A few themes covered, based on the timeline’s order, include:

• Cutting through misinformation

• Economic growth and diffusion

• The economics of scale

• Select power and energy

• Jobs and local impact

• Geopolitics and national security

Access to full radio broadcast

Or a commercial-free version:

Key questions and edited responses

Talk Back Missoula radio show on KGVO — September 17, 2026

Q — Bob: Give our audience the foundational overview: what’s actually happening with AI and data centers right now?

A — Jennifer: The white paper report splits the story in two: the technology side (moving three times faster than prior IT waves like the internet or mobile/cloud) and the economic side, which shows up physically in data centers. Data center development is spreading across many regions and is now one of the economy’s key growth drivers — supporting jobs and manufacturing well beyond the data center itself. Energy use and water use are real concerns, but the industry is trending toward more sustainable builds, including a mix of renewables, nuclear and new natural gas capacity for firm power.

Q — N. caller: Pushed back on AI alarmism, arguing AI has existed for decades and fear-mongering is irresponsible.

A — Jennifer: Agreed that AI as a technology dates to the 1950s, at the dawn of the modern computer. There’s a lot of misrepresentation driven by various agendas, and cutting through that noise — separating the technology itself from the data center buildout around it — is exactly what her report tries to do.

Q — R. caller: If AI and AI data centers were limited, how would that affect consumers, and would there be a backlash given how much AI already touches everyday products?

A — Jennifer: Data center growth directly reflects how the economy is shifting — more online shopping such as Amazon, Walmart and more streaming (e.g. Netflix, whose subscription price increases reflect the rising cost of the cloud infrastructure behind it). Restricting data center supply would restrict the digital services people already rely on and are demanding more of. Communities that resist development don’t stop the growth — they just push it to another city, county, or state, along with the jobs and manufacturing activity that follow it.

White paper link

Q — Bob: Can you speak to the “multiplier effect” — the idea that a period of heavy infrastructure buildout eventually spins off broader innovation and opportunity, the way past industrial revolutions did?

A — Jennifer: Construction jobs are temporary and always draw complaints (“boom and bust,” as with the shale boom in Midland, Texas), but this buildout is diffuse — spreading across the whole country rather than concentrated in one place. The jobs that remain carry real economic benefit: data centers pay significant taxes, support an ecosystem of surrounding businesses, and (citing Microsoft’s public figures) generate hundreds of millions to billions of dollars in local economic development. They’re also clean, low-traffic critical infrastructure — not the kind of industrial neighbor people often assume.

Q — H. caller: Wouldn’t distributed power (rooftop solar, batteries) or smaller, distributed data centers built on old industrial sites be easier than huge new plants? Also, how much longer can this level of investment — which he said is “keeping the stock market afloat” — actually continue?

A — Jennifer: Data center scale is a market decision driven by the economics of the underlying hardware: GPUs are extremely expensive (roughly $50 billion per gigawatt by one estimate), so hyperscalers need scale to justify and recoup the investment — hence the push toward large campuses, increasingly sited away from cities. On the “how long can this last” question, she framed the market as being in a “digestion phase,” noting there are real lags between when capex is announced and how it’s deployed.

Q — Bob: How is the Iran conflict — and its effect on inputs like helium — factoring into GPU costs and investment planning?

A — Jennifer: Agreed this kind of geopolitical shock changes the pro forma in real time, which is part of why forecasting this space is difficult. She pointed to Fed Chair Warsh’s comment that the Fed is relying on market participants themselves to help assess how AI-related investment is flowing, since the data isn’t available in real time. She’s been tracking some of this through Fed district data through the end of August, which shows continued spread of growth through the economy.

Q — C. caller: Is China funding opposition to AI/data centers and using bot farms to influence public opinion — a new “space race” for AI dominance?

A — Jennifer: Said this is precisely why she wrote the report — to cut through social-media-driven misinformation. She agreed national security and national competitiveness need to stay top of mind, but argued the right response is to stay clear-headed and keep moving the development forward rather than being paralyzed by misinformation.

Q — J. caller: What about proposals to build data centers in space (e.g., rumored Starlink-related plans)?

A — Jennifer: Personally opposed — space is already cluttered with debris and effectively ungoverned, and she sees off-world data centers as inviting a new kind of race rather than solving anything. She redirected to the terrestrial picture: water use per data center is falling significantly as technology improves, and she expects continued progress toward a cleaner, more reliable grid over time. [New regulations and legislation ahead ill also impact development.]

Q — F. caller: What about offshore/ocean-wave power as a cleaner, water-free alternative to land-based data centers?

A — Jennifer: Called it a complex, separate conversation, but used the question to explain “behind-the-meter” power: hyperscalers increasingly bring their own generation on-site (e.g., natural gas for round-the-clock power, at times paired with solar) because of the interconnection queue bottleneck. There’s no single model — the mix depends on energy source, location, and the specific project, making it “a multivariate equation.”

Q — G. caller: Could small/miniature nuclear reactors (like those used in submarines) power data centers? And are the resulting jobs accessible to local workers, or only to highly specialized talent from places like Silicon Valley?

A — Jennifer: Small modular reactors and micro-reactors are real, funded projects, but still years away from broad deployment. For now, the industry has to work with currently available power sources. On jobs, she pointed to Microsoft’s public commitments to local workforce training, saying that pattern of local hiring and training is showing up increasingly across development locations.

Q — Bob (closing): Where can people go to learn more and do their own homework on this topic?

A — Jennifer: Conceptelemental.com and Substack, “More Than Elemental.” Cited were two features available: The AI Wild Ride (2025) and The New Social Network (January 2026), plus her broader energy-focused work.

The 13-page analysis includes the following sections:

• Technology pacing;

• Financial metrics indicate growth;

• Select chip and digital infrastructure dynamics;

• The factor of time

• Rate of change in the physical world.

A video walk-through of highlights with additional economic evidence of the buildout is included. (Clip below)

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The report is intended for individual use and not to be reproduced. Please request fair custom pricing for additional users.

Clip is first minutes of long form video that accompanies white paper.

REGIONAL ECONOMIC INDICATORS ADDENDUM

A clip from the video companion to the white paper

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A few select ideas from Main paper:

• The AI industry is currently pacing three times faster than the internet, mobile, and cloud sectors.

• The chip layer is expanding significantly and represents the most expensive part of the AI infrastructure buildout.

• Fed Chairman Warsh noted that market participants must act as information intermediaries; this is owing to technology moving fast and data lags official tracking.

  ---

Below are two important histories: a May 2023 first instance of LLMs/AI and Nvidia’s impact on the Nasdaq, followed by a preview and explainer about the Jan 2026 feature regarding the AI buildout from a Tier 1 data center market, Dallas.

Feature below, but video backgrounder included here.

By request of Seeking Alpha, the impact of $100 oil prices on inflation and the economy are discussed. Occasionally, I’m asked to weigh in on a topic, and this is the burning issue of the moment. I’ll run through some slides based on futures pricing, then look at recent Beige Book data from the Fed, and discuss where I think this plays out going forward.

A short

The full video and summary ideas follow:

Summary ideas:

Futures Pricing

I compare futures prices as of September 9 and one month earlier. WTI is near $97 and Brent is at $101. Dutch natural gas futures are almost $26. We’ve also seen increases across the OPEC basket, the Indian basket, Dubai, and the Murban basket. The Mars basket — a medium sour crude reflecting pricing for key Middle East exporters — is at $115.

A month earlier, WTI was $78 and Brent was $83 — a differential of $19/barrel on WTI and $17/barrel on Brent. Dutch gas was $19 a month ago, up $7 since. This gives a sense of what’s happened over the last month amid renewed fighting in the Iran/Middle East crisis.

Beige Book Data (Reporting Period: Early July–Late August)

Districts generally reported slight to moderate growth. Tourism increased; airlines saw strong demand despite higher fares, showing consumer resilience through summer travel. Auto sales were subdued. Manufacturing picked up, led by defense and data-center-related orders — confirmed by other data. Construction rose on data center projects, which is supporting broader economic growth and jobs.

Eleventh District (Dallas Fed — Texas/Louisiana)

The Eleventh District expanded moderately, outpacing the other ten of twelve reporting districts (two reported no change). Manufacturing input costs were elevated, such as fuel, petrochemicals, fertilizer, copper, memory components. This is consistent with rising CapEx budgets from hyperscalers.

The manufacturing outlook improved slightly despite geopolitical instability. Retail expectations have been positive, heading into the holiday season. Oil price headwinds proved weaker than feared, though sentiment could shift as price increase are still in a “wait and see” environment.

Manufacturing & Oil Patch Detail

Gulf Coast refiners raised output; petrochemical production held stable; fuel exports hit new highs. But E&Ps view current profitability as a transitory geopolitical windfall, not something expected to last; operators are being conservative. Auto sales softened. Supply chains remain highly integrated (Canada, Mexico), so trade tensions matter directly to consumer costs.

In the oil patch specifically: the $100 headline price isn’t necessarily what operators are basing decisions on. Planned production increases reflect a pickup in activity, not pure price-chasing. Upstream shale spending remains disciplined overall — a lesson learned long ago that isn’t changing regardless of politics.

Things to Watch

● Price pressure in fuel feeding through to oil-patch costs.

● Low crude oil inventories tied to the Strait of Hormuz and Red Sea situation.

● Producer concern over lasting damage to energy infrastructure — a drag on efficient oil/gas flow.

● Pipeline workarounds in progress: one route to the Red Sea (bypassing the Strait) estimated complete 2030; a UAE route estimated complete 2027; other bypass routes still TBD.

● 2026 inventory data (Jan–May) shows a clear drag versus historical norms.

Takeaways

Input costs remain elevated and tied to the Middle East conflict, with effects on fuel and materials still working through the system — the full pass-through may not have happened yet. Manufacturing is split, with durables outperforming non-durables (partly AI infrastructure build-out driven). Consumers remain resilient but nervous about prices, and elevated oil creates broader tension.

The US has weathered $100 oil before, but what the “new normal” looks like post-conflict is unclear — any real change will take months to show up. Energy activity remains measured, since producers answer to shareholders and need reasonable returns.

A Wall Street Journal piece noted Tehran’s reduced ability to move goods through the Strait, reflecting real economic stress on Iran. My. take: the Strait’s importance is ultimately secondary to relationships. The Canada-US trade war isn’t helping either, potentially hurting in both prices and jobs outlooks.

Closing Thoughts

Looking ahead: futures pricing a month ago (near $80) didn’t hold given renewed conflict, and volatility is likely to continue before prices moderate. This has no long-term economic upside, and the conflict’s geopolitics weighs on global growth broadly — the US has been more resilient than others, but that won’t last indefinitely, and it’s a dynamic voters are sensing. Inflation is likely to be a key issue heading into the vote, with volatility persisting until then — hopefully giving way to more policy normalcy afterward.

Edited transcript follows with background references.

AI and the Economy

The chairman noted that artificial intelligence — despite being an old concept — is advancing faster than even its biggest supporters and voices predicted just a couple of years ago. That’s consistent with what is being observed: the AI trade just keeps going, but is built on data headed the right way.

He also pointed out that ever-expanding pools of capital are pouring into AI-related infrastructure of all kinds. This ties back to the idea of broadening investment that I’ve written about on Seeking Alpha and elsewhere — big finance has emerged in the game, beyond the hyperscalers. He also referenced a kind of “hyper Moore’s Law,” with scaling laws reshaping both the method and the speed of innovation.

This echoes something I discussed in the context of AI diffusion a couple of years back. Everyone talks about Moore’s Law, but scaling laws are now the more relevant framework — and even those playbooks are being rewritten in real time.

(Interview fall 2025 with semiconductor expert Tyson Tuttle and San Antonio Fed board member about Moore’s law and new developments)

Notably, the chairman mentioned that annualized token sales from the two leading labs, likely OpenAI and Anthropic, have topped $100 billion, a 500% year-over-year increase.

(Add to that, ChatGPT just announced its ads business has surpassed a $1B annualized run rate, less than 200 days since launch.)

Regarding the $100 billion in revenue, Warsh raises real questions: will we see a sustained rise in productivity across the economy, and when? Will next-generation models demand more capital, or will models themselves enable a more capital-light path? It’s still unclear where returns on capital will land, and when.

The Big Unknowns

Much of the analysis I see on [crowd-sourced] Seeking Alpha is grappling with exactly these questions — where the money is flowing, where the capex is going, and who benefits. The chairman also raised the question of who captures the initial benefit: owners of scarce assets like the AI labs, chip makers (which have been on a tear), energy producers (major beneficiaries now and in the future), and cloud providers. There’s also the question of how much value shifts downstream to businesses and consumers — which is already starting to happen.

In the biggest-picture sense, market structure — how value shakes out across all these sectors — is one of the largest unknowns. We’ve heard 2026 capex figures of roughly $725 billion for the top four hyperscalers alone.

[Discussion about chart on capex drawn from an April 2026 study.]

Google and Amazon are taking the lion’s share, with Meta and Microsoft following; Meta is actually outspending Microsoft. Oracle is also in the mix, and interestingly has stayed fairly steady on this measure going back to 2020.

The Fed’s Policy Approach

The chairman described a measured policy approach. Rather than telegraphing exactly what’s coming, he wants to preserve room to step back and form a more solid view before committing. Warsh also mentioned a new task force on productivity and jobs, meant to feed the intellectual groundwork to policymakers going forward.

More broadly, he emphasized that market participants themselves should be tracking real information across the economy. I’ve noticed that this is exactly what analysts, media, think tanks, and universities are already doing. There’s a growing wave of new entrants into this space as information providers and analysts, and that’s only going to continue.

[Chart about compute capacity and market share discussed]

Economic Performance

The chairman noted being impressed with economic performance, which appears to have strengthened. Fourth-quarter growth in equipment and intangibles investment has been the highest since 2021 — when the pandemic was letting up — at 9%. AI has contributed roughly 20% of S&P profit growth over the past year; he attributes more than half of this year’s capex growth to the AI buildup. While hyperscalers account for much of that, it’s showing up in other sectors too.

[I discuss chart on usage from Claude data]

Inflation: The Big Focus

Inflation remains the chairman’s central concern — something I discussed in a video about a month ago. It’s running above target, and commodity prices have been part of that story. This pressure looks likely to persist over the next quarter or two, or three or four — it’s hard to say. That raises the chance of a future rate hike.

Al Value

Specifically, from my research, a Stanford study offers useful context here: the value AI delivers to consumers grew 54%, reaching $172 billion by early 2026, up from $112 billion the year before. That value comes from both cost savings and revenue generation across a few key areas (not exclusively) — customer support (14%), software development (26%), and marketing (50%). Marketing in particular is benefiting on both fronts: new revenue streams and reduced costs, some of it from the same shift from automation to augmentation reflected in the Claude usage data.

The same study noted a key milestone: on July 9, 2025, Nvidia became the first $4 trillion public company. As of the summer of 2026, it has crossed $5 trillion in market capitalization — a striking data point.

Closing Thoughts

Pulling from the chairman’s speech: economic performance is good, but this is new territory with a lot of unknowns. While gains from AI are spreading, we don’t yet know how that plays out over time. Inflation is the one to watch, and a potential rate hike.

Commodity markets bear watching too — as we’ve seen with oil prices amid the Middle East situation, Russia, and the related supply-chain effects. The Iran-Hormuz situation has escalated again today.

Read more

Conceptually, the large-scale investment will become diversified across a pool of capital beyond the Nvidias, Microsofts and Metas. This trend was already starting to emerge through Meta’s financing arrangements in El Paso and Louisiana’s Hyperion for its large-scale projects.

Constructing compute capacity

Last October 2025 at the North America Blockchain Summit (NABS), top public crypto miners discussed the market shifts from crypto mining facilities’ capacity to AI and high-performance computing. At the “Capacity is the New Commodity” talk at NABS, representatives of Iren, Core Scientific, and Riot were present. In an article I highlighted still-relevant takeaways, which I’ll update too:

1) “Interconnection queues were a problem to get sites energized. In Texas’ ERCOT grid, 189 gigawatts were noted as being in the queue.”

Now, that queue is over 400 (much of which is not real). The state is pausing to better review these project. Still, plans are in full swing for large players.

2) “Speed to being energized is more valued now because capacity is in crunch mode. Notably, sites that have power online within, say, 24 months, are much more valuable than those sites that are to be energized in 2030. There’s a premium on existing assets, or capacity, and existing sites that can power up quicker.”

Read more

In a video news round up, topics in the news related to notable energy indicators are reviewed with commentary for context. While geared for an investor audience, the findings are relevant to the U.S. economy at large.

Some Select Summary Points

Data centers as a political flashpoint

● Data center energy and water use has become an easy political target this election season, with two state-level approaches emerging.

● Virginia’s governor is pushing to intervene in the $67B NextEra–Dominion merger (creating $400B in enterprise value, covering ~110 GW of capacity), citing concerns over ratepayer costs, job impacts, state benefits, and that data centers pay their fair share of electricity costs.

● This echoes the Trump administration’s ratepayer protection plan at the federal level.

● Texas Governor Abbott has ordered audits of data center projects given an overstated 474 GW interconnection queue, seeking information on water use, cooling technology, and ownership.

● A batch process meant to streamline the queue — one that drew significant lobbying investment — has been halted, effectively pausing new data center development while ERCOT and the Public Utility Commission review information already in the pipeline.

● Well-financed, established hyperscale developers are unlikely to be materially affected; the pause likely impacts speculative or thinly-financed projects.

Strait of Hormuz / Middle East crisis — market impact

● The Iran/Middle East crisis has not resolved; a brief pause is still at risk of reigniting as Iranian hardliners seek assurances over benefits tied to the Strait.

● US midstream and oil & gas producers have benefited from the disruption; a full quarter of data is now available to assess the export windfall.

● Futures were broadly higher (WTI, Brent, gasoline, heating oil); European natural gas (Dutch TTF) was up 6%, partly reflecting hot summer LNG demand.

ONEOK, an Oklahoma-based midstream firm connects to demand

● Their extensive pipeline network across Texas and the central US, including Oklahoma’s Anadarko SCOOP/STACK play, are well diversified across the oil and gas value chain.

● Q2 2026 (the period the Strait has been obstructed) shows crude oil volumes up ~1.5M bpd, a considerable jump from Q1; aviation fuel volumes up 12%, crude volumes up ~10%.

● In their latest reporting, they noted ~5 Bcf of potential natural gas demand from LNG and data center counterparties, concentrated in Oklahoma/Texas/West Texas, plus LNG and industrial demand along the Louisiana Gulf Coast.

● They have a pipeline under construction connected to Project Kilby, a 2+ GW Chevron-developed data center project in West Texas with Microsoft as the anchor offtaker. I note that these projects take years to move from announcement to execution.

Peer comparisons and funds that have benefited are then highlighted in the video.

Bottom line

● The Strait of Hormuz disruption has been a tailwind for US midstream via higher LNG, refined products (diesel, aviation fuel), and NGL/ethane/LPG exports, as global buyers turn increasingly to the US.

● Expect election-cycle headlines to add noise around energy and data center projects, but the underlying fundamentals should be the focus.

Noted by Finance Professor Feng Zhang of SMU Cox, the impact of leveraged single-stock ETFs and the influence of high housing prices in Seoul were contributing factors that also drove the volatility. Similarly, the U.S. market faces issues like cost of living, inflation, and potential energy disruptions from a Middle East war flaring up again.

South Korea is an advanced Asian economy, alongside Japan. The GDP of South Korea ($1.9 trillion) and Japan ($4.5 trillion) and the U.S. ($33 trillion), set the stage for a discussion on the Kospi.

South Korea Market Meltdown Explained and More

Some other highlights:

Complex ownership structures in South Korea lead to challenges in information dissemination, according to Zhang in a recent interview. He cites ‘work being done by South Korea to improve corporate governance and boost valuations, which will take time.’

The South Korean government’s newly-announced $950 billion AI initiatives will be spent over time.

Execution and delivery on promises from tech hyperscalers, despite the market’s reaction to announcements, are what matters. Investors should focus on the long-term plans and capex execution of companies, rather than short-term market fluctuations.

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Bonus clip of SMU Cox Finance Professor Feng Zhang on Korean stock market, part of a longer video interview dated 7/27 on his research about global stock market returns.

Additionally, some overall macroeconomic risks are noted regarding the continued military campaigns between the U.S. and Iran and its implications for energy.

My overall take on U.S. stock market earnings: good news is to generally be rewarded, though not always — some results have “backfired” when the market drew the wrong inferences. Continued transparency on strategy with execution will keep paying off, as it has for Apple.

The top four hyperscalers (Amazon, Microsoft, Alphabet, Meta) are spending $725 billion this year. Google and Amazon have both signaled capex increases for 2027.

Apple and chipmaker Nvidia are now neck-and-neck for the world’s largest market cap, both just under $5 trillion. As of 7/20, behind them: Google ($4.2T), Microsoft ($2.9T), Amazon ($2.6T).

Apple’s re-rating is likely owing to its integrated hardware/software ecosystem and its announced of a chipmaker acquisition — the same “integrated” logic hyperscalers get credit for, applied to Apple.

Also noteworthy is hyperscaler capital spending.

• The top four hyperscalers (Amazon, Microsoft, Alphabet, Meta) are spending $725 billion this year.

• Google and Amazon have both signaled CapEx increases for 2027.

A new partnership was announced between Microsoft and AMD, indicating how collaborative and fluid this ecosystem is.

• Microsoft announced a partnership with AMD for new “Helios” racks — a full-stack, integrated system running on it Azure platform.

• In December of 2025 at an event in San Francisco, chief executive of AMD Lisa Su commented that ‘AI is not a bubble.’ The announcement from yesterday was a bump for AMD’s stock and a sign of broadening competition among chipmakers.

In the video, I discuss some of the holistic factors supporting and constraining the buildout. The erosion from inflation is more of a problem, and it can manifest through a number of channels. Worth noting: the United States is largely a consumer economy, so the consumer matters. However, new investment on a different scale is undeniably impacting GDP and growth.

Update: In a new announcement, Apple says it will identify a chip manufacturer to acquire. This synchs up to the landscape portrayed in the video.

Key ideas mapped to timestamps:

Macro & Inflation

• 0:02–1:08 — Inflation is a bigger concern than AI CapEx “blowing up”; U.S. is a consumer economy, so consumer health drives the whole cycle.

Chips & Memory

• 1:10–1:53 — Memory chip costs are driving up the chips layer of the five-layer stack, adding a “speed bump” to build-out.

• 1:54–2:43 — Chip/memory supply chains are shifting globally

Iran War / Energy

• 1:54–3:48 — Iran war raising energy costs (gasoline, diesel), felt most in Asia; this inefficiency from supply chain reflows the market, which is yet to be understood.

• 16:08–16:43 — Strait of Hormuz strain shows oil market resilience but is a shared global chokepoint that can feed inflation.

  ---

Hyperscaler Capital Spend

• 3:17–3:48 — Hyperscaler debt issuance hasn’t strained credit markets

• 5:28–6:10 — ~$725B slated for 2026 across Google, Amazon, Microsoft, Meta, with nuance described.

• 6:49–7:22 — Microsoft: $190B spend; $25B of it from memory costs; CEO signaling a slowdown.

• 7:22–8:38 — Amazon: $200B spend (mostly AWS-directed); OpenAI and Anthropic revenue expected, incl. 5GW of capacity.

• 9:11–9:47 — Meta notes memory costs + capacity tightness as constraints

• 13:54–14:29 — Google: integrated across the full stack; cloud revenue +63% YoY to March 2026.

Market Structure / Stack

• 9:48–10:24 — Five-layer AI stack (Jensen Huang’s cake); application layer showing more stress of late.

• 12:07–13:19 — Hyperscaler + leased data center share: <50% (2023) → 57% (2025) → 74–75% (2029–30 projected).

Closing

• 15:05–15:36 — Constraints by layer

• 16:43–17:21 — Build-out is a secular 5–10 year force

More analysis and research:

Read more

Why did they come?

European explorers traveled across the Atlantic Ocean to North America attracted by the promise of gold, silver, and other valuable commodities. Beginning in the sixteenth century, short-term voyages gradually evolved into more sustained attempts at colonization. As Spanish, French, Dutch, and English settlers competed with one another for territory long occupied by Indigenous communities, disputes arose, often erupting into armed battle.

Missionaries and colonists from France and Spain came seeking converts, with Protestants from England interested in the same in the Northeast. Wealth and power became concentrated in elites who owned large plantations. Fortunes were made through investment in the profitable “triangle trade,” in which raw materials from the colonies (such as sugar, rice, and lumber) were exchanged for manufactured goods from Europe and New England (such as rum, guns, and cloth). Objections to the slavery were rarely made until the mid-eighteenth century.

It begins

In the 1760s, increased taxation and government interference fueled resentment in Britain’s American colonies. Hostilities smoldered for a decade before erupting into armed conflict in 1775. Many colonists wished to avoid war, but representatives of the thirteen British colonies who formed the Second Continental Congress ultimately decided that it was inevitable. On July 4, 1776, they declared independence from Britain while also attacking the time-honored system of privilege conferred at birth on an elite class. Their assertion that all men are born equal and endowed with inalienable rights has served ever since as an inspiration and a challenge to countries around the world, including the United States.

Indigenous nations were not part of the 1783 peace negotiations.

Creating Culture

After gaining independence, the United States began the work of developing an independent culture. Writers, artists, performers, and intellectuals emulated the traditions they had inherited from the Old World. Nationalism sparked a challenge of deriving original subject matter from the history, land, and inhabitants of the United States.

Thought leaders, and leaders otherwise, drew inspiration from the natural scenery of North America and the vast continent’s dramatic differences in topography, climate, and wildlife. The landscape was romanticized as an untamed wilderness, which ignored thousands of years of cultivation by Indigenous communities. Regional differences in the manners, customs, and language of the Northeast, South, and West infused many of these works, as did democratic values, such as individualism, optimism, and vitality. These creative and intellectual achievements helped to define the emerging features of the United States.

Onset of industry and commerce, and unrest

In the decades after 1820, the United States experienced a period of rapid change. This was the era of canals and steamboats, the beginning of the railroads, and the acceleration of commerce and industry. Enthusiasm for improvement led to investment in education and religiosity.

The ideals of democracy and egalitarianism became a leveling force. In 1828, Andrew Jackson ran for president as a political outsider from the West. He had served as a first member of the U.S. House of Representatives from Tennessee. He sought to wrest power from Northern elites.

In 1830, legislation approved caused Indian tribes west of the Mississippi River on a grueling “Trail of Tears.” The southern lands they left behind became vast plantations supplying cotton to textile mills in the North. Marginalized groups such free Black men and women sought change through religious and secular organizations increasingly by 1860.

Territorial Identity

For much of the nineteenth century, the United States pursued the goal of exploring, settling, and governing the vast country that lay to the west of the original coastal states. Many commentators believed that the United States was preordained to expand westward to the sea and become a continental nation.

Faith in this “manifest destiny” (a phrase coined in 1845) prompted aggressive expansionist policies that often led to violence. Through a bloody war with Mexico over Texan independence (1846–48), the United States gained immense tracts of land stretching to the Pacific Ocean. These developments came with consequences. The disputed status of slavery in the newly acquired territories brought the nation to the brink of civil war. Legislative compromise postponed the crisis—but only temporarily.

Debates about the shortcomings of the United States as a just society gained momentum during the mid-nineteenth century. Some campaigned for or against the key political and social issues of the day, including temperance reform, abolition, and women’s rights. These reform movements coalesced around the institution of slavery and states’ rights. Opinion in the industrialized North increasingly diverged from Southern leaders. By the mid-1850s, the opposing camps had become too inflamed for agreement, and episodes of armed conflict ensued.

This brings us to the Civil War of 1861-1865, which President Abraham Lincoln steered the country through, only to be assassinated shortly after being elected a second term.

Special offer for the 250th…until July 11, 2026

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The Frontier of Texas Begins

For my part, this broader part of the storytelling is finished, and I will set the general stage about Texas, where my family lines converged in the beginnings of Texas. The remaining curated narrative is from the National Portrait Gallery, and it has a purpose.

American revolutionaries of Virginia came to Texas from Tennessee in 1821 and 1829, respectively. Sam Houston (Rockbridge County, VA, 1793-1863) was Texas’ first president as the Republic of Texas. He played an outsized role in early Texas history, fighting in the 1835 Texas war. The Republic was annexed to the U.S. in 1845.

Other Texas notable, Stephen F. Austin of Wythe County, VA (1793-1836) was part of the first settlement to Texas from his father’s land grant. He kept Texas under Mexico’s rule, but joined the Texas war for independence in 1836. He is considered the founder of Texas. Also, renowned explorer Davy Crockett, a Tennessee congressman (1827-31, and 1833-35) joined settlers who were promised land in exchange for fighting for Texas independence. He died at the Alamo in San Antonio, Texas in 1836.

The rest is history for another day. In the meantime, be free.

• Meta, Microsoft

• Apple, Amazon, AMD, Anthropic

• Nvidia

• Google

• OpenAI, Oracle

• SpaceX

[Shorts after interview text]

The Q&A follows, with more detailed elaboration.

Nicole: In your latest article of June 4th, you coined the acronym ‘MANGOS,’ grouping major tech firms (Meta, Microsoft, Apple, Nvidia, Google, Oracle, OpenAI, SpaceX) with AI infrastructure models like ChatGPT and Anthropic. With these private companies hitting the public markets with multi-billion-dollar valuations, how can investors distinguish true long-term value from headline hype? And what was the genesis of the MANGOS?

JW: First, you have to sort through what the big tech firms do. What is their source of value creation? And then, the AI frontier models, they’re new entrants. We don’t have complete information on their future, but we do know who is making revenue, presently. And we also know that the top big tech firms, the top of MANGOS, they are spending, on and investing in these frontier models like OpenAI and Anthropic.

So they’re more integrated into Big Tech’s business. Investing in AI frontier models, while there are huge valuations in some of these potential IPOs, this is only going to sort out over time. There are unknowns in the present.

One strategy is to just hold some of the various indexes that contain big tech and then what’s coming. Oracle’s kind of interesting too because they’ve been known for enterprise and a software provider, but they’re moving into cloud infrastructure and AI infrastructure an evolving area. And NVIDIA, known for their GPUS or chips, and the CUDA software stack, which is huge—for everything. They have the data center focus as well.

You have to do some of your own due diligence and be objective about the various firms about what their offerings are and make educated guesses.

[Interview derived from June 4 investor version Seeking Alpha or this Substack below]

Nicole: Big Tech and the hyperscalers are spending upwards of $700 billion on data centers and AI infrastructure. What specific indicators prove this spending is fueling top-line growth rather than depleting free cash flow?

JW: Part of this demand is the increase the cloud compute. And a portion of AI that’s going to be also in the cloud, that is high-performance computing., which uses GPUs, TPUs and other chips likes CPUs and more other custom chips. They’re part and parcel of the inference piece of AI, which is increasing, which is just using AI basically. [It also includes the use of agents and asking more of models.]

So we are creating this demand through our use of mobile phones, computers, internet streaming, anything data-related, manufacturing, businesses.

Everybody uses a data center of some sort to house their data. That’s part of it. More broadly, we’re using more compute and AI to do our work, and everybody’s doing it —businesses and consumers. So we’re creating this demand for AI workloads. But it has to be monetized.

We’ve heard that Google will be face a free cash flow squeeze and others are raising debt and equity. Much of this cap ex is to secure very costly chips and hard infrastructure to house their digital assets that are physical. If there’s no data center, there’s no cloud, and without fiber and connectivity, nothing happens. We’ve not had to think of the physicality of the data center really until recently.

Before we just thought about big tech in a lump. Now we call them hyperscalers; this has to do with their ability to their scale up compute, networks and storage across global networks. This scale is being reflected in a lot of this AI infrastructure development, a physical asset, which has to be energized. Now we’re going to have increasing energy/power demand owing to an increase in this digitalization for a period. It’s a very dynamic period [that will push energy forward in unique ways].

Nicole: You’ve noted that the AI revolution is shifting from a [general] software story to a physical power story. Why should investors consider allocating capital to energy and infrastructure assets instead of focusing solely on pure-play tech stocks?

JW: To be diversified, a portfolio needs to include energy and relevant infrastructure assets, plus even energy infrastructure, for example, midstream firms. They do kick off income, or, dividends, you know. I like to have basic necessary industries in a portfolio as a baseline of value and, hopefully dividends.

I don’t want to rely solely on growth or momentum, which can display volatility. So this is a preference for me. Initially, the chips story dominated the AI story, with NVIDIA, right, starting three years ago. Then frontier models, ChatGPT, and Claude were nascent until, like 2023, ‘24. The data center discussion really dominated late ‘24 through 25, which became the AI infrastructure story as folks recognized the appropriateness of it, this physical counterpart.

Freakouts, melt ups and downs have occurred along the way, and it’s not unwarranted. The numbers are staggering. In 2026, competitive advantages, strategies, and capex are in focus. Execution matters greatly now. The tech guys use the word orchestration. Many distinction and targeted strategies are more clearly focused with some big tech players, and AI cos. However, this disruption and shifting landscape will happen for the next several years.

Energy is a necessity to power these digital and physical infrastructure assets that are being built. They can’t operate otherwise, and there is competition for energy with other demand centers as well. The energy world has a lot of opportunity ahead, just powering the rest of the globe, plus securing sources that provide this firm mostly 24/7 power.

Nicole: Given the intense optimism around AI, how should investors filter out the noise to identify companies hitting operational targets versus those vulnerable to a reality check?

JW: So the headline hype is emotional and hard to tame. Investing requires reality checks through sorting through a firm’s operations, like I said early on. That is, how do they make money and what are their prospects, and the market’s expectations?

Both Open AI and Anthropic have revenue: $24 billion and $30 billion, respectively. Anthropic is profitable with free cash flow expected by 2027, according to projections. Open AI is profitable in 2030. [Google invested $900 million in SpaceX in 2015. The investment was worth over 100X in early trading of the IPO June 12th.]

Why my MANGOS metaphor works? It has some grounding in big tech, but acknowledges the opportunity ahead. Specifically, it captures AI frontier models but also an industrial aspect with SpaceX. Only time and market discovery will reveal what that truth is.

If you stock pick, consider both bull and bear thesis. Do your own research and learn how to discern fact from fiction over time. Have realistic expectations and don’t risk what you can’t afford to lose for a period. And have some strategy that incorporates a rising market overall, but targets areas where you have a natural or studied competency.

End of extended version interview.

[See an early 2026 feature about the AI Infrastructure buildout]

More research below.

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We’ve gone to Mordor and back again.

In a video, I summarize some of the current state of play related to the Strait and what some implications are. Included below are the series of events that show how the oil market adapted as time passed.

A month ago, I could sense that adaptation was going to have longer term outcomes.

It also looked like this after three months…Was the Strait hijacked?

This article below highlights the initial states of stress, but the top video recap includes the very items noted as valuable that mitigated the worst outcomes. The article embedded inside the “World More Worried…” about how oil price dictates many macroeconomic variables proved how robust markets are.

Valuable factors:

• US exports

• Backup infrastructure

• Spare capacity

• Meta, Microsoft

• Apple, AMD, Anthropic

• Nvidia

• Google

• OpenAI, Oracle

• SpaceX

Individual stock picking in this sector is challenging given the intense competition among frontier AI models, high AI infrastructure costs, and the consolidation of market cap among a handful of tech giants. The video highlights the growing importance of competition, the AI tech and infrastructure stack, and human capital in the evolving AI economy. Some discussion about diversified ETF exposure (like Invesco’s QQQ Trust and VanEck’s Semiconductor ETF “SMH”) are used as examples in discussing the investment landscape.

A few highlights and reflections follow.

Shift in Brand Value

The five most valuable global brands in 2025 are all big tech companies — a dramatic shift from 2008, when consumer staples like Coca-Cola and Exxon led the rankings. Google was the first tech firm to hit the top five, followed by Apple (2010), Amazon (2018), and Nvidia (2025).

Competition is steep

Competition among frontier AI model developers such as Anthropic, OpenAI, xAI, Google, and Meta is intense, and others. Upcoming IPOs from SpaceX, Anthropic, and OpenAI will reshape index compositions, including the QQQ, a macro tech proxy. Increasingly, model costs are varying, and output unreliability still requires human oversight. The ROI question is front and center among investors and firms adopting.

Human capital a real asset

Despite AI automation concerns, model reliability issues mean humans must stay in the loop. Human capital may become more valuable, particularly at large tech firms where intangible assets like talent underpin goodwill, captured as an intangible asset on the balance sheet. Human capital is a real asset.

[A more focused investor version was published on Seeking Alpha. This is not investment advice.]

Regarding the recent energy landscape, in 2024, global oil demand was around 103 million barrels per day and was forecast to grow to 104–105 million barrels—roughly where we are now. The U.S. EIA had a solid forecast at the time, and the projections I’ve written about in recent articles have tracked fairly well.

Today, given the Iran situation, $100 oil is likely the new normal at least through year-end, maybe lower if a deal holds and the best case scenario emerges. Much has been documented here on this Substack and on an investor platform. How markets readjust will matter for the global economy at large and the near-term digital infrastructure buildout.

The AI tech conference featured leaders working in the applications area but also chips and infrastructure layers.

The Five-Layer Cake: Jensen Huang’s Framework

At the Dallas conference, NVIDIA, Amazon, and several AI-focused private firms were represented. An NVIDIA executive referenced Jensen Huang’s “five-layer cake” framework for the AI buildout:

1. Energy

2. Chips

3. Infrastructure — data centers, AI factories

4. Models — Anthropic/Claude, Gemini, OpenAI/ChatGPT, and many others; highly competitive

5. Applications — how firms will deploy and benefit from AI

This serves as a simple framework to understand how the pieces fit together. Within each layer, it is anything but simple.

Disruption, Competition, and the Next Four to Five Years

Since May 2023, I’ve been analyzing NVIDIA and chips through an energy lens and tracking how this technology is diffusing. While it had largely been an NVIDIA story in the markets, competition is increasing and the focus is shifting toward execution: how firms implement AI, a broad area, and capture value from it.

Conference participants highlighted that the next four to five years will be a period of substantial disruption. Looking from 2026 to 2030, the growth in data center demand and power consumption is enormous—and it will be constrained by physical realities: converting hydrocarbons to electrons, building out wind and solar, and upgrading grids.

This is precisely why the NextEra–Dominion merger matters: the power sector will have to become more efficient, just as oil and gas did. Midstream players have already been agile—making deals and connecting with hyperscalers and data centers as new customer segments.

Backgrounder:

Agentic AI, Enterprise Adoption, and Cultural Resistance

A theme that has emerged more visibly over the past year—and that I wrote about in earlier AI infrastructure pieces—is agentic AI. Training was once the dominant story; now agentic AI (AI actively using its capabilities to accomplish tasks) is driving a considerable portion of real-world demand and attention.

In contextualizing one’s approach, one tech leader drew a useful distinction: are you “AI native” or are you “working with AI”? Tech firms on the front lines can exploit AI capabilities more fully at present. For broader enterprise adoption, context matters—and model makers and hyperscalers need proximity to the enterprises they serve.

For example, I attended an Anthropic event in Dallas—clearly an effort to establish presence in a major enterprise market. Differentiation in how firms create and capture AI demand will grow, and education will be a large part of the process.

Regarding the efficient use of AI: one leader made the practical point that AI should solve a problem people will pay to have solved. Tokens are not cheap, and resource requirements are real. The related strategic questions—relevance, competitive differentiation, and cultural readiness—are what will separate winners from laggards. Another leader noted that cultural resistance within organizations is a meaningful drag on adoption and diffusion.

Investment and Concluding Thoughts

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The Next Wave

The NextEra-Dominion merger is a structural statement: two of the largest U.S. utilities consolidating with a combined enterprise value approaching $400 billion. The $67 billion all-stock transaction reflects something broader than deal-making, though it is a big deal. The logic of infrastructure scale, long familiar in technology, is being replayed in energy.

Northern Virginia remains the premier data center market in the country, for now, and Dominion’s foothold there is substantial. In its May 1 earnings presentation, Dominion reported 51 GW of contracted data center capacity through Dominion Energy Virginia as of March 2026 — up 2.5 GW since December. That’s roughly 3x the contracted load from less than three years ago.

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Dominion’s broader footprint — such as in Florida, South Carolina, and North Carolina — adds exposure to high-growth commercial markets. The market reaction to the merger May 18th was textbook: Dominion’s shares (D) rose nearly 10% on the announcement while NextEra’s fell roughly 5%, the classic acquired-acquirer spread.

The combined company will trade under NextEra’s NEE ticker. NextEra has already been on a roll with an ambitious next-gen energy strategy. The scale of the combined entity is genuinely significant. NextEra had been signaling its sweeping vision in the last quarters.

Layering in NextEra’s own data center load pipeline makes the combined opportunity set considerable — though not all of it will be built. What matters is that it represents genuine incremental demand, not a reshuffling of existing load.

S&P’s 2026 power market update reinforces the strategic rationale: the NextEra-Dominion combined footprint maps well onto the regions with the strong forward demand. Near-term solar additions are largely already contracted and under construction; the more interesting variable is the outlook for firm dispatchable capacity.

Firm power commands a premium in this environment. Combined-cycle gas remains the workhorse — both today and through the mid-2030s — aided by the region’s proximity to Marcellus Shale supply. As coal retirements accelerate, gas fills the gap. The generation mix shifts more materially after 2030 (as above).

NextEra’s “Energy Resources” unit projects and reported a standalone and co-located battery storage pipeline of approximately 110 GW. Given NextEra’s entrenched positions in California and Texas — the two largest markets for batteries— that figure is defensible. Additional absorption capacity in Virginia, New York, and other large power markets adds further credibility to the pipeline.

The chart below reflects S&P’s generation outlook — consistent with the combined entity’s positioning. (The gas needs are not fully reflected here but are acknowledged.)

A Big Territory

The timing of the merger is well-considered. PJM — the thirteen-state grid operator whose footprint substantially overlaps with the combined entity’s coverage area — recently revised its near-term data center demand forecast downward, pushing load growth further out on the curve. That creates a long runway (see below). Scaling infrastructure across the upper East Coast, mid-continent, and Dominion’s Carolinas service territory is a multi-year exercise, and this deal positions the new NEE to execute for capital efficiency.

Natural gas is projected to satisfy approximately half of firm power requirements through the forecast period, according to S&P’s assessment of PJM. In addition to the above-mentioned states, add in Ohio, Pennsylvania, and Illinois—all growing data center markets—and the opportunity set is further increased to support the growth.

Past is Prologue?

The closest historical comparison may be Exxon’s acquisition of Pioneer in 2023— a scale and consolidation play driven by a resource trend of acquiring key assets and scaling up resources. The Permian, the largest producing basin the U.S., was the prize in this case. Pioneer’s acreage was simply the best.

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Like the oil futures and physical markets, the stock market and the real economy seem disconnected. U.S. consumers feel the pain at the pump and are beginning to respond accordingly. In the last week, I’ve heard from various analysts, experts, and producers in energy. Looking for new insight about the gravity and impact of the oil and gas crisis stemming from the Middle East, the most common and accurate refrain is: Nobody knows.

Those in the industry offer mixed reviews of the situation owing to the many different value chains in energy and demand centers. So what do we know about this crisis now?

The Strait of Hormuz is effectively closed. That means around 10-12% of the oil supply has been affected. More physical shortages are coming. A last count of the afflicted was 12-13 m/b/d.

(Earlier reporting)

The Flows

Saudi Arabia’s flows are being diverted through its East-West pipeline, the new quest to find alternatives to get product to market. Up to 5 m/b/d can be flowed this way and exported outside of Hormuz, which is happening; the pipeline could potentially hold 7 m/b/d of capacity. In fact, Aramco has received higher price realizations and itself benefited from reflowing crude away from Hormuz. Rail lines are being used to move some coveted consumer goods to the UAE.

Aramco’s Chief Executive Officer Amin Nasser said recently:

“If trade flows resume immediately or today through the Strait of Hormuz, it will take a few months for the oil market to rebalance. (However), if trade and shipping remain curtailed by more than a few weeks from today, we anticipate the supply disruption to persist, and the market to normalize only in 2027.”

Saudi Arabia’s crude oil exports are important in global markets. They now have 60% of pre-war exports online. If the UAE can ramp up as intended, more renewed barrels, which are offline from the Gulf, can offer the market an assist. The UAE could ramp up from their 3.2-3.5 m/b/d prior OPEC quota to 5 million by 2027, and conceivably higher. The “higher” option would be an unusual event but not entirely inconceivable anymore.

On the products side, the U.S. exported over 6 m/b/d of crude in early May from close to 4 m/b/d in April; those numbers are inching down owing to less arbitrage. That looks different for refined products: gasoline, jet fuel, and propane were up. The rest of the developing world relies heavily on hydrocarbons as a transportation fuel. These are the U.S.’s main trading partners below.

Middle East infrastructure that has been damaged and shut-in production is an upcoming problem, even when key producers attempt to restart fields. Countries more at risk include Iraq and Kuwait, and likely others, with less engineering prowess than exists in Saudi Arabia. This was an unknown impact that will come to light in the next weeks and months ahead.

The Prices

On Thursday, May 14th, both global Brent and U.S. WTI futures rose to $105 and $101, respectively. Today, WTI hit $107. The Mars oil basket, which represents the physical spot price of the medium sour crude blend that comes to U.S. Gulf ports, is $121. The differential represents the disconnect between futures prices and spot prices of the physically traded commodity. At a Dallas Federal Reserve bank event last Friday, an energy analyst discussed this Mars proxy with me.

What producers from which country will decide to produce more oil and gas to rebalance or develop new markets? This is complicated, comprised of a mix of state-owned, private, and publicly-traded firms. Many U.S. shale producers have taken a wait-and-see position, except for Diamondback and Continental Resources, which is private. Which importer countries will shift temporarily to new suppliers, or permanently? The U.S. oil patch is activated, in terms of deals and consolidation.

Another oil and gas executive noted in a presentation that physical oil traders believed $120 oil would be the price at year-end. Given the virtual stalemate in the crisis and the nonstarter Strait, this is increasingly looking plausible. As the Aramco chief executive mentioned, every week delays rebalancing. More delays to restarting oil fields add supply risk for certain Middle East producers with less capacity to pivot quicker.

The U.S. has been somewhat insulated from the impact compared to others. Where this shows up is in inflation, which has arrived and was already being experienced. Pain at the pump is the most visible effect, but it is trickling down to real budgeting and the real economy. The big question is: how will the rest of the world adjust to the crisis? The EU is planning new policies to try to shift their economic malaise to growth and rebalance their economies and trading partners.

The impacts of energy diversification and how U.S. firms reposition as a result are yet to be decided. They will flow to the U.S. in various ways from both outbound and inbound investment. Just like the outcomes are unknown of the Iran and Middle East writ-large crisis, the U.S. economy will feel some type of secondary and tertiary knock-on effects. We just don’t know exactly what. Destruction is sowing the seeds of creative destruction, with changing geopolitics, trading partners, and opportunity.

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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: