Transcript
Recorded Monday, March 2nd — a breaking news episode responding to U.S. military strikes on Iran over the weekend.
Jigar Shah: The way we power the world is changing at a fundamental level. Across the United States, clean energy now makes up more than 90% of new electricity added to the grid — not because of politics or ideology, but because these technologies simply work better.
Jamie Nolan: They're cheaper to build, faster to deploy, and easier to scale than anything we've had before.
Jigar Shah: Whether you're curious about where the economy is headed, how energy affects your daily life, or who's behind the billion-dollar deals shaping our future —
Jamie Nolan: Energy Empire is your guide to what comes next.
Jigar Shah: Hello, my name is Jigar Shah and I'm a clean energy entrepreneur.
Jamie Nolan: And I'm Jamie Nolan, a clean energy communication strategist. And this is Energy Empire.
Introduction
Saturday Morning
Jamie Nolan: Hi Jigar. My Saturday morning — well, I was en route to Philadelphia. I go every year to the Philadelphia Flower Show. So I was on an Amtrak train, which was not the most comfortable place to be when you find out that we have just bombed Iran. Your mind immediately goes to security risks in major public places and transportation. But I made it back. What about you — where were you?
Jigar Shah: We were up in Deep Creek. My brain went straight back to the Iraq War and 9/11. The Venezuela situation felt well thought through — they sort of left the number two in charge, we weren't nation-building. But when they reported that the Supreme Leader had died and everyone else in the chain of command was gone, I thought — who's going to run this place? Are we going to be in Iran for the next ten years? And then we heard that three service members had tragically died. I just kept thinking: what are we doing?
I'm not here to defend the Supreme Leader. I don't think Iran has been well run as a country. I think the Iranian people are extraordinary entrepreneurs who, if freed to realize their full potential, would build one of the most productive economies in the world, certainly in the Middle East. I want that for them. I'm just not sure we're going to achieve it this way.
Jamie Nolan: I'm an elder millennial, and these conflicts in the Middle East have defined my entire adulthood. I was a freshman in college when we invaded Iraq. I have lots of friends who served overseas. I haven't personally lost anyone, but I know plenty of people who were. A good friend of mine is about to deploy to the Middle East — she's an attorney in the Army. I was scrambling Saturday morning to find out where she was and was very relieved to learn she's still stateside waiting to ship out. But she's headed out on a long-term deployment.
I care very deeply about women's rights — particularly the right of girls to an education — and no one has any illusions about how the Iranian regime has treated women. But I also don't believe you can liberate a people by bombing them.
Like most things, it's very complicated. It's scary. There are major energy implications, though. We completely threw out our plan for today and put together a different episode with just a few hours' notice. I'm glad we did — it helped me process some of this and think more tangibly about the real-world impacts, and it helped me catastrophize a little bit less.
Jigar Shah: We're having on my good friend James Gutman — one of the original co-authors of The New Joule Order, which came out about a year ago and has been extraordinarily prescient. A lot of people have read it and are following it. The central argument is that everyone needs to localize energy, everyone needs energy sovereignty. One of my investment bankers told me today that everybody's solar company just doubled in value — people are going to install way more clean energy technologies because it's a natural hedge against the fossil fuel economy. James is a big thinker, and I always learn a lot from him.
Jamie Nolan: One thing worth noting: we are recording this on the afternoon of Monday, March 2nd. In an armed conflict, things change very quickly — that's the context with which we entered this conversation.
Interview: James Gutman
The New Joule Order and What Actually Matters
Jigar Shah: James, it has been too long. I think we've done three events together in the last twelve months.
James Gutman: We keep coming across each other in all the right places.
Jigar Shah: This morning I picked up my phone and saw: we're at war with Iran. So we changed our schedule and I thought — what's James doing? We should get James on the podcast. You and your colleague Jeff Currie wrote a paper for the Carlyle Group called The New Joule Order about a year ago. It's been dominating the conversation ever since. Can you start at the highest level?
James Gutman: Thank you for those kind words — they might be a little overdone, but I'll take them. I spend a lot of time talking to traders, and I keep telling them to stop focusing so much on the micro. They're asking me how many LNG carriers are transiting the Straits on any given day. That doesn't really matter. What really matters is that there is now a serious risk to LNG carriers that transit the Strait of Hormuz — so how does that change the incentives facing Beijing, Brussels, other capitals around the world?
What incentive does the U.S. have to protect LNG carriers transiting the Straits? Well, actually none. When the U.S. became energy independent, we lost the incentive to protect global energy supply chains. That observation is where The New Joule Order starts.
The first wave of investment in nuclear and renewables happened when the U.S. was on its knees after the 1973 oil embargo. That embargo only lasted a few months. The price impact was a spike and then a retracement — but at a higher overall level. That set off a chain of inflationary events with respect to the dollar, the global balance of payments, and the distribution of power between East and West. It eventually contributed to the collapse of communism. The price of oil mattered, but it wasn't even in the top five most important things that happened. It was a catalyst for a sequence of geopolitical consequences that reshaped the world.
So when I look at where we are today, I see echoes of that. We have a gas price spike because of what's going on in Iran. There will be a moment to fade it — maybe that moment is now. But that won't be what people remember ten years from now. What people will remember is that this was the moment when other capitals said: Venezuela is no longer in the picture, Iran is no longer in the picture — we need to change our behavior.
Venezuela as a Commodity Colony
James Gutman: Jeff and I wrote a piece last September about how Russia, Iran, and Venezuela had effectively become commodity colonies of China. These are countries almost entirely dependent on commodity exports for their foreign earnings — and those exports go almost entirely to China, or in Russia's case, to China and India. They're paid for mostly in Chinese RMB, transacted over a Chinese payment system. So they're locked into a trading network that frankly looks like the British system of imperial preferences in the 19th century.
Jigar Shah: To boil that down: Venezuela was selling a million barrels a day to China. China paid for it in their own currency, and then Venezuela was forced to use that currency to buy Chinese goods. They couldn't easily buy American or European products. China did something similar with Iran and, in some ways, with Russia. So when we intervened in Venezuela, it was never really about getting production back to three million barrels a day. It was about preventing Venezuelan oil from being paid for in Chinese currency. A lot of that oil is now going to Texas refiners — which offsets some of our Canadian imports — and the ripple effects of that are significant.
James Gutman: You're right, and I want to be careful not to reduce U.S. policy to a single motivation. But yes — Venezuelan crude, no longer going to China, is now going into U.S. Gulf Coast refineries that are optimized for heavy sour crude. The Canadian crude that previously filled that role now gets sent elsewhere. You're reshuffling the plates, but the end result changes who makes money and who doesn't.
What's really important here is the signal sent to Beijing. Venezuela was never a huge part of China's overall energy import mix — China has kept its imports from these three states to roughly 30% of total energy imports, deliberately avoiding overdependence. So China doesn't really hurt when Venezuela goes. But Iran is different. Iran is starting to put real pressure on the Chinese import pipeline.
The Strait of Hormuz: Don't Overrate the Risk
Jigar Shah: And the Strait of Hormuz is where a lot of Saudi oil flows through on its way to China.
James Gutman: Absolutely — though I tell people to dial back slightly on the risk factors associated with the Straits. Closing them isn't that easy. The Iranians have to be able to do it without getting blown up by the Americans, who have the capacity to sweep away a lot of Iranian offensive equipment. The most effective approach would be sea mining, but that requires doing it in front of the Americans who would then try to sweep the mines.
And there's a strange dynamic here: the mines would blow up whichever ship passes by — including Chinese or Russian tankers. The Iranians have made clear that allied tankers aren't their target. So you end up with a situation where the Iranians could potentially threaten non-Chinese, non-Russian cargoes, but not the other way around. And the U.S. would be trying to protect the Straits — but I'm genuinely not sure why, since we don't depend on those oil imports.
I think the Straits aren't really where you want to focus your attention. The more likely Iranian response is to activate their international network of proxies — go beyond Hezbollah, Hamas, and the Houthis — and use them to create instability and uncertainty in global sea trade around the world, forcing the U.S. to be everywhere at once. Which it simply cannot do.
China's Strategic Calculus
James Gutman: Meanwhile, if you're China, the incentives are pretty clear. First, you do what you need to do to keep the Straits open for your traffic — Iran is your partner, so at some point you step in and say: my ship, my protection, my insurance, everybody else figure it out.
Second, you land all that floating storage — the oil glut that's been sitting at sea, maybe 100 to 150 million barrels just floating out there in tankers. You take that into strategic reserves. China has the capacity to absorb it.
Jigar Shah: China has actually been buying heavily into their strategic petroleum reserve for the last twelve months.
James Gutman: They have. And think about what that does to the oil market. Right now, OECD inventories — which is what the market is trained to key off — are relatively tight, which has been a bullish signal. But the market has been stuck in a bearish narrative because traders keep seeing this floating glut at sea. What I'm suggesting is that if there is a security-driven imperative to land those floating barrels, the glut is gone. The market is tight. You get steady backwardation, prices go up. I don't think they go to unseemly levels — and I won't give you a price forecast, I've been doing this long enough to know better — but we have seen the lows.
What Other Countries Take From This
Jigar Shah: What I think matters most is what the fifty largest oil-importing countries learn from 2026. China has been working hard to reduce its oil dependence — fast on EVs, fast on solar and storage, ramping up nuclear. And now they have a set of solutions they're exporting around the world to Indonesia, Brazil, Mexico, India. What's the mindset in those emerging markets after Venezuela and Iran?
James Gutman: The takeaway is clear, telegraphed, and easy to predict — and it's also what they're actually saying. If they have oil and gas, they're going to develop it. You can't really blame them. But if they don't have it — and India doesn't really, Mexico has some but not much — they're going to look for alternatives. The Indian solution is to double and triple down on renewables. That just makes sense. That's just smart.
And it's not just the big countries. I've been hearing from people I've known for years about how demand for microgrids and home solar solutions has skyrocketed throughout Africa as people move away from diesel generators. Pakistan shifted 10% of its entire grid toward solar and battery storage in the last three years — largely DIY, through WhatsApp groups where people were teaching each other. Indonesia spends a huge percentage of its federal budget on energy subsidies for poor people and is starting to ask whether they should just give people solar panels and batteries instead.
Jigar Shah: And one of the great things about distributed energy is that these countries don't have to go on the 40-year journey we went on. The technology is already there. If inertia has shifted enough based on the events of this year, they could start deploying next week.
James Gutman: I don't know about next week, but yes — the U.S. experience of the last fifty years in energy has been nothing short of miraculous. What the U.S. has shared with the world — not just decades of energy stability and security, but technology, know-how, and markets — is extraordinary. Think about why the shale revolution happened here: geology and engineering, yes, but also the fact that you could hedge your production in an extremely deep, liquid futures market at very low cost. Instead of laboriously negotiating with banks to wildcat wells, you just went on the futures exchange and you were done. That's what gave capital to the shale industry and enabled it to revolutionize the entire space.
Europe's Position
Jigar Shah: Let's talk about Europe — because it's a more complicated situation. The UK just imported a ton of U.S. LNG. Europe is also importing Chinese solar modules and Chinese EVs, which Volkswagen is not happy about. How does Europe view the Venezuela and Iran events of 2026?
James Gutman: More complicated. But look — just open Bloomberg and look at what Macron has announced about French nuclear deterrence. They're doubling down. At a very high level, that says they believe the world is scarier and their traditional sources of energy security are no longer guaranteed.
On LNG: Europe made the decision to stop taking Russian pipeline gas after Ukraine. Pipeline gas is cheap, but it has to start here and end there — you can't move the pipe. The Russians showed they could turn it off. Europeans said, well, so can we. LNG is a less bad solution when you're weaning yourself off Russian gas, because you can now take cargoes from a variety of places — not just the U.S. Gulf Coast. You can take them from the Middle East. Unless, of course, the Straits are disrupted. TTF — the Dutch Title Transfer Facility, which is Europe's equivalent of Henry Hub — spiked 37 to 40% over the weekend. That's why.
But if you look beyond 12 months, TTF is basically unchanged from a year ago. Let the market trade. That's the signal for medium-term pricing.
Europe's challenge is that they don't really operate as a European Union — they operate as 27 member states. And I understand the frustration. When I'm in Brussels, I often encounter this self-flagellation, this sense of failure. And Americans love to tell them just how useless they are. I want to shake people and say: you're fantastic. Seventy-five years ago, you were crawling out of the rubble from centuries of slaughtering each other. You started by agreeing to share coal and steel. That turned into an economic community, a free trade area, a shared currency, shared political institutions. That is extraordinary. It's like a marriage — hundreds of little failures that stack up to enormous successes.
Yes, Spain needs to better integrate its grid with the rest of Europe. Yes, France could be more accommodating. They'll work it out. This situation in Ukraine has really, truly focused people's attention. They are ready to compromise, they are ready to negotiate. They just need time.
Europe and China: Shared Interests in a Disrupted World
Jigar Shah: Coming into 2026, China was overproducing everything — putting manufacturers everywhere at risk. There was a movement to box China in with tariffs. What does Europe do with its relationship with China after the Iran news?
James Gutman: There's a wide gulf between Europe and China on values, political traditions, and way of life. That's not going away. But if you look at the geopolitical and geoeconomic landscape, they have more in common than not, and increasingly so.
China's natural adversary is actually Russia — they've fought wars, they have an ambiguous border, Russia has resources China wants. Europe is not a threat to China. There's no contested border, no disputed resources. In many respects, they have reasons to cooperate.
Right now, both China and Europe are net takers of energy that flows through the Strait of Hormuz — LNG into Europe, oil into China. When the Straits are disrupted, they are the two parties who say: I want the Straits open. What is the U.S. doing? What is Iran doing? That creates a shared interest, even if it's not a formal alliance.
I don't think you're going to see some great alliance structure between China and the European Union. But you will increasingly see Europe saying: we can work with China, we can work with India, we can work with Brazil in areas of shared interest. That may not always align with what Washington wants. But it kind of makes sense. People look after their incentives. That's exactly what The New Joule Order is about — when the U.S.'s incentive structure changed, its behavior changed. When Europe's incentives change, its behavior will change. Right now, their incentives point toward less friction with China.
Taiwan is the real flashpoint. Until Taiwan is resolved, China will keep Russia close, and that will keep Europe at a distance. When that changes — and at some point it will — China's desire to support Russia goes down, that area of conflict with Europe goes down, and you could see a very different energy cooperation landscape emerge.
The Over-Under on Iran
Jigar Shah: Over-under on when the Iran conflict comes to a close?
James Gutman: Wide distribution of outcomes — I want to be very clear that I don't have inside knowledge and that nothing about this is obvious. My read: there's no capacity or incentive for the U.S. to continue running down scarce stockpiles stopping an Iranian barrage of drones and missiles for weeks. So I'd be looking at days for the acute phase. But I could be wrong.
What I do think is that low-level hostility and conflict will persist. The message that's gone out is that every country that can develop a nuclear weapon should develop one. If you can get close to China and acquire Chinese hardware, you probably should. The short sharp conflict we're seeing now — I don't think that goes on much longer. But this bubbling cauldron of conflict, not just with Iran but with other countries around the world, is going to be a characteristic of the next several years at minimum.
Jigar Shah: Sober.
James Gutman: Nobody calls me when they want to feel better about the future. Seriously, nobody does.
Jigar Shah: I always feel less dizzy talking to you, James. Thank you for stopping us from spinning in circles and giving us more insight into how to think about the events of the last few days.
James Gutman: Thank you. Great having a chance to talk to you and Jamie. I look forward to doing it again.
Takeaways
Consumer Impacts and What This Means at Home
Jigar Shah: It's always a tour de force when you talk to James Gutman. I think I only picked up about 70% of that — I'm going to have to listen a few times. But The New Joule Order continues to apply to what's happening in the world today.
Jamie Nolan: He really did make the point that the localization the global energy industry has undergone in the last 50 years — since the oil shocks of the '70s — has transformed the experience of so many people. We're not seeing the type of fallout that historically we would from a conflict like this. But I want to understand more from you, Jigar, about the consumer impacts here in the U.S. When he talked about natural gas going up by a dollar per MMBtu — what does that actually mean?
Jigar Shah: A few things. Oil prices are already going up, so you're going to see some impact at the pump — probably 20 cents a gallon — and that's not nothing. A president who has touted lower gas prices during his term watching oil prices go back up and stay there is going to be something people watch.
On natural gas: right now, Henry Hub is around $3.50 to $4 per million BTUs. If it goes up by a dollar or two, that's a 25 to 60% increase. James's point was that it's starting from a low base compared to Europe. But in the United States, that's a lot. Particularly for people who just went through the polar vortex in February — people in the Northeast got electricity and gas bills double what they expected.
And then pile on top of that: everyone wants to build a natural gas generator next to their AI data center, which we talked about with Tim Hade — that's another 10 billion cubic feet a day of demand. And if Qatar has shut down LNG exports through the Strait of Hormuz, all of that supply is going to be pulled from U.S. export terminals in Texas, sucking even more natural gas out of the domestic market to send to Europe. James suggested our natural gas prices might converge toward a global price. I don't want that. I like cheap natural gas. I don't think American consumers should be feeling protected right now.
Jamie Nolan: I'm glad it's March 2nd, because for a lot of people, they simply cannot afford for their heating bills to go up by 25 to 60%. Seniors on fixed incomes — if that bill goes up $50 a month, that's the difference between paying it or buying medicine. These impacts are real. I don't think we can minimize them, even knowing we wouldn't see the price shocks of fifty years ago.
Energy is already on the minds of Americans. The president discussed it in the State of the Union. We have 36 governors races this fall. Energy has gone from a number 22 political issue to a number two or three issue around affordability. And things may heat up even more from here.
Jigar Shah: Which is why this moment calls for sobriety — and a recognition that we have an extraordinary set of cost-effective technologies ready to deploy: solar and battery storage, heat pumps, energy efficiency, batteries everywhere. We need to get the policies lined up to deploy all of that two, three, four times faster than we're doing it now.
Did We Go Into Iran for Oil?
Jamie Nolan: One outstanding question a lot of our listeners probably have: did we go into Iran for oil? Is this just another conflict to control the energy reserves of a country in the Middle East?
Jigar Shah: James was articulate about this. With Venezuela, Trump basically said it was about oil — but I don't think it really was about oil per se. It was about shifting a million barrels a day away from China toward U.S. Gulf refineries, and about the fact that China and Russia had built up significant leverage in the Western Hemisphere. The Chinese were demanding payment in their own currency and that currency was then being used to buy Chinese goods — effectively a closed trading loop.
Iran feels more geopolitical in the same way. Not oil for oil's sake. And one thing James said that was genuinely alarming to me: Iran has proxies well beyond Hezbollah, Hamas, and the Houthis. The more sophisticated Iranian response isn't to close the Straits — it's to activate that entire international network and force the U.S. to be everywhere at once. That's a very different kind of threat.
Jamie Nolan: What has fundamentally changed since Iraq in 2003 is that we are now one of the largest oil-producing countries on the planet — and we are a net exporter. A lot of people still don't realize that. The dynamics have completely shifted. One would hope that our energy independence would reduce our incentives to be involved in Middle Eastern conflicts for resource reasons. And yet — here we are again.
Jigar Shah: And meanwhile, those fifty oil-importing countries around the world are accelerating their imports of Chinese EVs, solar panels, and batteries. They're looking at how Pakistan transformed 10% of their grid in three years and thinking about how to do it themselves. I think the pain people felt in Ukraine in 2022 is fresh enough that they remember it, and the plans they said they would implement in 2022 that went slowly — I think they're going to accelerate now. I think we're going to have an extraordinarily busy year in the sustainability industry globally.
Jamie Nolan: If anything, this is one more vote for electrification and localization of our energy system. We of course hope this conflict in Iran is resolved quickly and to the benefit of the Iranian people, with minimal loss of life. But the signal is already there: there is still more work to be done. Install those heat pumps, people.
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