America Runs on Gas, but the World Still Breaks on Oil

Although oil prices typically dominate energy debates, natural gas may be the more significant story in the United States today. It continues to anchor the domestic power system, but rising LNG exports demonstrate that its importance has expanded far beyond the United States market. Oil, by contrast, remains a source of geopolitical risk, particularly around strategic chokepoints such as the Strait of Hormuz. This article contends that natural gas is at the heart of the United States’ energy story, whereas oil remains its greatest geopolitical vulnerability.

Figure 1: Shares of U.S. electricity generation

Source: U.S. Energy Information Administration (EIA) (2026), Short-Term Energy Outlook.

As Figure 1 shows, natural gas remains the largest single source of U.S. electricity generation in 2026, accounting for 40% of the power mix. Coal and nuclear still make substantial contributions, while wind and solar continue to grow. Even so, natural gas has yet to be displaced from the centre of the system. Rather than pointing to a fully “post-fossil” electricity sector, the chart suggests a more hybrid reality: renewables are expanding, but they are doing so within a grid that still relies heavily on natural gas for scale, flexibility and day-to-day stability.

This interpretation is consistent with earlier research on the evolution of U.S. energy markets. Oil and gas play distinct roles in the American energy economy: oil remains strategically important because transportation still depends heavily on liquid fuels, whereas natural gas is more widely distributed across end uses and has become especially attractive for new electricity generation because of its efficiency and relatively low capital cost (Deutch, Schlesinger and Victor, 2006, pp. 3–5, 13–14). Despite periods of price volatility, natural gas increased its share of U.S. net electricity generation from roughly 13–14% to nearly 19% between 1994 and 2005, while gas-fired capacity had already secured a significant place in the national power fleet (Michot Foss, 2007, pp. 11–15). Taken together, the chart and the literature point to the same conclusion: renewables are on the rise, but natural gas remains the stabilizing core of US electricity and is increasingly an export story.

Figure 2: Brent Crude Oil Prices and U.S. LNG Exports (2024–2027)

Source: U.S. Energy Information Administration (EIA) (2026), Short-Term Energy Outlook.

As Figure 2 shows, the most revealing external trend between 2024 and 2027 is not Brent’s uneven movement, but the steady rise in US LNG exports. Brent falls, then recovers and falls again, whereas LNG exports only increase. That contrast is significant because it points to two very different types of energy stories. Oil prices remain cyclical and reactive, influenced by short-term market sentiment and geopolitical tension, whereas LNG exports reflect a more long-term structural shift: the United States’ growing ability to convert domestic gas abundance into sustained participation in international energy trade (Medlock, 2012, pp. 5-9).

In this sense, LNG isn’t just another commodity series like Brent. It demonstrates that natural gas now operates on two levels simultaneously: as a stabilizing fuel in the domestic energy system and as an increasingly important tool for external economic and strategic influence. Deeper gas trade can strengthen US ties with allies and trading partners while increasing American geopolitical influence, even if export volume alone is not a complete strategic solution (Medlock, Jaffe, & O’Sullivan, 2014, pp. 14-16). As a result, the same fuel that powers the United States’ power grid is becoming a more powerful export lever abroad. Brent is still relevant, but in a different way: as a reminder that oil remains the primary channel through which geopolitical shocks can disrupt markets (Medlock, Jaffe, and O’Sullivan, 2014, pp. 24-25).

What Figure 2 cannot show on its own is the scale of the geopolitical tail-risk sitting behind the Brent line. Brent appears to move in a relatively calm range from 2024 to 2027, but this should not be interpreted as the extreme of oil-market stress. Frankel identifies the conflict with Iran as one of the major shocks capable of destabilizing the global economy, and his warning is still very relevant today (Frankel, 2012, p.2). More broadly, Alqaralleh, Almajali, and Canepa contend that geopolitical conflict can disrupt both energy production and transportation systems, while Kokko demonstrates that recent crises have made energy markets more vulnerable to disruption and contagion effects (Alqaralleh, Almajali, and Canepa, 2024, p. 39; Kokko, 2025, pp. 2, 15-16). In other words, the Brent line in Figure 2 is useful only under relatively normal circumstances.

Source: Stuff (image credit: Associated Press)

These normal conditions can quickly deteriorate in the Strait of Hormuz. Hormuz is one of the world’s most important oil chokepoints, with few bypass options and no immediate alternative route for much of the LNG trade that relies on it (El-Katiri and Fattouh, 2012, pp. 5-6). A significant portion of traded oil travels through a small number of vulnerable transit routes, making chokepoints central to the strategic risk inherent in oil dependence (Deutch, Schlesinger, and Victor, 2006, pp. 22-23, 48).

That is where Venezuela enters the argument. If Gulf flows were severely disrupted, markets would immediately search for replacement barrels, and Venezuela would become relevant not because it could solve the problem, but because it remains one of the few politically contingent sources of additional non-Gulf supply. Earlier work by Salameh framed Venezuela as a potentially important buffer against Middle Eastern instability, arguing that greater Venezuelan output could help moderate oil prices if investment and political conditions allowed it (Salameh, 2014, pp. 2–4). That logic has not disappeared entirely. Venezuela still matters because of its reserves, and because U.S. policy towards Caracas continues to oscillate between pressure and selective deal-making, with oil extraction remaining one of the arenas in which that bargaining takes place (Renzullo, 2025, pp. 2–3, 6–9).

To summarize, the evidence suggests that the United States is entering an energy phase in which natural gas provides the system’s underlying structure, while oil continues to define its greatest vulnerabilities. Natural gas remains central to domestic electricity generation and is becoming increasingly important internationally as LNG exports rise, reinforcing its position at the heart of the United States’ energy story. Oil, on the other hand, is less important as a stable source of growth than as the primary channel through which geopolitical shocks can disrupt markets, particularly when chokepoints like the Strait of Hormuz are involved. Venezuela may still have an impact in this context, but only as a limited buffer rather than a genuine substitute. The broader lesson is clear: gas is becoming the fuel of American strength, whereas oil remains the fuel of global vulnerability.

References

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