California’s Coming Energy Crisis

Peter Zeihan 4 min

We are dealing with the fact that crude oil is shut in. That's not this year, and it's probably not next year either.

Chapters

  1. 0:00

    Global Oil Supply Collapse

    The closure of the Strait of Hormuz has shut down major oil fields in the Persian Gulf, causing a global supply crisis that will last for years rather than months.

  2. 2:14

    California's Specific Vulnerability

    California produces only 300,000 barrels a day but uses 1.4 million barrels daily.

  3. 4:09

    Logistical Constraints and Future Outlook

    The energy shortage will not resolve until the Persian Gulf is 100% safe again and fields can reopen, which is not this year or next.

Key points

  • 0:00

    We are dealing with the fact that crude oil is shut in.

  • 0:00

    They have fields that are in a state of kind of warm shutdown where they can bring those fields back on in about 90 days.

  • 0:00

    We have Iraq, Kuwait, Gutter, Saudi, and the Emirates who have all shut down a total of about 10 to 12 million barrels of crude a day.

  • 0:00

    Only probably about one and a half million barrels a day, which could actually be turned back on in any sort of meaningful timeframe.

  • 0:00

    It took them 20 years to bring it back after Saddam fell.

  • 0:00

    At first, South Asia got shut off, then Southeast Asia, then most recently in the last two weeks, both the Northeast Asians and the Europeans have had their final tankers of pre-war crude arrive.

  • 0:00

    This week, California joins that cluster.

  • 2:14

    Now, California, for a mix of reasons, has decimated its local oil production, so it's only producing about 300,000 barrels a day anymore.

  • 2:14

    And just shy of half of that comes from Persian Gulf producers who suddenly can't get crude to market.

  • 2:14

    And since there's no pipeline to transport oil or oil products across the Rockies, that means you either have to do it by truck or by rail.

  • 2:14

    This doesn't come back with a peace deal. This only comes back when the Persian Gulf is 100% safe again.

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