Taking Stock

According to a good stocktake in The Economist on April 30th, the most likely amount of oil market shortfall has been 12.3 m/b/d, or 10% of global supply through March and April. I wrote about alternative pipelines used by Saudi Arabia and the UAE that bypass the Strait of Hormuz in an earlier article.

The value of spare capacity, mostly from them, is limited now, and a good amount of it blocked. (Ironically, a Middle East oil market expert opined about the value of spare capacity in early April, before the UAE announced the departure of OPEC for May 1.) U.S. shale is forecast to only ramp up 300,000-700,000 extra barrels per day over the next 3 to 6 months. Specifically, one Permian producer is planning an extra 50,000 of incremental production. Russia could add 300,000.

Around the world, solutions in the near term are rationing of supply and price hikes to reduce demand. Crude oil demand has been reduced in the Middle East, owing to war disruptions; roughly 50% in Asia; and the remaining from East Africa, which is dependent on the Gulf; and some Eastern Europe.

Interestingly, as noted earlier too, U.S. crude exports and refined products would be called upon.

Reuters reported on April 30th: “Total U.S. crude exports climbed to a record 6.44 million barrels per day, marking a 1.64 million bpd rise from the week prior.” See where our transport fuel exports go—mostly to Latin America and the UK, plus the Netherlands.

Pain points are most visible in diesel cargoes. One trader saw a $600 diesel cargo from $300 the week prior. The U.S. doubled diesel exports to Europe from January 2025 of 167,000 b/d to 396,000 in January 2026 for heating and power. Russian sanctions were the main cause of Europe’s switch to U.S. cargoes. In March, they reached 414,000.

The stocks of refined products such as petrol, diesel, and kerosene (jet fuel) are dispersed among millions of suppliers and consumers and so are not easy to measure. Demand, meanwhile, is typically inferred from data on production, trade, and storage rather than measured directly, notes The Economist in trying to sort stocks from flows.

The bankruptcy of Spirit Airlines is a definitive casualty. Air fares are rising quickly in the U.S. ahead of the summer travel season. Travelers will either choose to purchase but now for fear of higher prices, or wait and see. One might envision more road trip vacations to shorter distances.

Stocks and Flows

While the stocks reducing story is troubling, the flows story is just starting. Noted by the Economist:

“If demand destruction has reached 4m b/d over the past two months—a generous estimate—that means the world has been draining stocks by as much as 8m b/d. …If Hormuz remains closed, [sea borne trade] and releases from strategic reserves dwindle, commercial inventories will have to provide 6m-8m b/d—a pace no one considers sustainable.

One trader expected shortages to materialize within 4-8 weeks in most regions.

Crisis Strategy

There’s nothing like a crisis to create new strategies. The UAE made a timely decision to leave OPEC. Aside from Saudi Arabia, the UAE is a source of spare capacity. They will now ramp from their 3.2-3.5 m/b/d prior quota to 5 million by 2027. They could conceivably go higher. Right now, that’s market signal that others can step into rebalancing the market. Oil market producers have every incentive to not allow the demand destruction happening now to continue into the future.

The chart below reflects the impact on overall prices rose sharply with Europe’s Russian energy and gas shock. Countries are more energy efficient and have altered their supply chains too. On the flow side, I expect more shifts in energy supply chains and diversification of sources.

U.S. exports will be increasing as noted above, but their stickiness is to be determined. After Russia’s invasion of Ukraine, the U.S. increased its LNG trade considerably. There is definitely incremental activity being picked up in the U.S Gulf.

‘The crisis has pushed U.S. LNG exports roughly 1.9 Bcf/d above pre-crisis forecasts for 2026 overall, hitting U.S. infrastructure’s ceiling,’ NPR reported. In the next 1–2 years as new capacity comes online — U.S. LNG supply is forecast to grow by about 84% over the next five years, according to S&P Global Energy. However, the terminals and pipelines are inadequate to fill the 10+ Bcf/d void left by Qatar in the near term.

LNG exporters Cheneire, Woodside Energy and Venture Global have seen their stock prices rise with the large spread between U.S. gas versus European and Asian prices. While energy stocks have had a run upward, semiconductors reflective of the tech and AI trade indicate a type of momentum owing to near term trends and sentiment. Scarcity is also part of the semiconductor trade, but chips competition is changing slowly. Energy investing has nuance and changing fundamentals but commodities are its baseline.

What Matters Now?

Bottomline: In the energy space, the increased relevance of the opportunities are now more salient such as midstream and infrastructure plays connected to longer-term export opportunities. More upstream deals and consolidation will continue in U.S. oil and gas.

Markets will definitely be rebalanced based on prices ahead. Developing countries hit by the shortages the hardest will shift policies ahead incrementally. Stable, market-based economies will benefit in terms of being rewarded with new business opportunities and capital flows. The UAE’s move to align toward a more market-oriented outcome is also a sign of the times. The country has recently articulated its new plans which includes $55 billion in upstream and infrastructure development.

What comes next based on fundamentals is higher prices in places and reduced consumption that filters through everything. Can developed countries take the hit? It depends on one’s energy orientation and sound policies based on the way in which energy works, not as it is idealized. Infrastructure changes are longer lead affairs with large amounts of capital required.

Does Iran have oil markets over a barrel? Temporarily, in terms of the shock and awe, but that has largely passed for now. On a practical level, adaptation, pioneering new opportunity, and rethinking supply chains is next.

A few key areas are highlighted.

On oil prices.

Hatfield uses a rule of thumb: every one million barrel change in supply moves the price by five dollars. With sixteen million barrels per day offline due to the conflict, the math puts the worst-case ceiling at $140 and the best case — full resolution — at around $70. He pegs the equilibrium at $100. Markets won’t price in the worst case, he argued, because they assume the Strait of Hormuz won’t stay closed indefinitely. If negotiations drag on without a resolution, prices will drift higher; if the conflict ends, they fall toward $70, which is roughly what futures are already pricing in.

He did not believe that high oil prices would seriously damage the U.S. economy. Electricity is priced off natural gas, which is cheap domestically. Gasoline accounts for about 3% of consumer spending — meaningful but not decisive. The AI-driven economic boom, in his view, more than offsets the headwind.

Video Interview: Energy Crisis Hits US Less Hard: AI Infrastructure Plays On

(I have interviewed Hatfield on energy and markets periodically since 2014.)

On midstream MLPs.

The master limited partnership (MLP) space is where his firm recommends investors play the energy dislocation. The sector was out of favor for years, left behind when tech boomed. And it still hasn’t caught a real momentum bid despite the tailwinds from AI power demand and energy security concerns. He sees that as an advantage. Energy Transfer trades at roughly 13X earnings with a 7% yield. (His firm’s AMZA ETF fund yields over 9%.) If the war ends, MLPs might fall three or four percent. Upstream oil stocks could fall 10-15%. That’s the trade-off he forsees.

(Paywalls are to be removed some days/weeks after paid or founder subscribers, based on content. The occasional, organically-derived sponsored post, adhering to independent editorial standards, is possible in future and flagged as such to support the work efforts.)

On AI infrastructure.

Hatfields approach is to invest in the AI infrastructure providers rather than attempt to pick winners among software companies. Amazon, Microsoft (for its infrastructure scale), Broadcom and Marvell (for ASIC intellectual property) are the names he favors. Data center REITs like Digital Realty offer a lower-volatility entry point. His core point: nobody builds a data center without signed contracts, so there’s no speculative overbuild risk comparable to the fiber bubble of the late 1990s. Demand for compute is broad enough that if one counterparty defaults, another takes the capacity.

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On financing the AI infrastructure build-out.

Hatfield dismisses the short thesis that there isn’t enough capital. The U.S. capital market is not only banks — it includes public bonds, private credit, private equity, and strategic capital. When banks hit concentration limits on Oracle exposure, a 144A bond offering picked up the slack for a major Michigan data center deal. That kind of market depth doesn’t exist in Europe or Asia.

On market efficiency.

The markets get it right over the long run, Hatfield suggests, and badly wrong in the short run. Lockheed Martin dropped $100 in two weeks with no fundamental reason — collateral damage from capital rotating into semiconductor momentum trades. At 16X earnings, he thinks it should trade at 20, and his firm is buying it. The semiconductor momentum trade, in his view, is tired. MLPs still have fundamentals that aren’t fully reflected in prices.

His closing point: patient investors who focus on valuation rather than momentum will find plenty of opportunity in the current environment, particularly in midstream energy and AI infrastructure. The bear theses that circulated in recent months — no AI applications, circular financing, insufficient capital — have largely been wrong, and the noise around them has created entry points that a shorter-term focus would have caused investors to miss.

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Two notable developments: Kuwait recently called force majeure on meeting customer demands — reported on the 20th — signaling real pain felt by Gulf states and their customers. Additionally, the UAE has requested financial backstopping from the United States. This is significant given that the UAE holds sovereign wealth fund investments in U.S. AI infrastructure, including their own domestic AI build-out. Saudi Arabia has also been investing heavily in its digital infrastructure, and both countries’ plans will be impacted to varying degrees depending on how much supply remains shut in or stalled in transit.

Energy security is now top of mind globally. Countries that import from Gulf states must reckon with both short-term crisis management and medium-term diversification of energy sources. Oil prices are expected to hover in the $100-per-barrel range, and low gasoline prices in the United States are not on the horizon anytime soon.

Longer form video discussion:

Also noteworthy: reporting in the Wall Street Journal indicates an increase in militia attacks on Gulf states’ interests in Iraq — proxies acting on behalf of Iran. These attacks are becoming more diffuse, extending beyond the action connected to the Strait of Hormuz. The economic impact on Middle East and Gulf State energy-producing countries and their energy customers should not be underestimated.

U.S. AI Infrastructure Build-Out

The AI infrastructure build-out in the United States is continuing. Progress is visible on large-scale projects, including Microsoft’s $7-billion Fairwater project. Amazon recently announced a $25 billion investment in Anthropic. Microsoft has also taken over leases at the Abilene Stargate project, absorbing capacity previously held by OpenAI, Oracle CoreWeave, and Meta has absorbed some of the lease capacity too. These are enormous capital projects, and the hyperscalers have benefited from recent shifts in the competitive landscape.

The build-out is still very much active, though the intensity of near-future investment remains uncertain. Power availability remains the central constraint — the key governor on the pace of growth. A secondary constraint could emerge from inflation: higher interest rates, consumer pressure, and shifting priorities between spending on energy versus data could introduce speed bumps.

Texas Grid & Data Center Demand

Some takeaways follow that are partly from a Global Energy Symposium hosted by TCU’s energy institute, which I attended last week. Highlights include remarks from the CEO of ERCOT, the Texas grid operator, as well as an executive from power producer Vistra.

Demand Growth

The ERCOT CEO Pablo Vega confirmed that the headlines about growth are accurate. Demand is coming from data centers, industrial users, crypto mining, and oil and gas operations. Vistra estimates the Texas grid will grow at 4–6% per annum in the years ahead; PJM (the northeastern U.S. grid) is projected to grow 2–3%. Texas is attracting the lion’s share of data center development for reasons documented in a number of features and posts here.

Grid Statistics & Interconnection Queue

Texas peak demand on the grid has been approximately 85 gigawatts. The total generation queue over the coming years stands in Texas alone stands at 450 gigawatts: 360 GW from solar and batteries, 60 GW from gas, and 50 GW from wind. Not all of this will materialize.

From a report of April 21, regarding preliminary large load peak demand forecasts and reported requests of interest to connect, ERCOT highlighted transmission service providers reporting about what’s in the interconnection queue. The 2026 peak demand forecast is 98 gigawatts, with 112 gigawatts reported, which speaks to near-term interest. Data center demand alone in the queue as reported by the Transmission Service Providers:

2026: 7.4 GW

2027: 40 GW

2028: ~100 GW

2029: 150 GW

2030: 187 GW

2031: 212 GW

2032: 228 GW

For context, crypto mining represents 9 GW through 2032, industrial load adds 3 GW, and oil and gas 2.5 GW. Data centers dominate. Industry analysts suggest only a fraction of the queued data center demand will actually connect — at maximum half, or likely much less.

Grid Modernization

ERCOT is moving toward a “batch process” for interconnection studies, designed to reduce uncertainty and produce more reliable forecasts. Interconnection will be aligned with transmission planning, and stricter entry criteria will govern who gets into the queue going forward.

Texas is also building new 765 kV high-voltage transmission lines — a less-common infrastructure type in the U.S. These lines are five times more efficient over long distances than the 345 kV lines which were planned two years back, and are now superseded. Initial routes will originate in far West Texas, passing through the Permian Basin, with additional lines serving the Texas Triangle (Dallas/Fort Worth-Austin/San Antonio–Houston corridor). In Texas, construction takes 5–6 years; in other states, 9–13 years, according to a panelist at the conference.

These transmission upgrades will benefit oil and gas, data centers, and industrial users to keep up with Texas’ economic growth.

(For background on the 765 kV plan and the earlier CREZ lines (built to move renewables, see the NAPE magazine article referenced in this video.)

Summary

The Middle East crisis continues and impacts are being felt. Its economic impact — on Gulf states, their customers, and the global energy market — deserves diligent attention, not to be underestimated. In the United States, the effects so far have been rising inflation and higher prices at the pump. If the crisis persists, capital projects will increasingly compete, interest rates will constrain investment, and the AI infrastructure build-out may face some headwinds.

Two governors are at work on the pace of AI infrastructure growth: power availability, and the broader macroeconomic environment shaped by energy costs, inflation, and interest rates. The digital economy is not going away — but there may be speed bumps ahead.

This crisis reminds us how interconnected the global economy still is, especially through energy.

Other reference chart from ERCOT:

While the U.S. focuses on silicon-related business activity and AI, the energy to support it is foundational. From an analysis, by request, of Saudi Aramco, Saudi Arabia’s national oil company and the oil crisis, a few key takeaways emerged that offer more facets of the crisis’ continuing impact. For one, the firm is the most valuable brand in Saudi Arabia, and right now—the world—reaching a $6.6 trillion valuation. A number of items are now more valuable too:

• Energy, generally, and oil and gas production, specifically;
• Back up infrastructure;
• Spare capacity;
• US exports; and
• Investment environment stability (and liquidity) to continue digitalization and development.

[Update: 4/17 Iran declared the Strait open and WTI (US) futures dropped to $83; the Dubai basket (Gulf streams) is $104 for April. Then a WSJ article said, “Even if Tehran permits a genuine reopening, a commodities analyst estimated that only about 25% of Middle East Gulf export capacity would resume within one to two months.]

World Worried

It is useful to look at the energy crisis from the rest-of-the-world point of view. In a Bloomberg article of April 15th, they write:

The U.S. market has been under-appreciating the impacts of the disrupted flows connected to energy. Aside from the U.S. exporting more crude oil and liquids plus LNG, a slight wrench could occur in the growth that supported the U.S. economy in most of 2025—the AI infrastructure and data center buildout. This will be critical to watch over the next many months. Today, Europe is reported to have six weeks of jet fuel. Other developing countries were already rationing.

Echoing the concern, at TCU’s Energy Symposium of April 15^th a major U.S.-focused shale producer chief executive believes the crisis’ knock-on effects are more problematic than the market is communicating. With the blockade in place, cargos that were in route will reach destinations but there will be few behind that. This indicates shortages for those Gulf States’ barrels. U.S. producers can only pickup slack so fast and relative to refining capacity.

(See some early impacts are here including inflation and price scenarios.)

As noted by a Saudi energy expert at an energy symposium at the SMU Cox School April 10, the other risks are the cargoes of products normally transiting through the Strait such as :

• sulfur with 50-60% of the seaborne trade;

• ammonia 24-27%

• urea ~ 33% of global trade

• helium 30-38% (used in semiconductors)

Besides crude oil and gas, as LNG, liquified petroleum gas (LPG) is also affected. As of March and April, global helium supply is facing a major disruption, with approximately 30–38% of global production offline from Qatar’s infrastructure being offline. Helium is as a byproduct of LNG.

Slowing the AI push in the Middle East?

The Saudis will want to restore stability and continue diversifying their economy according to the Vision 2030 plan.

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Crisis in oil and gas, especially of this magnitude in the Middle East, scathes all markets and countries, to greater and lesser degrees, based on their fundamentals of supply and demand and their export-import dynamics. No one is escaping inflation really.

(As of April 12th, the U.S. is forming a blockade in the Strait of Hormuz to deter Iran holding the transit way hostage to its demands.)

Just as U.S. natural gas via liquified natural gas, or LNG, came to the rescue during the Russian invasion of Ukraine in 2022 onward, there is a call on U.S. oil. Imagine a world that didn’t include U.S. resources now. (That thought experiment was included in a 2021 article when net zero was still a more emphatic goal as the pandemic waned.)

What is temporary or enduring depends on the Strait being reopened, which is in the interest of the entire globe now, not only the Middle East. Fortunately, the temptation to control U.S. exports is being avoided for now. In fact, it would not help U.S. prices at the pump, owing to refining issues at present. Allowing the market to flow as freely as possible now will pay dividends later. It might even calm the market to be slightly forward looking.

Illusions of a fossil-free energy world anytime to 2050 are clear. Not only is oil demand not peaking just yet, as narratives went, crude oil is expected to peak near 112 million barrels per day (m/b/d) in 2050. The year 2025 ended with supply of 106 m/b/d. It is to decline 2 m/b/d in 2026, owing to supply disruptions and demand curtailment. Several countries in Southeast Asia have begun adaptations, like rationing, supply diversifications, and other workarounds. Generally, adaptation was a climate change heuristic, and now it’s everywhere energy touches.

Price discovery of other goods is tied to the price of oil, too.

Sticker shock

This Iran War supply shock is a big.

While this crisis is the largest disruption on record in modern history, notably the Iran War and Russian invasion included U.S. shale in the production tally, whereas earlier supply shocks did not.

Currently, large volumes of oil are shut-in in the Middle East. OPEC recently highlighted that production has declined by 7.56 million barrels per day to 22 million in March as the closure of the Strait of Hormuz continues to create significant supply constraints. U.S. Energy Secretary Chris Wright has noted as reference that the U.S. consumes ~20 m/b/d, and the war has shut 10-15 m/b/d of supply from the Persian Gulf.

Another chart gives the actual spot prices of the conventional benchmarks. Importantly, the Dubai basket was much higher than Brent, at over $160 per barrel the week ended March 20th. The Dubai oil basket prices—which act as the primary benchmark for Middle Eastern crude oil sold to Asia—are paid primarily by Asian refiners and national oil companies. Futures prices show expectations and are generally disconnected from actual prices. Spot prices reveal the physical scarcity, as noted by a recognized analyst from Saudi Arabia at a Maguire Energy Institute symposium just days ago.

Below is the impact of WTI futures (CL1:COM) and Brent (CO1:COM). However spot prices of the physical commodity are different.

Shut in

The U.S. Energy Information Administration (EIA) says Iraq, Saudi Arabia, Kuwait, UAE, Qatar, and Bahrain collectively shut in 7.5 million barrels per day (b/d) of crude oil production in March. They expect production shut-ins will rise to 9.1 million b/d in April, assuming the conflict does not persist past April and that traffic through the Strait of Hormuz gradually resumes. Under those assumptions, they expect production shut-ins will fall to 6.7 million b/d in May and return close to pre-conflict levels in late 2026. In this best-case scenario, production resumes at full supply in late 2026, with global oil prices forecast at $96.

Just over a year ago, the relatively rapid decline in oil prices was leading a different outlook for U.S. oil and gas since the shale boom. Globally, to 2024, we had been producing 22% of the crude and liquids market and 26% of natural gas, a huge supply-side accomplishment.

I wrote last year that the pricing impact of shale has been enormous. The Dallas Fed found that oil prices in 2018 would have been roughly 36% higher had the shale revolution not occurred. Further, the shale revolution implies a reduction in current oil price volatility around 25% and a decline in long-run volatility of over 50%. Considering that the price of oil dictates so much around the world, and geopolitics were a key source of volatility, the world looks different that pre-shale. It gets taken for granted.

At the symposium last week, the analyst from Saudi Arabia said that OPEC’s control over spare capacity had also reduced volatility. However, this year spare capacity has been at record lows at 1-1.5 m/b/d, partly owing to lower prices. Currently, little oil is moving out of the Strait of Hormuz.

Below is a map from the EIA:

Basically, 20% of global supply moves through the Strait of Hormuz. The pipelines in the Middle East are being rethought for backup infrastructure routes, but Iran attacked the Saudi’s E-W pipeline a couple of days back. This map is from April 8^th (Bloomberg).

The analyst presented the following chart of some key pipelines that will be considered more valuable in the future:

Below, more color is offered for illustration purposes only about the capacity potential of various pipelines that bypass the Strait of Hormuz from the Strauss Center. (Disregard the operational status, as that has changed.) Only two are operational at present: Saudi’s E-W, with 700,000 capacity and Abqaiq-Yanbu NGL pipeline. This shows one how quickly things can change.

While the industry has faced such macroeconomic and geopolitical headwinds with aplomb in the past, the geological and economic issues surrounding peak oil are different. I’ll attempt a brief analysis that shows why it’s important. Price discovery of other goods is tied to the price of oil, too.

Opportunity: Shale and peaking supplies

Discussions of U.S. peaking oil supplies are a misnomer. Price and technological advances matter greatly in the next 10 years, especially until more nuclear capacity comes online to defray power consumption and support electrification. If anything, the density of oil, which the world relies on, has come into sharper focus. The same is true with energy sources for electrification.

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From a long-running history with India of 30 years, I’ll share some firsthand observations of the features of their growing four-trillion-dollar economy. It’s like a massive socio-economic experiment contained in the democracy, that is India. The numbers, however, do it no justice.

I was part of a delegation of educators, trade representatives, and creative professionals that left in early March and returned a couple of weeks later. Upon arrival, we spent two days in Delhi, then traveled south to Odisha — a growing state in southeastern India with a long 357-mile coastline curved along the Bay of Bengal. With the sea spray hitting my party’s faces, we marveled at just being there. The closeness of Southeast Asian surrounds was palpable, and its opening to the vast Indian Ocean.

As a maritime democracy, India’s history is interwoven with external relations and trade. We share that element with them, and also strong national identities.

Going back to a 1994 first trip to India, I traveled from Delhi north toward Tibet and Nepal, spending most of my time in the northern regions near the Himalayas, before heading south to Kerala at the southernmost tip of the country for a three-week journey. We were filming a documentary about a newly discovered cave called Patal Bhuvaneshwar.

India has developed enormously since then. Thirty years ago, I wrote a travelogue and so I have a detailed record against which to compare. At the Taj Mahal, the crowds were probably five to ten times what they were back then. This reflects the growing middle class we so often read and hear about — but from a first-person viewpoint. It depicts a new India that has more vacation time and disposable income to tour their own country, much as we do in the United States. Tourism is an agenda item for India in the future as well.

As the largest democracy in the world, we share many values with the people of India. As we celebrate 250 years of our experiment in democracy, their journey in independence began in 1947, after Britain left. We also share that history of freedom loving and independence. The young entrepreneurs with startups in clean coal production, ocean-related green ventures, and data science-based services spoke to an emergent India—and does not even scratch the surface.

Experiencing the young entrepreneurs’ stories was a window into the world’s largest democracy and top-five economy in transition.

In the last two decades, India has made great strides in their economic development, putting out the welcome mat to foreign investment in the early 2010s. Their tech capitals of Bangalore, Chennai and Hyderabad are well recognized and continue to attract U.S. big tech and global firms of stature. In the last year-plus, $70 billion in investment by Google, Amazon and Microsoft has been spent for data centers, according to the Ministry of External Affairs official we sat with in Delhi. However, the investment now goes bilaterally as well, a testament to the growing wealth of India.

[A 2008 analysis piece in Far Eastern Economic Review shows some early work about India’s infrastructure buildout.]

My state Texas has stakes claimed with India through many forms of exchange, whether in business or education. Recently, a first refinery built in half a century, in partnership with Reliance Industries, was announced. The $300-billion project by value, across a 20-year term, will process U.S. shale resources, which has been lacking since the onset of the twin booms in shale oil and gas. Reliance’s Ambani family has a refinery in India of similar size. In fact, we met with Ms. Nita Ambani, while she was recognized by the Kalinga Institute of Social Sciences in Bhubaneshwar, Odisha for her philanthropy throughout India.

A stadium of 40,000 students and officials from around the world witnessed an address that was cheered and revered. Ambani spoke of ethical, balanced leadership, its role in the global South, and women’s and girl’s empowerment. An honorary degree was conferred too by the affiliated Kalinga Institute of Industrial Technology.

The future plans and ambitions of India are notable. They are vying for the Olympics in 2036, with tracks being laid to advance their athletes competitive stature and the buildup of the infrastructure required as a foundation. One goal of the Olympics is socio-economic development for the country, a path which has been largely accomplished through education to date. A next iteration of the Indian economy is in the works.

The diaspora of India is notable and large, numbering over 5 million in the U.S. They also lead some of the most famous brands in America, with their stories of risk-taking, resilience and adaptability.

Top CEOs of Indian Origin in America

In the past, India was often thought of as bureaucratic and red-tape laden, a product of the state. While the most populous state may still have that aspect, a both subtle but burgeoning entrepreneurial culture is emerging. The younger generations recognize it as a path to prosperity.

For sure, I witnessed ample supply of labor in places where it seemed like too many, which would be deemed unproductive in the U.S. That is simply a part of India in places— people need work. It’s also cultural to discuss as a collective, eventually lighting on the best path or direction. Patience and nonjudgment is required of outsiders.

Importantly, the measuring stick by which to analyze India isn’t in the numbers. The support of their human capital across many strata of society was the intangible of the economy that emerged so visibly to me in 2026. Though they are considered “developing” in terms of per capita measures, it’s pacing reflects a seemingly balanced approach to lift more up.

The growing middle class, as evidenced by automobiles, malls and shopping centers, and household goods to live comfortably, spoke to access to a better standard of living, much more obvious than thirty years ago.

The India state of mind can only be captured by being there and glimpsing what the future may hold.

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While AI workloads and dense compute dominate headlines, the shapeshifting growth of the digital economy is part of the larger story too.

This first big wave of AI compute is spreading around the U.S. and globe, and others will follow. While energy is integral to the speed of the AI infrastructure build out, the physics of energy and pace of physical infrastructure development are the moderators of it. Others in the industry call them the ‘governors,’ which is more interesting.

The technology of AI is ‘unoptimized’ as D.C.-based chief technology officer Dan Golding of advisory ASG notes in my recent work.^[1] Evidence of varied use cases by consumers and businesses, whether generative AI, machine learning or other forks in the road of AI tech, are emergent, fluid, and building a momentum that is hard to describe—around the globe.

While AI infrastructure is dependent on energy, the technology’s fluidity means linear conclusions about energy demand are out the window as the Meta announcement shows. This will be a step-change process. An infrastructure stock change is being pushed by the innovation inherent in more dense compute power. Meta’s 20-year deal with Dallas-based utility Vistra, extending nuclear fleet lives and expanding capacity in the PJM grid, a 13-state region plus D.C., is one example of a direct and practical bet to date. Included are next generation nuclear technology down payments in firms Oklo and TerraPower, too.

U.S. grids and the energy resource mix status-quo are changing.

Tale of two grids

On the concern side of the ledger, forecasting real data center demand is also vital when adding new transmission, generation and the heavy lift of AI data centers. A University of Southern California (USC) study forecasts 50GW of planned data center capacity to 2030, with 5GW in Texas and 19 in Virginia, based on colocation and hyperscale developers, the bulk of new builds.^[2] In June 2025, Texas grid operator ERCOT counted 4.6 GW ‘energized” plus 2 more approved for 2026, with planning study approvals of 12 GW to 2030.^[3] Like Northern Virginia, Dallas is a “Tier 1” market for data centers. The Texas Triangle — Dallas, Austin and San Antonio, and Houston—is becoming one massive cloud node.

More large-scale data centers are coming to Texas, with its own ERCOT grid, and PJM, home to data center alley. PJM once expected 30GW of peak load growth to 2030, in line with the USC study. However, from a recent AI conference at the Federal Reserve Bank of Dallas, we learned that PJM is recalculating their forecast. Comparisons to Virginia, Texas or other emergent clusters are apples to oranges, as is the same with energy and grid systems comparisons.

Most grids have been largely enabled to handle the super peak, which rarely happens –like 1 to 2% of the year, noted a Vistra executive recently. That speaks to PJM’s approach of a capacity market versus Texas’ competitive market. The grid -- the thermal fleet of gas, coal, nuclear—runs on average 40 to 50% of the time. Incidentally, Burke recently mentioned that Texas could handle 10GW of data center demand without new generation.^[4]

The concerns about increases to electricity prices are complex based on grid region, resources available and legacy policies. Both Texas and PJM, plus other regional grids, are adding new high-voltage transmission to synch up energy resources to expected demand centers. Meta and other hyperscalers have recently pledged to be accountable for their own power consumption and not burden ratepayers. Big Tech is giving the U.S. grid a facelift.

Catching the wave

A competitive energy market, ERCOT has been experiencing growth for the last two-plus decades and PJM has not, with it even hitting new peak demand records. Between the deindustrialization and energy efficiency that’s occurred in PJM’s past, which includes a now- changing Rust Belt, PJM hasn’t had to worry about resource additions. In November 2025, the Vistra executive forecast load growth in PJM of 2-3% and Texas at 5-6%.

A sign of these “reindustrializing” times, Vistra just added 5.5GW of natural gas generation assets, with nearly 60%, heading to Pennsylvania, Maryland and New Jersey, PJM’s original namesake states. Excess capacity exists on the ERCOT grid at 160 GW of nameplate capacity^[5]. The price signals of Texas’ competitive market seem to be working in this demand-driven environment, optimizing supply which can deter overbuilding assets.

From 85GW peaks of the last two Texas summers, Vistra’s expectation in July of 2025 was 105-110 GW of load growth by 2030, with the expectation that large loads curtail their usage off-grid during the peaks. Without curtailment, more generation would be needed. Burke suggested that ERCOT expand its gas generation utilization like PJM does, from say 50% to 70%, thus adding more capacity. For a hot summer’s reference, U.S. peak electricity load reached 760 GW in 2025, and PJM’s peak load count was 161 in June 2025.^[6] More nuanced approaches are happening with large loads exercising their choice of siting based on market capacity and attractiveness.

Interestingly, at the Dallas Fed conference, according to Enverus’ Johnson, power is a big problem across grids, with ‘bottlenecks everywhere.’ Given U.S. installed capacity, solar, natural gas and batteries will be called on more immediately. This dynamic has been building, but that confirmation from a group that sees the entire U.S. energy system is instructive. She also noted that the grids of SPP and MISO are more advanced in solving their interconnection queues relative to PJM and ERCOT. However, the work is being done by these very large, load-attracting grids.

Better resource utilization and new approaches are being forced by the market to meet a multi-generational infrastructure pivot. In a reindustrializing era, more robust ERCOT and PJM grids are possible. AI infrastructure, and the technology driving it, may just push U.S. power and grids for the benefit of next generations.

^[1] https://www.dmagazine.com/publications/d-ceo/2026/january-february/ai-power-race-crosby-marsh-schaap-cummins/

^[2] “Data Center Energy Demand: Who, Where, and How Growth Is Emerging,” Shon R. Hiatt and Angela Ryu,

University of Southern California, Marshall School of Business, Sept 2025.

^[3] ERCOT Large load report, June 2025. p 9.

^[4] https://www.dallasfed.org/research/swe/podcast. See “Can Texas Muster the Power…”

^[5] See “New Texas Energy Barons”

^[6] https://www.eia.gov/todayinenergy/detail.php?id=65864#:~:text=Hot%20weather%2C%20which%20increases%20electricity,Texas%20and%20in%20Northern%20Virginia.

In an exclusive interview with CEO Ian Taylor of Simba Chain, we discuss the state of battery supply chains, which are increasingly important on two fronts:

1) In critical mineral supply chain and energy security, and;

2) The growing market for batteries as backup power for AI infrastructure development, industrial loads and renewables plays.

With its origins as a DARPA-funded blockchain research project at Notre Dame, Simba Chain has evolved into a platform that combines blockchain, verifiable credentials, and graph databases to make complex supply chain data transparent. Simba Chain is positioning itself as a trusted infrastructure layer for battery traceability, one application of their approach. Their work with the DoD has translated into an approach to help firms evolve supply chain efficiency. Battery supply chains are a first visible mark, which dovetail with upcoming regulatory mandates in the EU and the US.

A clip is here and the full interview follows, initially for paid subscribers, then free in some days ahead.

The Simba Passport can track a battery’s full lifecycle — from raw materials (e.g., critical minerals) through testing, first use, second life, and resale — similar to a Carfax report for cars.

An emerging opportunity is AI-focused data centers, or AI factories. They will require large-scale battery energy storage systems (BESS) to handle power spikes. These batteries cost $200–300K and need replacing every 3–5 years, making Simba’s health-monitoring and potential for secondary markets highly relevant.

Full interview is below with references about battery sizes and scale in various domains, illustrating the market potential.

Here’s a quick overview of battery notables (by Claude):

Generally, 6 kWh is on the smaller end for commercial battery packs.

Typical Commercial Battery Pack Sizes

ApplicationTypical Capacity

Small commercial/light industrial5–30 kWh

Medium commercial buildings30–200 kWh

Large commercial/industrial200 kWh – several MWh

Utility-scale storage1 MWh+

How Battery Packs Are Built

Commercial battery packs are assembled in a modular, scalable way:

• Cell level – Individual lithium-ion (or other chemistry) cells (e.g., 3–5 Ah each)

• Module level – Cells are grouped into modules (often 1–10 kWh each)

• Pack/rack level – Modules are stacked into racks or enclosures

• System level – Multiple racks are combined to reach the desired capacity

So, a 6 kWh module is actually a common building block used by manufacturers like Tesla (Powerwall = 13.5 kWh), LG, BYD, and others. You’d typically string multiple 5–10 kWh modules together to build a commercial system.

• 6 kWh alone is more suited to small residential or light commercial use.

• For true commercial applications, systems are usually built from multiple modules, often reaching 50 kWh to several MWh.

• The modularity means 6 kWh units can be a component of a larger commercial pack, but they wouldn’t be used in isolation for most commercial needs.

Large-scale battery sizes in both categories:

Automotive (EV) Battery Packs

Vehicle TypeTypical Pack Size:

Economy EVs (e.g., Nissan Leaf) 40 – 62 kWh

Mid-range EVs (e.g., Tesla Model 3) 60 – 82 kWh

Long-range EVs (e.g., Tesla Model S) 95 – 100 kWh

Electric trucks/SUVs (e.g., Rivian, GMC Hummer) 135 – 212 kWh

Electric buses 200 – 600 kWh

Electric semis (e.g., Tesla Semi)~900 kWh

Battery Energy Storage Systems (BESS)

Scale Typical Size

Residential (home battery) 5 – 30 kWh

Commercial/Industrial 100 kWh – 10 MWh

Utility-scale (grid storage) 10 MWh – 1+ GWh

Largest deployed systems 1 – 4+ GWh

Notable large BESS examples:

• Moss Landing, CA (Vistra) — ~1.6 GWh (one of the world’s largest)

• Hornsdale Power Reserve, Australia — 150 MWh (the famous Tesla “big battery”)

• Edwards & Sanborn, CA — ~3.3 GWh

Key Takeaway

• A large EV battery tops out around 100–200 kWh

• A utility BESS can be 10,000–1,000,000x larger, ranging from MWh to GWh scale

• The energy density of modern lithium-ion cells is roughly 150–300 Wh/kg at the cell level, dropping to 100–200 Wh/kg at the pack level

Importantly, long‑term commitments have been made from sophisticated end‑users of rare earth magnets, including a long‑term magnet supply agreement with General Motors and collaboration with Apple to build an innovative rare earth recycling and magnet production system. Important for national security, these magnets are inputs for drones, robotics, AI data centers, electrification, and advanced semiconductor fabrication. The light and heavy rare earth raw materials necessary to support 10X will be sourced from MP’s processing facility in Mountain Pass, California. Between Texas and California, a circuit of circularity is to be established, which will also enhance price performance.

In July of 2025, the newly-established Department of War (DOW) embarked on a mission to accelerate domestic rare earth magnet manufacturing capacity. The DOW serves as the offtaker to offer demand certainty for MP Materials. Additionally, on July 15, 2025, Apple had announced a $500 million commitment to MP Materials. In this multiyear deal, Apple committed to buying American-made rare earth magnets developed at MP Materials’ flagship Independence facility in Fort Worth, Texas. MP Materials will have the best of both worlds in this public-private partnership model, both government and business.

The first instance of the upcoming site selection, though not a fully-baked deal, was noted in DCEO’s innovation issue of Jan/Feb 2026: “Meet the Man Running a Modern-day Manhattan Project.” More context is offered.

The Texas economy experienced a relative slowdown in 2025 to 2.6% GDP growth, and near-zero job growth. However, the state is positioned for recovery in 2026 driven by AI investment, data center construction, and improved fiscal conditions. Some of the key challenges include labor constraints, low oil prices, and trade policy uncertainty.

Extrapolating from 2025 data, two energy markets will be major recipients of Big Tech’s massive AI spend—of the $600 billion capex forecast for 2026. They are PJM, to include Northern Virginia, and Texas—big data center markets. Louisiana was the next largest winner of cap ex in 2025 (likely Meta’s Hyperion campus). The evidence of the spending was confirmed from a Federal Reserve Bank of Dallas “Texas Economy Outlook” of Feb. 6th. Recent construction activity revealed more real evidence of cap ex trickling through the economy.

At the recent NAPE Expo energy and land industry summit, the data center build out was top of mind in many presentations. Sarp Ozkan of Enverus noted that natural gas is really the go-to source over the next five years, until small modular reactors (SMRs) surface, possibly, in the five years after. I gleaned that the oil and gas industry is best-positioned to meet the power needs ahead, but new approaches and technological know-how will need to be applied. The slow pace of interconnection queues to bring data centers online will also create a measured pace of development. This flies in the face of the speed-to-market that is much desired by hyperscalers and other developers. But I am noticing workarounds and ingenuity.

It is relatively easy to generalize energy demand needs, the timing of the build out and the obstacles. Harder is identifying the approaches that are working and the players that are meeting the challenges. This is like finding needles in haystacks. More on that later.

Specific to the AI infrastructure and energy space, new data is emerging. For context, in 2025, the top four hyperscalers’ capex— Microsoft, Amazon, Google, Meta— was in the $350 billion range, and $220 billion the year before. This becomes important when considering the following numbers which are trickling through the Texas economy.

More color on the data center build out follows:

Read more

Access feature here. Go to page 45.

At the NAPE Summit and Expo 2026, the transmission part of the energy equation was little discussed. Given the early days of the Texas plans, many stakeholder groups are weighing in —landowners, lawyers, state representatives and NGOs.

While the plan for high-voltage transmission seems like an imperative, my final takeaway of lines being built and prioritized where they are needed rings true. With new large loads in need of connection and more robust wires, new thinking may emerge— though incentives to build transmission don’t necessarily follow newly emerging market imperatives.

This feature is a sequel to an earlier work called “Texas Million Dollar Miles.” This predecessor work is an example of what this platform will offer ahead but in today’s much-changed context.

In the piece, the intricacies of connecting transmission to demand centers is discussed and some set up unique to the Texas economy. In order to see where we are going, you need to also look at where we’ve been. Read it below:

Read more

Held in Denver, it represented the top thinking from Dallas’ 11th district and Kansas City’s 10th district, where the bulk of the U.S.’s energy is produced.

Read more

The feature in the January-February 2026 edition of DCEO Magazine is a sequel to the March 2025 feature “The Really Wild AI Ride.” That feature represented about two and a half years of work focusing on what was happening with generative AI, semiconductors (chips), the emergence of more data centers and increased capex spending by big tech.

Playing that story forward represents an immersion of the last six to eight months, trying to make sense of the AI infrastructure buildout. Many big tech firms, including NVIDIA, have adopted the term “AI infrastructure” because it describes what’s happening in a way people can relate to.

I’ve been writing about energy infrastructure and digital infrastructure for well over a decade, so it was natural for me to segue into this digital infrastructure world from the energy world. As we know, energy is integral to the success of the AI infrastructure being built right now.

Read: “Inside the AI Power Race: Why DFW Could be the Backbone of the Next Industrial Revolution”

A video backgrounder about how this work came together:

From November 2024 DCEO energy edition.

Read the online article.

Further analysis to compare and contrast my findings happen after a Federal Reserve Bank Energy conference shortly after this was published. These works typically involve many months of concept and R&D before settling on a track, interviews for some months, and then production time.

In a preview (rehearsal) version for a speaking tour in Montana, I thread together shale developments, AI and data centers. The actual recording of “The Big Synch: New Era Economy and Innovation” was corrupted so I fortunately have this copy. It documents the “onset” after the initial policy push and announcements of January 2025.

A second video pulls together a working thesis of reindustrialization, which was then repeated many times over, including one AI model. Here I chronicle the original thinking.

It reflects where we have been, which informs where we are going. (First video recorded Feb 2025 and the second Jan 13, 2025)

However, when OpenAI came out with their economic blueprint, I decided to discuss what I had already been working on. I had been scraped.

In a Jan 13, 2025 preview, I discuss the themes I'll be presenting about at Montana World Affairs late March connected to my work in energy, reindustrialization and innovation. It also touches on upcoming work...in print with DCEO for their March magazine. (The Really Wild AI Ride)

[Pre-inauguration] on January 13th, I'm also responding to a few relevant ideas put forth by OpenAI in their recently released economic blueprint, based on my work observations and research of others. Specifically, I note AI data collection, energy and digital infrastructure, and the development of ecosystems.

I released this March 1, after my AI and digital infra work has just launched.

This feature was a sequel to 2024’s “The Long Runway for New Energy Demand.” The 2025 feature focused on how North Texas-based firms are meeting increased energy demand driven by AI and data centers. In it, I examine the relationship between Texas ERCOT grid and PJM. Also the increased gas movement from Texas westward and Texas’s leadership in data center development is highlighted.

Since this publication, I find the comments by Jim Burke, CEO of Vistra, offer a realistic viewpoint of the timelines for power and energy in the AI infrastructure race.

Link here to digital version.

A backgrounder video pre-publication:

An interesting comment from Mackey McCrea, co-ceo of Energy Transfer, was that data centers were fighting for capacity. He noted that in our June 2025 interview and that trend has continued to the present. I’ll be writing a piece about that in the near future.

Read the feature.

“Right here in Dallas-Fort Worth, you have a tech company that’s building the foundational layer to actually support all of those [semiconductor] chips,” notes Schaap.

~CEO Andrew Schaap of Aligned Data Centers, from a Dec 2024 interview.

This is More Than Elemental.

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