The future of US energy security: Building on lessons from the Iran war
Bob McNally is the founder and president of Rapidan Energy Group, a Washington, DC-based energy market, policy, and geopolitical risk firm. He served as White House energy adviser to President George W. Bush on the National Security and National Economic Councils.This essay is part of the 2026 Global Energy Agenda.
The Iran war has produced the largest energy disruption in history and is still unfolding. While its ultimate impact will depend mainly on how it ends, the record already reveals some US energy policy decisions that proved wise and others that did not. Assessing successful strategies along with missteps will help the United States build a more energy-secure world in the future.
The positive side of ledger
At the top of the list of prescient decisions belongs the US embrace of the shale revolution. When shale began transforming American oil and gas production in the late 2000s, US policy largely adopted an ”all of the above” approach rather than “keep it in the ground.” The result was the transformation of the United States from a net oil importer into the world’s leading producer and, eventually, a net exporter.
The energy security benefits are real. Since February 28, the United States has become an ”arsenal of energy,” exporting oil and liquefied natural gas (LNG) to beleaguered importers across Asia and Europe.
Net oil export status, however, has not insulated US consumers from global price spikes—oil is a fungible commodity, and a Hormuz disruption drives prices higher everywhere. Motorists pay more at the pump, and rising prices for diesel (for trucking, farming, and shipping), jet fuel, plastics, fertilizers, and heating spread through supply chains to consumer goods broadly. But being a net exporter permits higher export revenues to flow to domestic producers, supporting gross domestic product (GDP) and the current account, partially offsetting what consumers lose. Net importers enjoy no such cushion—for them, a price spike is a pure wealth transfer to foreign exporters.
Natural gas is an even clearer win for the United States. Massive US production has kept Henry Hub prices structurally low relative to global benchmarks—even as LNG exports have grown and global prices have surged. European consumers paying spot LNG prices enjoy no such cushion.
The United States’ single best bipartisan policy step of the modern era was the December 2015 lifting of the forty-year crude oil export ban by Congress and the Obama administration. Without export access, the shale industry would have faced structural oversupply and collapsed. Subsequent liberalization of LNG export licensing reinforced that foundation. The 2024 election reversed the Biden administration’s attempt to slow-walk new LNG export approvals.
At the outbreak of the Iran conflict, the Trump administration responded with targeted, technically sound measures. Fuel waivers to dampen price volatility expanded the pool of usable “blendstocks” for finished motor-vehicle fuel. A Jones Act waiver and its extension enabled faster, lower-cost movement of refined products from Gulf Coast refineries to East Coast markets facing supply constraints.
Equally important was what the administration chose not to do. It said no to a federal gasoline tax holiday, no to export restrictions on crude or refined products, and no to intervention in futures markets. Export restrictions would have suppressed domestic refinery margins, reduced throughput incentives, and ultimately tightened the very supply they purported to protect.
The regrettable decision
Against these successes stand three significant mistakes whose costs are still accumulating.
The biggest unforced error of Operation Epic Fury was leaving the Strait of Hormuz unprotected at the outset. The military had spent decades preparing to engage Iran and limit any disruption to the strait, but when the moment came, the president rejected that option. The strait has been nearly shut since February 28. Strategic stocks, commercial storage, and rerouted tankers initially bought time, but those buffers have now disappeared, and the supply gap continues to widen. Nearly two months in, the job remains unfinished—and the coming weeks could well bring the full reckoning: cratering inventories and surging prices.
A second energy security misstep: By permitting Iran to take Hormuz hostage for two months and counting, the United States effectively toppled a load-bearing assumption in global energy security. Since the Carter Doctrine and its Reagan Corollary, the United States has acted as guarantor of security in the Gulf, including the free flow of oil and gas. Iran has now demonstrated it can strangle the world’s most important energy choke point indefinitely.
Finally, the conflict underscores the folly of drawing down strategic stocks for nonemergency purposes. The Strategic Petroleum Reserve (SPR) entered this conflict with only 415 million barrels, about 60 percent of its capacity. Congress repeatedly raided the SPR for budget revenue, not supply emergencies. The Biden administration compounded the error by releasing approximately 180 million barrels, even though the feared loss of Russian supplies—the stated pretext—never fully materialized.
The ledger’s balance, incomplete
Washington’s embrace of the shale revolution fostered genuine structural resilience, positioning the United States as the energy exporter of last resort. But the conflict witnessed a shocking lack of contingency planning to protect the strait, deepening the commodity crisis and exposing the folly of frittering away strategic oil stocks. Regardless of the outcome of this ongoing war, policymakers should consider both columns when formulating new energy security policies.
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Image: A drone view of a pump jack and drilling rig south of Midland, Texas, US June 11, 2025. REUTERS/Eli Hartman