Potential Global Shift to Coal Amid US-Israel Conflict with Iran and Energy Disruptions

In February 1977, shortly after taking office, President Jimmy Carter addressed the nation on energy policy as West Texas crude prices neared $14 per barrel. During his fireside chat, Carter urged Americans to set thermostats to 65 degrees Fahrenheit during the day and 55 degrees at night to conserve energy amid a perceived permanent shortage.

The current US energy situation draws parallels to the 1970s crisis. Gasoline prices have surpassed inflation-adjusted levels from the winter of 1977, contributing to inflation concerns that could reach three-year highs. Although the US economy depends less on energy than in the 1970s, fears of stagflation—a combination of recession and high inflation—have emerged.

President Donald Trump has prioritized expanding domestic fossil fuel production in response.

The US-Israel conflict with Iran has triggered an energy crisis by restricting flows through the Strait of Hormuz, where Tehran has limited energy shipments critical to the global economy. This disruption affects 20% of the world's natural gas supply and has raised gasoline and crude oil prices.

The conflict, now in its early stages, has heightened global instability, impacting energy-dependent regions in Europe and Asia more severely due to their reliance on imports.

Renewable energy sources like solar and wind offer potential insulation from such geopolitical bottlenecks, as they rely on domestic production. ' However, renewables face challenges, including dependence on critical minerals predominantly sourced from China, which has used its market dominance in geopolitical contexts, and increased costs from global inflation and higher interest rates driven by the conflict.

Global coal consumption has grown significantly, reaching 8.8 billion tons in 2023, an increase of 1.3 billion tons since 2020. This rise stems from high demand in India and China, as well as responses to prior crises, such as Europe's halt on Russian gas imports following the 2022 invasion of Ukraine.