by Drew A. Kassel, PhD, Webber Energy Group, UT Austin
When the Strait of Hormuz closed in February 2026, nearly a quarter of global oil supply and roughly one-fifth of liquefied natural gas (LNG) flows were suddenly at risk. Within weeks, Brent crude prices surged past $100 per barrel for the first time since 2022, when Russia invaded Ukraine. Consumers in the United States felt the effects soon after, as the national average price of gasoline rose above $4 per gallon in early April.
Moments like this revive a familiar concern: the extent to which U.S. energy security remains tied to global geopolitics. The debate dates back to the twin energy crises of the 1970s. The thoughts are the same, even though the global energy landscape has fundamentally transformed for two reasons:
- The shale revolution
- Renewable energy development
The shale revolution of the early 2000s revived domestic oil and gas production, enabling the U.S. to shift from being an oil and gas importer, dependent on international markets, to an oil and gas exporter. However, this shift did not eliminate exposure to international markets. Much of the crude produced in regions like Texas is light and sweet, while many U.S. refineries were historically optimized to process other types of heavier imported crude.
When our oil refineries were constructed during the 20th century, they were built to produce finished products – like gasoline, diesel, and jet fuel – from heavier crude oil that came from the other countries in the Middle East or South America. Now, even though the U.S. has domestic sources of oil, our refineries can’t fully switch over to it. You can think of an oil refinery like a car. At the local gas station, both gasoline and diesel are available, but your vehicle can only run on one of them and it would be a major retrofit (replacing the engine) to make it run on the other. As a result, the U.S. continues to both import and export oil—importing heavier grades suited for existing refineries while exporting lighter crudes to other regions, like Europe, that often command higher prices abroad.
Such commodity trading is not uncommon and can be financially beneficial. Still, it underscores an important point: even with abundant domestic production, the U.S. remains closely linked to global price dynamics.
At the same time, massive development of renewable energy sources has also changed the energy ecosystem. Using wind and solar resources at scale for electricity generation provides multiple hedges for the power sector against oil and gas crises.
From a reliability standpoint, electricity generated from a renewable resource is domestic and secure. A war on the other side of the globe might impact trade routes for thermal fuel supplies, but it will not stop the wind from blowing or the sun from shining on U.S. land. Although the supply chains to construct the equipment are still globally correlated, once the wind turbines or solar panels are installed, there is less that can be done to impact their operations. In that sense, the electricity production becomes less associated with geopolitics.
Not only do renewables provide a direct alternative against scarcity prices of oil and gas, but they can serve as a counterbalance to bring domestic prices lower. Contrary to oil, the U.S. is generally able to use domestically sourced natural gas, especially as a fuel source in the power sector. When wind and solar generation displace natural gas in electricity markets, they reduce domestic gas demand, potentially freeing up supply for export. Over time, this dynamic can influence both domestic and global gas pricing.
These interactions are especially relevant as more sectors electrify. For example, if an individual purchases an electric vehicle (EV) to decouple their transportation needs from the price of gasoline, they are now directly tied to the price of electricity and indirectly tied to the price of natural gas that fuels the electricity. An abundance of renewable generation resources can further decouple that individual from fossil fuel markets.
Nowhere are these dynamics more visible than in Texas. As both a center of the shale revolution and a leader in renewable energy deployment, Texas sits at the intersection of these trends. The state has ~80 gigawatts (GW) of wind and solar capacity, with more on the way, and it remains the largest natural gas producer and exporter in the country. Meanwhile, electricity prices in the Electric Reliability Council of Texas (ERCOT) market are often below the national average.
Texas functions as an interesting test bed. The state participates fully in global energy markets while also building increasing layers of domestic resilience. As energy systems evolve, the Lone Star State may very well serve as a real-world case study for how to balance economic opportunity, reliability, and insulation from geopolitical risk.