Global Energy Crisis Highlights Resilience of Interconnected Markets and U.S. Energy Independence

Oil and gas prices spiked in 2022 after Russia's invasion of Ukraine, leading to the "first truly global energy crisis" with widespread impacts.

In contrast to the 1970s oil shocks, today's more interconnected global energy system can respond better to supply disruptions through releases from strategic reserves, market reallocation, and "grey-zone trading."

The shale gas and tight oil revolution in the U.S. has transformed geopolitics by turning the U.S. into a major exporter and reducing its reliance on imported oil.

This shale bounty has eased U.S.-China resource competition, enabled U.S. disengagement from the Middle East, and prevented severe fallout from incidents like the 2019 attack on Saudi oil facilities.

While climate policy may restrict fossil fuel supply going forward, for now supply is adequate, but the market could tighten if producer investments lag recovering demand.