Inside today’s Daily Journal…

Editor’s note: Today, Porter turns the Daily Journal over to Andrew Lipman, an analyst on Porter & Co.’s Distressed Investing. Andy details how the U.S.’s increasing energy independence has helped buffer it from great energy price shocks resulting from the war in Iran.

Andy takes it from here.

The U.S. is becoming more energy efficient…

Domestic production of oil and gas has increased significantly over the last two decades, and because of this, oil-price increases attributable to the war in Iran have been much lower than in conflicts past.

Since the U.S. government’s war against Iran began on February 28, the price of benchmark West Texas Intermediate crude has risen about 50% – from roughly $65 to $98 per barrel this morning.

And the consumer felt it almost immediately at the pump… with the price of a gallon of gasoline shooting up by around $1, to $3.95 on average nationally. The cost of diesel fuel shot up even more – affecting truckers now and the price of food in the grocery store in a few months.

The consensus in the financial press and in the financial markets is that higher energy costs will reduce economic growth in the near term, but they are unlikely to trigger a recession. Just 20 years ago, that was not the case – an economic shock of this magnitude might very well have been enough to do more damage to the economy that it has today. By historical standards, today’s oil-price rise, though painful at the gas pump, is relatively modest.

For example, in October 1973, OPEC – the consortium of Arab and African countries that manages that region’s oil market – declared a total embargo on oil sales to the U.S. Six months later, by March 1974 when the embargo ended, the price of a barrel of oil had risen 400% – from $3 to $12 per barrel. This price increase led to 9% unemployment, a 48% decline in the stock market, and a recession that extended into 1975.

After Iraq invaded Kuwait in 1990, the Gulf War that followed caused the price of oil to more than double – from $17 to $36 per barrel. This increase in energy costs, which had eventual effects on goods and services, led to 7.8% unemployment and a recession through April 1992. It is widely believed these events lost President George H.W. Bush re-election to the White House in 1992.

In 2008, oil production was declining while worldwide demand was increasing. The Chinese economy was growing rapidly – more than 13% in 2007 – and global economic growth was a solid 4.5%. This supply-and-demand imbalance caused the price of oil to more than double, rising from $60 per barrel in early 2008 to $143 per barrel in July 2008. This sharp increase in energy costs was one of the many factors responsible for the great recession of 2008-2009.

Things are different now – the U.S. economy has become less energy intensive. The economic output per unit of oil or gas – as measured in dollars of gross domestic product (“GDP”) – increased by an average of 1.3% annually from 1949 to 2001. If we look at the quarter century through 2024, energy has become 2.0% more efficient each year. The main reasons for this are:

In the chart below, the blue line represents U.S. GDP, with 1990 set at 1. It shows that by the end of 2024 the U.S. economy was 2.2x greater than it was in 1990. This equates to annual growth of GDP averaging 2.4%.

The green line represents the energy required for the U.S. economy to generate that GDP. The amount of energy required rose roughly 20% from 1990 to 2024 – equating to a compound increase in energy use of roughly 0.5% per year.

The brown line denotes the energy efficiency of the U.S. economy – the portion of economic growth not requiring additional energy. This doubled between 1990 and 2024 – equating to a 2% compound annual increase.

Said otherwise, it took about half as much energy to generate each dollar of GDP in 2024 as it did in 1990.

Not only is the economy more efficient, but the U.S. is also benefiting from increases in domestic energy production, which has accelerated greatly over the last decade. Though it had been heavily energy dependent for decades, beginning in 2019 the U.S. produced more energy than it consumed.

Though the U.S. still imports certain grades of oil – for instance, heavy crude oil needed for certain refineries – its dependence on imported oil is a small and declining fraction of what it once was. Going forward, this big-picture trend will yield increasing economic and strategic benefits for the U.S.

The combination of increasing energy efficiency and greater domestic energy production positions the U.S. economy for a stronger future, lessening the impact of global price shocks like the recent conflict-driven increases. This trend of energy independence provides a significant competitive advantage, particularly for traditionally power-hungry industries.

Specifically, sectors like heavy manufacturing, steel manufacturing, and aluminum smelting stand to benefit substantially from more stable and relatively lower domestic energy costs compared to international competitors. The boost in electricity generation enabled by domestic supply will also be crucial for managing the exponential energy demands of data centers and the infrastructure supporting artificial intelligence (“AI”). Companies leading this charge – both in energy production and consumption efficiency – are poised for growth.

For example, major domestic oil and gas producers – such as ExxonMobil (XOM) and Chevron (CVX) – benefit directly from increased output. Meanwhile utilities, like NextEra Energy (NEE) and Duke Energy (DUK), are positioned to meet rising electricity demand. Furthermore, manufacturers committed to efficiency and domestic sourcing – such as Nucor (NUE) in steel – and AI infrastructure developers – like Microsoft (MSFT) or Google (GOOGL) – will find the new energy landscape a powerful economic boost.

Tell us what you think: [email protected]

Andrew Lipman
Southampton, New York

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1. U.S. Treasury yields are surging. This morning, the yield on the benchmark 10-year U.S. Treasury note rose above 4.45%, its highest level since July. As Porter noted in the Journal earlier this month – as 10-year yields rose above 4% following the beginning of the war with Iran – when Treasury yields rise during a global conflict, the market is saying the U.S. government is no longer a risk-free refuge, but a participant in the same inflationary fire as everyone else. That is not a bullish setup for the equity markets.

2. Another legal win for Venture Global. As part of an arbitration settlement with French electricity producer Edison, Venture Global (VG) will deliver shipments of liquefied natural gas (“LNG”) to Italy beginning in May. Edison and others sued Venture Global, alleging that it sold LNG from its Calcasieu Pass facility in Louisiana on the lucrative spot market before honoring its lower-price long-term contracts. The deal includes additional LNG deliveries to Europe beyond the original long-term contract with Edison. With QatarEnergy’s Ras Laffan natural-gas facility offline due to the war in Iran, and European buyers scrambling for non-Qatari supply, Venture Global’s incremental Italian volumes couldn’t be better timed.

3. Google gains on cloud infrastructure. While Amazon (AMZN) remains the market leader in cloud infrastructure with a 32% share, Google Cloud emerged as the fastest-growing player with a 50% year-over-year revenue increase, boosting its market share to 12%. To capitalize on this momentum, Alphabet (GOOGL) has more than doubled its 2026 capex guidance for cloud to $185 billion, joining other hyperscalers in a massive investment race in this critical segment – which has expanded by more than 20% in the last six quarters.

Complete Investor recommendation Core Natural Resources (CNR) hit a 52-week high today as global energy buyers moved to coal as a solution for the massive disruptions to supplies of liquefied natural gas (“LNG”) as a result of the war in Iran.

On Wednesday, we asked Daily Journal readers where they thought the S&P 500 would sit in one month… on April 25. And the results are mixed: 46% of survey takers selected “flat,” while 43% chose “deep correction.” Just 11% of Journal readers seem bullish at the moment, selecting “bull run.”

In yesterday’s Daily Journal, Tech Frontiers’ editor Erez Kalir wrote about the decline of the petrodollar system. Readers shared their thoughts…

Gerry C. writes:

Bill B. writes:

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