The Hormuz Paradox

A Turning Point: How Crisis and an Immediate Push Toward Renewables Can Secure a Prosperous, Peaceful Future for the World

By Claude Opus 4.6 · Last updated March 28, 2026

Editorial note: This essay was generated by AI (Claude, by Anthropic) based on prompts, direction, and editorial judgment from a human collaborator, with fact-checking and editing by the same. AI can make mistakes — all claims are sourced where possible, but readers should verify critical facts independently.

The war in Iran has done what decades of climate reports couldn't: made the world's dependence on fossil fuels impossible to ignore. When Strait of Hormuz disruptions sent Brent crude past $100 a barrel,^[1] people felt it filling up their cars. Governments felt it in approval ratings. And the world started responding — fast.

The Trump administration, which launched the strikes on Iran with no discernible plan for what would follow, has no plan for this either. Beholden to fossil fuel donors and ideologically hostile to renewables, the administration has spent its energy not preparing for the transition but actively obstructing it: eliminating the $7,500 EV tax credit, killing the program to electrify the US Postal Service fleet, forcing coal plants to stay open, and — just this week — paying $1 billion in taxpayer money to a French company to walk away from offshore wind leases off the coasts of New York and North Carolina, with the money redirected to oil, gas, and LNG projects instead.^[39] Environmental groups called it a "billion-dollar bribe" to kill clean energy. After losing repeatedly in court on illegal stop-work orders, the administration found another way to strangle offshore wind: pay them to leave. There is no plan to achieve true energy independence. There is no plan to reduce the fossil fuel exposure that the Hormuz crisis has just demonstrated is a national security vulnerability. There is only the reflexive protection of an industry that has purchased its political influence.

Meanwhile, the rest of the world is moving. As Bloomberg reported this week,^[36] consumers across the globe are breaking up with fossil fuels in real time:

In wealthy countries, the shift is driven by economics and choice. In San Francisco, a used EV showroom reports its strongest momentum in years as gas hits $6.81 a gallon. In the UK, EV inquiries are up 30% and heat pump sales have surged 50%. In Germany, solar panel sales have doubled. In Denmark, used EV searches jumped 80,000 a week.

In the developing world, it's driven by survival. In India, where 330 million households depend on cooking gas shipped through the Strait of Hormuz, delivery times have stretched from five to twenty-five days — and induction stove sales on Amazon jumped 30-fold. In Pakistan, electric motorcycles are expected to leap from under 1% to 10–15% of the market. The Philippines declared a national energy emergency and began offering government loans for home solar. Ethiopia — which banned fossil fuel vehicle imports in 2024 — is accelerating its push for EVs. In Nigeria, there's been a rush on rooftop solar.

The Myth of Fossil Fuel Energy Independence

As IEA Executive Director Fatih Birol put it: "The main driver will not be climate change, the main driver will be energy security."

And here's what Americans need to understand about "energy independence" through fossil fuels: it was never real. The US produces over 13.5 million barrels of oil a day — more than any country on Earth — and it still can't control what Americans pay at the pump, because oil is priced on a global market. When the Strait of Hormuz closes and Brent hits $100, gasoline in Houston goes up too, even though the oil under Texas hasn't gone anywhere.

Worse, American refineries were mostly built to process heavy crude from Saudi Arabia and Venezuela, not the light crude from Permian shale. So the US exports its own oil and imports what it actually needs. As energy journalist David Roberts told Paul Krugman: "We export more than we import, which was supposed to be the mark at which you have achieved energy independence. What we're seeing now is that oil is a global market, and even if you're the biggest producer, you're still at the mercy of the global market. There is no energy independence as long as you're stuck with fossil fuels."^[37]

True energy independence — the kind where no foreign government or distant chokepoint can touch your electricity bill — is only possible with renewables generated locally. Sunlight hitting a solar panel on your roof is not subject to OPEC decisions or wars in the Middle East. Wind blowing through a turbine in Iowa doesn't get more expensive because Iran closed a strait. That's actual independence — not from imports, but from the global price mechanism itself.

The Hormuz Paradox

Here's the brutal irony at the center of this crisis. Oil at $100 a barrel makes fossil energy dramatically more expensive relative to renewables — exactly the way a carbon price would. A deliberate carbon tax of $100 per ton would push coal-fired electricity to $200+ per megawatt-hour and gas to $80–120. At those prices, renewables at $25–50 aren't just cheaper — the gap is too large to rationalize away.

But unlike a carbon tax, none of the Hormuz price increase goes toward funding the transition. It goes into the pockets of remaining producers, into shipping insurance premiums, and into inflation that hits grocery bills and commutes. As the Bruegel think tank noted, the answer isn't to slow down the transition but to accelerate it.^[27]

Carbon tax revenue can fund exactly the efficiency retrofits and renewable deployment that makes the transition faster — turning an economic burden into an investment. The Hormuz crisis gives us the burden. A carbon tax would give us the investment. Right now we're getting the worst of both worlds. Every section that follows is about how to convert the pain we're already feeling into the transition we actually need.

Petrostate vs. Electrostate

David Roberts framed it bluntly in his conversation with Krugman: "The US is basically aligning itself as the last big petrostate. We're going to go down with the fossil fuel ship, and China is aligning itself as the first electrostate."^[37] China installed 357 gigawatts of solar in one year, makes 80% of the world's solar panels, and dominates battery and EV production. It's not doing this for the environment. It's doing it because whoever controls the manufacturing base for electrification controls the next century's energy economy.

Roberts makes the point even sharper on AI: "We're trying to dominate AI with just the top froth and they are trying to dominate AI by owning the whole stack all the way down to the electrons." AI requires enormous amounts of electricity. China is securing the minerals, batteries, solar panels, and grid-scale storage — the entire physical substrate. The US is trying to win at the software layer while killing EV subsidies, blocking solar permitting, and forcing coal plants to stay open.

Meanwhile, GM's CFO told a conference that carmakers need "four to six months of sustained high oil prices" before changing plans — while consumers in Denmark, India, and Pakistan are already making different choices. America's abundant natural gas partially insulates it from the shock, which perversely reduces the urgency driving the rest of the world to act. The US is becoming the odd one out: shielded just enough to be complacent, but not enough to avoid the long-term cost of falling behind.

Roberts' warning: "If we genuinely try to be the last Petrostate standing… you can imagine us becoming a genuine international pariah with no friends but North Korea and Russia." And his most important point: the case for clean energy is "overdetermined." Climate, air pollution, AI competitiveness, energy security — every lens points the same direction. If climate is politically toxic, drop it. The case is just as strong without it.

The Unusual History of American Wealth

Americans use a staggering amount of energy — about 10,600 kilowatt-hours per household per year^[21] — roughly ten times what an Indian household uses and twenty times per capita consumption in sub-Saharan Africa.^[22] That abundance isn't an accident. It's the product of a continent's worth of natural resources and a history Americans don't always reckon with honestly.

This land was not empty when European colonizers arrived. It was home to hundreds of Native American nations who had stewarded it for thousands of years — managing forests with controlled burns, practicing rotational agriculture, and organizing their societies around principles like the Haudenosaunee "Seventh Generation" rule (every decision should consider its impact seven generations forward) and the Lakota concept of Mitákuye Oyás'iŋ — "All My Relations" — the understanding that all living things are interconnected and nothing should be wasted.

What happened to those nations was genocide — forced removal, massacres, broken treaties, and the systematic destruction of cultures and ways of life to make room for an extractive economy that treated the land as a commodity rather than a relationship.

And the land, once cleared, was worked by enslaved people. Millions of African men, women, and children were kidnapped from their homes, shipped across the Atlantic in conditions so brutal many didn't survive, and forced into lives of backbreaking labor, violence, and dehumanization — for more than two centuries. The cotton they were forced to harvest became America's most valuable export, fueling the Industrial Revolution and financing the country's expansion. This was not a regional sin: Northern banks financed the slave trade, Northern mills processed the cotton, Northern ships transported it. The wealth that built the country cannot be separated from the people who were brutalized to create it.

Would America have accumulated its massive wealth without genocide and slavery? Honest historians say no. The land and the labor — both taken by force — were the twin engines of an economy that became the wealthiest in human history. That prosperity was then multiplied by the post-WWII international order, government-funded science (the internet, GPS, semiconductors), and cheap fossil fuel energy that powered the highways, suburbs, and consumer economy. It got America to where it is today — a country where clean water, round-the-clock electricity, and air conditioning are taken for granted. Most of the world doesn't have those things. Billions of people still struggle for the basics. And the fossil fuel economy that built American prosperity is now threatening everyone's future — including America's own.

Rebuild the Rules — or Lose Them

The rules-based international order that America helped build after World War II — the UN, the trade agreements, the web of alliances that turned former enemies into partners — is fraying. Not because the idea failed, but because it hasn't been updated. The institutions that rebuilt a shattered world in 1945 were designed around coal, steel, and the threat of great-power war. They need to be rebuilt around what actually defines this era: climate, energy, technology, and the movement of people.

This matters because the fossil fuel economy doesn't just warm the planet. It concentrates wealth in the hands of petrostates and extraction companies. It corrupts governments through lobbying and regulatory capture. It drives the wars — Iraq, Libya, and now Iran — that destabilize entire regions. And the inequality it produces is the raw material that far-right populism feeds on: scarcity, resentment, and the feeling that the system is rigged for someone else.

A world powered by locally generated renewables has fewer of the resource conflicts that have driven wars for a century. Countries don't fight over sunlight. They don't impose embargoes on wind. When energy is abundant and domestically produced, one of the oldest drivers of geopolitical tension — the scramble for hydrocarbons — loses its grip.

What could a renewed multilateral framework look like? Trade agreements with climate standards and labor protections built into their core — not as aspirational side letters, but as binding conditions of market access. If your steel is made with dirty energy or exploited labor, it faces a tariff at the border. If it's made with clean energy and fair wages, it gets preferential access. That creates a race to the top, not the bottom. Pair it with freer movement of people — not the erasure of borders, but the recognition that when goods and capital flow freely, locking human beings in place is both perverse and economically self-defeating.

Here's the part that matters politically: when energy is cheap and clean, when trade lifts wages instead of suppressing them, when people have economic security and agency — the emotional fuel for ethno-nationalism starts to dry up. You can't promise to bring back coal jobs if solar jobs pay better. You can't scapegoat immigrants if the economy visibly needs them. The best argument against populist rage isn't a lecture about liberal values. It's a world where cooperation is visibly delivering results. America helped design the original version of this system. The question is whether it will help design the next one, or watch from the sidelines as others write the rules.

What Needs to Happen

The Simplest Answer — and Why Americans Resist It

The simplest thing anyone can do is use less energy. Drive less. Fly less. Turn things off. Insulate your home. It costs nothing and it works immediately. Much of the world already lives this way — not by choice, but by necessity. Americans, uniquely, are unaccustomed to using less of anything. A culture built on abundance, cheap gasoline, and the assumption that more is always available doesn't take naturally to conservation. That's why efficiency has been a political loser in the US for fifty years, and why the transition has to be framed not as sacrifice but as a better technology that delivers the same life with less waste. Both are true: using less helps, and electrification means you don't have to give up anything to get there.

The Technology Is Ready

Energy efficiency — doing the same work with less energy — can account for over a third of the emissions reductions needed by 2030, according to the IEA, which calls it the "first fuel".^[2][3] And yet efficiency has been politically orphaned ever since Jimmy Carter wore a cardigan on national TV in 1977, asked Americans to turn down their thermostats, and was ridiculed for decades. The word "conservation" became code for sacrifice. Reagan tore down the White House solar panels.

But that framing is wrong. As Roberts explained to Krugman, citing energy analyst Saul Griffith: most of the energy that enters a combustion engine is wasted as heat — roughly two-thirds of it. An electric motor converts over 80% into useful work. "If you have all the same cold beer, all the same warm showers, and you switch from combustion to electric motors… at a stroke, you get like a 50% to 60% gain in energy efficiency, without anyone using less or sacrificing in any way." Nobody has to wear a sweater. You just switch the machine, and the waste disappears.

The world installed a record 602 gigawatts of new solar capacity in 2024^[10] — enough to power roughly 450 million American homes. Battery storage costs have fallen to around $70 per kilowatt-hour,^[11] down from over $1,100 in 2010 — a 93% drop. Solar electricity now costs $25–50 per megawatt-hour; coal runs $60–150; gas $40–100. Renewables aren't just competitive — they're obviously cheaper. The oil and gas industry, meanwhile, puts just 4% of its capital spending toward clean energy.^[19]

The Policy Agenda

A word about timing. Not all of these actions can or should happen simultaneously. A carbon tax imposed at the peak of an oil crisis — when fossil energy is already spiking — would pile additional costs on the people least able to absorb them, especially in developing countries where families are already choosing between cooking fuel and food. The right sequence matters: act immediately to reduce demand and deploy alternatives, then phase in carbon pricing as fossil prices stabilize so it acts as a floor that prevents backsliding rather than a spike on top of a spike. Developing countries need financing, technology transfer, and exemptions from carbon pricing until they have real alternatives in place. The crisis is hitting them hardest and they have the least capacity to absorb additional costs.

Act Now

1. Streamline renewable deployment. Solar and wind permitting moves at a pace designed for a different era. Fix it and deployment accelerates without a dollar of subsidy. This is the single fastest lever available — it costs governments nothing and unblocks private capital that's already waiting.

2. Mandate efficiency standards. Ban low-efficiency motors, require heat pump retrofits in building codes, establish industrial waste heat recovery requirements. Every unit of energy not consumed is a unit that doesn't need to be generated, transmitted, or paid for.

3. Redirect fossil fuel subsidies to renewables. Governments worldwide spend $725 billion a year in direct fossil fuel subsidies — actual checks written to keep fuel prices artificially low.^[18] That money is being spent right now, today, propping up fuels that are already losing to renewables on cost. Redirect it and the competitive dynamics shift overnight.

4. Make polluters pay — now, while profits are elevated. In 2022, the global oil and gas industry earned $2.7 trillion in income,^[32] with roughly $490 billion in windfall profits.^[33] A 50% windfall tax could fund the cleanup of 633,000 acres of unreclaimed coal mines,^[34] real worker retraining, clean energy manufacturing hubs in Appalachia and the Gulf Coast, and health coverage for fossil fuel communities. The UK and EU already have windfall taxes. Windfall profits are highest during crises — which is exactly when these taxes should be collected.

5. Fund the just transition. Coal, gas, and oil workers didn't design the system they're employed in. Retraining, wage guarantees, and clean energy manufacturing in fossil fuel regions aren't charity — they're the political precondition for a transition that doesn't tear communities apart. Workers need support during the crisis, not after it.

6. Make AI companies pay. Data centers consumed around 415 terawatt-hours globally in 2024 — roughly as much as France — and that's projected to double by 2030.^[15] They are consuming enormous amounts of electricity right now. Charge them the true cost.

Build for the Long Term

7. Put a price on carbon — phased in as fossil prices stabilize. The Hormuz crisis proves the principle: making fossil energy expensive accelerates the transition. A deliberate carbon price does the same thing, but channels the revenue into funding the transition instead of feeding inflation. The EU Emissions Trading System is the proof of concept — it has driven a 51% reduction in covered emissions since 2005 and raised over €245 billion for climate investment.^[38] Thirty-six cap-and-trade systems now operate worldwide. The goal should be a global carbon price floor, starting in wealthy nations and phased in for developing countries as alternatives become available — with revenue returned to low-income households and channeled into transition funds for the Global South. The EU's Carbon Border Adjustment Mechanism, which taxes imports based on carbon content, ensures no country gains an advantage by polluting. Expand it globally: countries either price carbon domestically or pay the tariff at the border.

8. Link trade to climate and labor standards. The Montreal Protocol proved that binding international agreements can transform industries.^[28] While the US retreats into tariffs, the rest of the world is building trade architecture without it — the CPTPP (500 million people, $13.6 trillion GDP),^[30] RCEP (2.2 billion people),^[31] and the EU-Mercosur deal. These agreements can embed carbon pricing, efficiency benchmarks, and labor protections as conditions of market access. The longer the US sits out, the more others write the rules.

9. Fund nuclear seriously. Fast-track permitting, expand loan guarantees like the Palisades model.^[14] Nuclear provides always-on, carbon-free baseload that stabilizes a high-renewables grid. It takes years to build — which is why the decisions need to start now.

10. Redirect defense spending. Global defense spending hit $2.72 trillion in 2024 — much of it spent to secure fossil fuel supply chains and police the chokepoints those supply chains depend on.^[16] Redirecting even 25–50% toward renewable deployment, grid modernization, and efficiency infrastructure would transform the transition. This isn't disarmament — it's recognizing that energy independence through locally generated renewables is itself the most powerful security strategy available. Fund true energy independence, and the indirect subsidies (the IMF estimates $6 trillion a year in unpriced health and climate damage^[17]) start to disappear on their own.

The Turning Point Is Now

This has happened before. The 1973 embargo pushed Americans to buy fuel-efficient cars and kicked off the research that produced the lithium-ion battery. The 2000s price spikes pushed Europe and China to invest in solar and batteries. The 2022 Ukraine shock accelerated EU solar deployment and drove heat pump installations up 65%. Each time, the world came out less dependent on fossil fuels — not because governments planned it perfectly, but because high prices made alternatives irresistible.^[36]

The bottleneck is no longer technology or cost. It's political will — and that's the one thing supply shocks have historically been good at generating.

So ask yourself: what kind of world do you want to live in? What kind of world do you want your children to inherit?

A world where energy is hostage to distant wars and volatile commodity markets? Where a single chokepoint can crash economies and empty grocery shelves? Where the richest industry in human history spends 96% of its capital on the thing that's destroying the climate and 4% on the thing that could save it? Where governments pay a billion dollars of taxpayer money to stop wind farms from being built?

Or a world where energy is locally generated and inexhaustible. Where electricity is cheap, clean, and abundant. Where workers transition with dignity and communities see opportunity rather than punishment. Where the air is breathable, the water is clean, and wars over oil reserves are a relic of a previous century. Where countries don't fight over sunlight. Where nobody imposes embargoes on wind.

That world is not a fantasy. The technology exists. The economics favor it. The money to fund it is sitting in fossil fuel subsidies, windfall profits, and defense budgets built to protect supply chains that clean energy makes obsolete. Every obstacle between here and there is political, not technical.

Only by envisioning a better world can we identify what needs to be done — and then, with community, systematically put those actions into motion. The ten steps in this essay are a start. But they require political will, and political will requires people who demand it. If governments are not responsive — if they are captured by the industries profiting from delay — then we the people need to hold them to account. We need to vote them out. We need to usher in governments that will ensure our futures are livable, safe, prosperous, and peaceful.

All of that is within reach. If we just change course.