whether we're in an economic
23:19
growth period or we were in a recession.
23:22
But what we've sent out, we've-- we now have five vectors of demand for copper,
23:27
which is one is all the traditional, uh, call it economic uses of copper.
23:33
Second is energy transition, and that's what really got us interested
23:36
in it because if you take an electric car, it uses almost three times as
23:42
much copper as a conventional car.
23:44
Uh, solar panels require copper in, uh, uh-- And so you have
23:50
energy transition demand.
23:52
And by the way, uh, one out of four new cars sold in the world
23:56
last year was an electric car.
23:59
Uh, then thirdly, you have data centers and A-AI, and we think that up to 20%
24:06
of US copper demand could be for data centers o-over the next couple of years.
24:12
And then you have on top of that, you have increased defense spending,
24:15
Europe going from one and a half to 5%.
24:18
Uh, uh, you have, uh, drones and the kind of electrification of the battlefield.
24:24
Uh, and then you have something that three-- couple years ago people would not
24:28
have taken so seriously, but they're sure taking it seriously now, humanoid robots.
24:33
And whether we're gonna have a, you know, 10 million, 100 million
24:37
or a billion by 2040, w- those, those critters are really wired.
24:42
And so there's the demand there.
24:43
And so we came to the conclusion that we're on a track now to have a big
24:47
shortfall in terms of copper availability because of how long it takes to
24:52
doing big new copper mines, 17 years.
24:54
So there's a real problem that has to be solved there, or, uh, or there
24:59
will be a shortfall or some things will not be achieved or, uh, you
25:04
know, you can go down the list.
25:06
But we're-- And part of it really requires, which is the same thing you see
25:10
for gas pipelines, the same thing that's you see for, uh, wind, uh, wind, you see
25:17
it, uh, uh, you know, this problem of permitting, and it's a global problem.
25:22
It's not just a US problem or a Canadian issue or a European issue.
25:26
It's a, it's a global issue.
25:29
The other side of the coin, the, the complementary theme that was driven at
25:34
CERAWeek in addition to convergence was competition, and that was an, an oma- or
25:39
a reference to a fracturing geopolitical order and a rules-based order.
25:44
You talk to a lot of energy boards and CEOs, and yourself,
25:49
you, you think on these issues.
25:50
How do companies plan long-term capital and strategize in, in this era
25:55
of regulatory risk and uncertainty?
25:58
Uh, it's, it's harder.
25:59
I mean, one book I did, um, which was not about energy at all, it was called
26:04
"Commanding Heights: uh, uh, The, uh, The Battle for the World Economy," and it
26:08
was about that shifting frontier between state and market and about globalization
26:14
and how easily, uh, things moved.
26:18
People-- Uh, companies, I don't think… I remember one CEO said to me, "You
26:22
know, we never thought about supply chain as a strategic issue until about
26:26
2019, 2020, and COVID amplified it." And now, of course, it's become very
26:32
relevant with the tensions between the United States and, and China, uh, for
26:37
both countries, uh, about supply chains.
26:40
And so I think, I think that's the kind of the, the-- one of the big… There are
26:44
many challenges for people, you know, CEOs and others who are running major global
26:49
companies, uh, major… But one of them is, um, is the kind of politicization
26:56
of supply chains, uh, is that the playbook, the playbook of globalization
27:03
doesn't work so well when barriers of one kind or another are going up.
27:07
Uh, it was not so long ago that people moved very easily
27:11
from one country to another.
27:12
Goods moved, services moved.
27:14
I mean, look how much more difficult it is just, uh, for going to c-
27:18
from one country to another in terms of visas and things like that.
27:22
So I think, um, I think it's, that's more challenging in the…
27:26
You know, and people will kind of be, I think, nostalgic for those three decades
27:30
of, uh, globalization when you could just think about, "Well, what was the
27:34
most efficient thing to do?" You didn't have to worry so much about resilience,
27:38
and it could be just in time, you know.
27:41
And now, uh, increasingly you hear it described as a just-in-case world,
27:45
where you really need to build in resilience and, uh, duplication,
27:51
uh, and rejigger your supply chains.
27:54
And of course, um, that adds to cost, and that's why people-- one reason
28:00
people think we're gonna kind of be in an era of, of higher inflation,
28:05
because we won't have that, uh, very open world, which, you know, there
28:09
was a book that came out during that period called "The Borderless World."
28:13
Well, we're back in a world of borders.
28:17
And lastly, Dan, we're recording this again on the eve of the
28:21
250th anniversary of the founding of the United States of America.
28:25
As one of the great storytellers of American energy, what are some of the
28:29
key inflection points that you think about that have woven into the American
28:33
story on energy that have made this country really an energy superpower?
28:39
Well, I think it's, um… I, I mean, I do see a g-a great flow, you know,
28:44
that during World War II, six out of every seven barrels that the Allies
28:48
used was produced in the United States.
28:51
And then we went into a world in which the US really went into decline, was
28:56
on the course to import 60% of its oil.
29:00
Uh, the question only seemed to be how much more would it be?
29:04
I remember being at a, at a, um, a, uh, National Petroleum Council meeting in
29:12
2003, where the discussion was that the US was gonna become the world's largest
29:16
importer of LNG. And if anybody had said that it was gonna become the largest
29:21
exporter of LNG, uh, they would've been, uh, e-e-excluded from the room.
29:26
They would've been, uh, s-sent out of the room and put in detention.
29:30
And yet here, uh, that's, that's happening.
29:33
So I think that's quite remarkable to see how the US has regained this
29:38
position and, uh, and what it means for, uh, the US economy, uh, what
29:45
it means for the world economy, what it means in terms of stability.
29:48
And, you know, some of the studies w-we've done, including one we're
29:51
just, uh, releasing now on LNG, shows, you know, the job impacts of
29:57
this have been quite considerable.
29:58
So I think this is one of the, you know, really unknown or largely unsung
30:05
or unrecognized stories about what the significance of the shale revolution
30:11
has meant, not just for energy, not just for gasoline prices, but what it's meant
30:17
for security and economic development and what it's meant for the position
30:20
of the United States in the world.
30:22
So, um, you know, on the 250th anniversary of the US, uh, to see that turnaround,
30:29
and it was innovation that was driven, uh, by people who ignored what the
30:34
textbook said because the textbook said you couldn't do this commercially.
30:38
It turned out you could do it not only commercially, but you
30:41
could do it at an enormous scale.
30:43
So that's part of the American story.
30:46
Dan Yergin, thank you very much for your time and your reflections on the
30:49
energy story that was, and looking forward to the risks, the challenges,
30:53
the opportunities in a dev-- in a transforming, evolving energy system.
30:57
Thank you, Dan.
30:58
Well, thank you, Naki.
31:00
This was a great conversation as we look towards, uh, beyond the 250th anniversary.