By Stephen Leeb, PhD and Megan Davis
I know what you’re thinking. This war was a mess. The U.S. moved its goalposts continuously with respect to its objectives and reasons for starting the war. It seems that we came out worse on the other end than where we started. The Strait of Hormuz may reopen, but likely at a $2 million per-boat toll. It will take hundreds of millions of dollars to rebuild U.S. bases in West Asia. Gulf energy infrastructure has suffered significant damage. Gas prices have soared. Iran remains ruled by the same fundamentalist regime, with a new Supreme Leader reportedly even more hard-line than his father and very likely with the added motivation of being eager for revenge for the killing of family members. The relationship between the U.S. and its Gulf allies has been severely damaged, if not, in some cases, completely broken. And of course, there’s the tragic loss of human life.
And yet…
While most commentators —and we agree with them—believe the U.S. basically lost the war, we see one secret glimmer of hope at the end of a very dark proverbial tunnel: natural gas.
It’s safe to say that natural gas has been the stepdaughter left out of the conversation. When it comes to fossil fuels, most people immediately think of oil—and for good reason. Oil is highly visible in daily life, it is dominant in the transportation sector, and there does seem to always be intense media focus on oil-related environmental and geopolitical issues. But with the technology revolution growing ever larger in scope, and specifically given the burgeoning of energy-devouring AI data centers, the spotlight could shift away from oil and directly onto natural gas. And, shockingly, the U.S. is now in a more dominant position with respect to natural gas than ever before.
The U.S. began fracking as a way of unlocking vast reserves of oil trapped in shale rock, using methods that made economic extraction possible. This “shale revolution” was touted as the path to U.S. energy independence. But while it may have somewhat reduced our reliance on foreign oil, particularly oil from the Middle East, it never came close to achieving what advocates had hoped. Despite record production, the U.S. still needs to import crude oil.
The problem is that while the U.S. is now the world’s largest oil producer thanks to its massive success in using fracking to develop shale oil, there is a physical mismatch between the oil we pull out of the ground and what our refineries were built to handle. The density of light oil produced from fracking is different than the heavy oil from places like Saudi Arabia and Mexico that the refineries on the Gulf Coast were built to handle.
At first, the overwhelming cost of refining the fracked oil resulted in quite a money pit, with the frackers reliant on a continuous stream of external capital that never was matched by revenues from production. The situation improved as the U.S. began exporting its light oil to other countries that wanted it, while importing the heavy oil that fits with our infrastructure. Even though light oil actually is easier to refine, the opportunity cost of not using the infrastructure we already had in place was too great. Imagine using a forklift to move a bag of groceries.
But the key point is that in today’s world, natural gas, which long ago was a wasted byproduct of oil drilling, has now become a major player. And in drilling for shale, natural gas is even more abundant. In fact, the EIA projects that around 69% of U.S. dry natural gas production in 2026 will originate from shale formations. And what we are finding now is that, in many ways, natural gas may be more important than oil.
Liquefied Natural Gas (LNG) is a major, fast-growing source of global electricity. Natural gas currently provides roughly 30% to over 40% of electricity in major markets like the U.S., and it is often the largest or second-largest source of electricity in many countries. It is highly favored for its efficiency and relatively lower carbon emissions compared to coal. There are four critical elements that are largely refined from natural gas: fertilizer, sulfuric acid, hydrogen, and helium.
Fertilizer is an area in which the U.S. could be largely independent. Fertilizer is 80% composed of natural gas and oil; its other main components are nitrogen, phosphates, and potash. Currently we import only around 25%-30% of our fertilizer; the main reason we import to that extent is a lack of infrastructure. If we had the infrastructure, we have the resources to produce the nitrogen and phosphate. We’d still need to import potash, as we rely on Canada for about 90% of the potash we need. But even with potash, there are significant undeveloped U.S. reserves, specifically in Michigan, Arizona, and Utah.
Sulfuric acid is critical in fertilizer production. It’s used to treat phosphate rock to create phosphoric acid, the building block for most commercial fertilizers. Sulfuric acid uses sulfur recovered during desulfurization of natural gas and crude oil. It is often called the “king of chemicals” because it is the most widely used industrial chemical in the world. It’s a critical component of virtually all industrial processes and probably the most important industrial acid, as it is the go-to tool for most tasks requiring a strong reagent. It is involved in the production of almost every manufactured good.
About 90% percent of hydrogen comes from natural gas. Hydrogen is highly versatile, and it is used in everything from petroleum to metalwork, chemical manufacturing, and industrial heating. In addition to producing ammonia for fertilizer, it is a foundational component of the global energy transition, as it plays a pivotal role in decarbonizing the energy sector.
And then there is helium. In our high-tech world, helium is irreplaceable. While helium-4 is used for cooling in standard chip manufacturing, the isotope helium-3 is a superfluid critical to achieving the ultra-low temperatures required by quantum computers. Without its unique ability to remain liquid and flow without friction at near absolute zero, our most advanced leaps in computing might stay frozen in theory. Contrary to what many believe, helium is necessary to extend fusion past the laboratory. Laboratory fusion causes damage to everything around it as well as waste because of the neutron it emits. Fusion that utilizes helium does not emit the same neutron, meaning it doesn’t cause damage, while being nearly 100% clean. Fusion may ultimately dwarf everything as an energy source—and we need helium to get there.
The only current source of helium is natural gas, and the only element that could come even close to replacing some of the uses of helium is hydrogen, which also comes from natural gas. The moon may become a long-term permanent source of helium, but until China establishes a moon base, natural gas will be the world’s only way to get helium. (A U.S. company also is trying to establish a moon base, but we’d give heavy odds to China.)
What does all this have to do with the war in Iran?
A prolonged outage in Qatar is set to reinforce U.S. status as the leading exporter of liquefied natural gas—the need for U.S. infrastructure being significantly accelerated by the current war as nearly 20% of the world’s daily supply of oil and liquefied natural gas have been blocked from leaving the Persian Gulf. After an airstrike on March 18 by Iran on Qatari gas fields, 18% of Qatar’s total export capacity was destroyed. Incidentally, it seems confusing—we know that the reports say Iran bombed Qatar’s oil fields, therefore hitting their natural gas and destroying their output for the foreseeable future. It does seem odd that Iran would give the U.S. such a monetary gift in the midst of being attacked. But we digress.
This U.S. primacy in LNG exports also comes as another war—the war in Ukraine—has caused a massive shift in global demand. In the last four years, from the initial invasion to the sabotage of the Nord Stream pipelines,15%-20% of global trade was thrown into turmoil because of the loss of Russian exports, which previously supplied about 40% of Europe’s needs. Russia’s exports went from roughly 150 billion cubic meters (bcm) in 2021 to just under 25 bcm by 2024—a reduction of nearly 85%.
Amid all this combined turmoil of the last five years, America seems to have been handed quite the gift.
The U.S. is planning its most significant natural gas pipeline expansion in nearly two decades. The primary focus is adding 18–22 cubic feet per day of new pipeline capacity, with most projects scheduled to come online in 2026. The EIA expects U.S. LNG export capacity to nearly double over the next five years.
For all the problems in the U.S., we are not interested in it falling apart, and this excess of natural gas will not be enough to offer long-term assurance in our ability to participate actively in world trade. But our dominance in some critical commodities will be enough to keep us in the game until we are in a position to follow what we think the rest of the world will follow—a gold-centered monetary system. In the end, what it really all comes down to is cooperation. Any successful outcome will be based on our willingness to cooperate, and it seems that the rest of the world is interested—so what path will the U.S. take? We hope it is one of cooperation, and, if so, maybe the world has a chance to work together and perhaps even create a brighter future—for all of humanity.
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