Does America’s earthquake-inducing oil boom make them energy-secure?
If you’ve filled up a car in the UK in the last month, you’ll have noticed diesel creeping toward £2 a litre and petrol sitting at a four-year high. There’s been some chatter about it, but no queues or rationing and certainly not enough to feel like a crisis.
The price increase is due to America’s war with Iran which has resulted in the closure of the Strait of Hormuz — the shipping channel that around 20% of the world’s oil passes through.
Tanker traffic has collapsed from roughly 85 ships a day to single figures. War-risk insurance for the ships still willing to make the crossing has gone up by something like 40 times its pre-war cost. Several insurers have pulled cover altogether. The International Energy Agency has called it the largest supply shock the oil market has ever seen.
As a result, an oil shock similar to that experienced in the 1970s with OPEC’s embargo on oil exports, was widely expected.
So why isn’t this a full-blown 1970s-style crisis? Why are we still filling up normally instead of queueing round the block?
The American shale boom.
Oil as a buffer
Back in 2008, US oil production had fallen to around 5 million barrels a day — the tail end of a long decline. Fracking changed that. By 2025, US production had nearly tripled to about 13.6 million barrels a day, making America the largest oil producer on earth, ahead of Saudi Arabia and Russia.
US shale can’t physically replace Gulf oil in an Asian or European refinery, but its existence means the world went into this crisis with far more spare capacity than it had in the 1970s. A $/barrel price shock is initiated not so much because oil extraction suddenly becomes expensive, but when the market gets wind that there’s going to be a worldwide shortage in supply. That’s what happened in the 70s when a Gulf disruption really did mean queues at the pump. And it is what is NOT happening now, because the markets know that a glut of oil is ready and available in America.
Back in April, analysts were warning of $200 a barrel if the Strait stayed closed. As I write this, oil is trading around $100–105 a barrel — it’s worse than it was, but nowhere near that worst case scenario.
Shale is the reason this hasn’t been catastrophic. That might come as a relief to you but… that’s exactly the concerning part!
The thing propping up the entire global oil market right now is hydraulic fracturing. A technique that’s expensive, technically demanding, and comes with a well-documented side effect — it can trigger earthquakes.
That risk isn’t theoretical or overstated. It’s serious enough that the UK has held an effective moratorium on fracking since 2019, reinstated by the government in 2022 after a brief reversal. Scotland and Wales have gone further and refused to license it at all. France, Germany, Ireland and Bulgaria have banned it outright. The US is the outlier, not the norm — the one major economy that decided a domestically controlled energy supply was worth a risk that most of the developed world wasn’t willing to accept.
Think about what that actually means. The world’s backup plan for a Gulf oil crisis is a supply source so difficult and risky to extract that almost nobody else will touch it. That’s not a sign that fossil fuel is becoming easier to get. It’s the opposite. We’re relying on the hardest, most expensive tier of supply just to keep the market from breaking — and that tier only exists because one country was willing to accept earthquakes for it.
This is what I mean when I say the easy oil is gone. It’s not that fossil fuels are about to run out — nobody sensible is claiming that. It’s that the gap between “what’s easy to get” and “what we actually need” is being filled by options that get progressively more expensive, more difficult, or more dangerous. Shale today. Deepwater and tar sands before it. Whatever comes after shale, next.
What this means for your business
None of this is a reason to panic. It’s a reason to take stock about what you’re exposed to.
Your business doesn’t get to buy oil, gas or electricity at some calm, theoretical global average. You buy it at whatever the market is doing on the day your contract renews — and as this year has shown, that can move a long way, for reasons that have nothing to do with your business and nothing you can do anything about. Households have the Energy Price Cap. Businesses have no equivalent. Whatever the market decides to charge, you pay in full.
The businesses that come through periods like this in the best shape aren’t the ones hoping the next crisis doesn’t land on their renewal date. They’re the ones who’ve already taken control of what they can control — understanding their own usage, generating a share of their own electricity, and reducing how much of their cost base is exposed to a market this volatile in the first place.
This is a sensible response to a market that has now shown, twice in four years, with energy crises in Ukraine and now Iran, that it can move dramatically and without warning.
If you want to see where your own business currently stands, take the free Business Energy Scorecard — five minutes, no obligation, and a clear picture of whether your premises is ready to be made energy secure.