Iran War and the Energy Crisis

I pumped gas today for $4.49 a gallon at my local gas station. Before the war with Iran and the subsequent closing of the Strait of Hormuz, I bought gas for $2.67 per gallon, a dramatic difference in two months’ time. It is hard to imagine that nobody thought of the global energy crisis and the price escalation of everything that would ensue shortly after the attack on Iran on February 28, 2026.

The Strait of Hormuz is bordered by Iran and Oman who have international control over their territorial waters. Approximately 20 percent of the world’s oil and LNG passes through Hormuz.

The Strait of Hormuz is legally an international waterway, but Iran has taken control of it, regulating access, directing shipping routes, and imposing tolls to friendly nations who are allowed passage.

The rest of the ships experience shipping delays, the threat of explosions from anti-ship mines, missiles, and drones, and increased insurance, resulting in soaring global energy prices.

Iran restricted access in the international waters of the Strait of Hormuz for U.S., Israeli, and their allied ships. China, India, Malaysia, Pakistan, Russia, and Iraq have negotiated safe passage on routes near Larak Island.

It does not matter that the U.S. has a large navy, its large ships are vulnerable to more than 100,000 Iranian drones.

The burning of fossil fuels, petroleum (38%), natural gas (36%), and coal (9%) provided 83 percent of U.S. energy production in 2023. According to statistics, net electricity generation in 2025 amounted to around 4,430 terawatt hours. Natural gas was the most common fuel for electricity generation. Combined with coal burning, fossil fuels accounted for 76 percent of all power generation in the U.S. U.S. fossil fuel consumption 2025| Statista

Despite billions of dollars invested in and, at times wasted on various green enterprises that eventually went bankrupt, it was painfully evident that renewable energy never provided enough energy for the needs of such a large economy like the U.S.

In addition to the price of gasoline going up significantly, the price of electricity spiked, making everything produced or serviced much more expensive. “Cheap energy is the key to civilization.”

Calls for more fossil fuel energy production are coming from many of the former proponents of global warming who claimed previously that the “evil” fossil fuels were destroying the planet and thus had to be replaced at all costs with renewable energy, solar and wind.

Why the sudden change? Why the calls for massive expansion of exploration and burning fossil fuels, oil, gas, and coal? What changed? Isn’t CO2 destroying the planet anymore? What happened to the much-touted climate change industry? Did it die as quickly as it started? Is CO2 spewed from burning fossil fuels no longer a threat to the planet?

Enter AI and data centers that need a lot of water and electricity. Influencers, the media, and the moneyed class are trumpeting AI as the future of humanity. Nobody is quite clear about the thousands of jobs it will create. Could those jobs be like green jobs that never materialized with green energy?

The problem with AI is that, to perform well, it needs data centers, thousands of them and then some. It also needs water and land.

Which brings us to the latest fight against data centers in Utah where the proposed Stratos Project in Box Elder County, financed by Shark Tank star Kevin O’Leary, would cover 40,000 acres in Hansel valley, 2.5 times the size of Manhattan, using 9 gigawatts of power, more than double Utah’s current electricity use. The project is overseen by Utah’s Military Installation Development Authority (MIDA). The project is framed as an economic and national security necessity. Tax revenue and thousands of jobs are being promised. Commissioners OK controversial data center proposal for Box Elder County in northern Utah - East Idaho News

Tucker Carlson interviewed O’Leary recently and asked him poignant questions about AI and its huge need for data centers, electricity, and water.

O’Leary’s argument for more data centers was that “if we don’t do it, the Chinese will,” and we will be vulnerable in an asymmetric future war.

Liberty Utilities, which served 49,000 Lake Tahoe residents on the California side, told customers that they must secure a new primary power source by May 2027 because “NV Energy will end its long-standing wholesale electricity supply agreement.” Why would that happen? Because electricity demand from large-scale data centers has skyrocketed. Liberty Utilities generates 25% of its power from its solar facilities in Nevada, and 75% from NV Energy. Nearly 50K Lake Tahoe Residents Have to Find New Power Source - Energy  News Beat

Political pundits opine that the sudden increase in data centers, which require a lot of electricity and water, is the race for AI. Nobody wants U.S. to be behind China. But China already has less data centers than U.S. and has total control over its population with the social score. The oft-repeated question is, what exactly is AI producing?

What would happen to humans and their work if they were suddenly replaced by AI robots? Would that be healthy? Would AI robots become sentient beings and become our judges, jailers, and executioners? Could AI trigger a war and other disasters by malfunctioning or on purpose?