The New Oil Crisis

Welcome to This Week’s Leyendecker View

The only thing necessary for the triumph of evil is for good men to do nothing.
– Edmund Burke

FAVORITE READ OF THE WEEK

AI regulation opportunities and risks
There are always some of both.

FAVORITE WATCH OF THE WEEK

Jamie Dimon wants a defeated Iran
It’s best for the world.

THINKING OUT LOUD

The New Oil Crisis
It won’t be like the last one

Any of us who were alive in the 1970s remember hours-long lines at gas stations, thanks to the severe oil shock that gripped industrialized economies. Because of the West’s support for Israel, OPEC placed an oil embargo in 1973 that triggered an immediate spike in the price of oil. The 1979 Iranian Revolution led to yet another oil embargo. In less than a decade, the price of oil went up 10X.

The rapid rise in oil prices created enormous pressure on American manufacturers. Manufacturing is very energy intensive. It doesn’t begin with the actual making of goods but with the extracting and processing of raw minerals, which must be transported to various factories as those minerals move from original form into finished goods ready for the consumer market. Energy powers every step along the way.

Skyrocketing energy costs put US manufacturers in a significant bind. After WWII, prosperity prompted swift growth in the US labor union movement. Manufacturing wages tripled between 1945 and 1970. By the late 1970s, US manufacturers were paying the highest wages in the world.

Simultaneously, Rachel Carson’s 1962 book Silent Spring inspired profound increases in environmental regulation. The book spurred congressional hearings, leading to the creation of the Environmental Protection Agency in 1970, and the passage of landmark laws like the Clean Air Act.

Trapped with high labor costs and mounting and costly environmental regulation, sky-high energy costs proved the straw that broke the camel’s back for American manufacturers. So these companies began to look outward. If they could not control energy costs or environmental regulation, maybe they could find lower labor costs. Countries in East Asia and Latin America offered significantly lower wages and less environmental scrutiny.

The technological boom of the 1980s enabled and accelerated globalization. The rise of companies like Apple, Microsoft, Cisco, and others began a new era of information digitization. As computing and internet power increased and costs fell, businesses gained new tools to coordinate operations across the globe.

Advances in telecommunications, logistics, and software enabled firms to design products in one country, manufacture components in several others, and assemble them in yet another. The shipping container revolution further reduced costs and transit times, making global trade faster and more reliable.

Over decades of development, supply chains that had previously been considered unimaginable became not only feasible but also the global standard. What began as a cost-saving measure because of the 1970s oil crisis gradually evolved into a total global overhaul in manufacturing and consumerism.

By the 1990s and early 2000s, globalization had reached full stride. The integration of China into the global economy, particularly after its entry into the World Trade Organization in 2001, added a vast pool of cheap labor and manufacturing capacity.

For a time, the benefits were great. Consumers in developed countries enjoyed lower prices and greater variety. Corporations achieved higher profits through cost efficiencies. Emerging economies experienced rapid industrialization and growth. The system, however, was built on a delicate balance, one that prioritized profit over national economic stability.

The COVID-19 pandemic exposed the fragility of globalization. As factories shut down, ports closed, and transportation networks faltered, global supply chains unraveled. Shortages of essential goods from medical equipment to semiconductors revealed how dependent nations had become on distant producers. What had once been considered a strength—the ability to source from and manufacture anywhere—suddenly became a vulnerability.

Trump won his first term by campaigning on the obvious need to build domestic economic resilience. Trump used tariffs, corporate tax cuts, and regulatory rollbacks to influence reshoring, near shoring, and friend shoring. Then the Biden administration’s Infrastructure and Jobs Act and Chips and Science Actfollowed Trump’s MAGA game plan. The effort to make America great again had become bipartisan, even if the Democrats who passed Biden’s bills would never have said so out loud, and even as the country continued to fracture.

Now a new potential inflection point is emerging in the conflict with Iran’s extremist ideological leaders and their proxies. Significant disruption to oil supplies echoes the crises of the 1970s, albeit this time in a far more interconnected world. Rising energy prices will increase the cost of transportation and production. For companies and countries reliant on global supply chains, this could once again expose structural weaknesses.

Unlike the 1970s, the response to today’s oil crisis may not be to expand globalization.

Today, national economic independence and stability have become a much higher priority, and certainly the highest priority for Trump and the US. Although today’s oil crisis will cause some near-term economic pain, US shale innovations are set to unlock oil and natural gas discoveries across the globe. Simultaneously, the manic effort to develop ever more electric power for the AI boom is likely to catalyze new innovations that reduce energy costs and increase energy density.

Whereas the 1970s oil crisis initiated the globalization explosion, today’s oil crisis is more likely to inspire the opposite. The era defined by the relentless pursuit of lower labor costs will give way to a relentless pursuit of national economic independence and stability and lower energy costs. And since the robot-filled factories of the future will require less labor and more energy, future economic prosperity will be defined by a country’s innovation culture and its access to abundant and cheap energy.

THE RANDOMS

In case you didn’t know it, our national debt just passed $39T.

The giant sucking sound in the private equity and private credit fundraising markets is likely the mega billions rushing to all things AI.

Check out this interview with Jamie Dimon. Can he please run for president?

An analysis of Iranian religious preferences suggests the country is in a similar situation as Nazi Germany, where a violent radical minority has control over a majority with much more Western values.

Iran has been a disruptive force in the world for decades. Our historical allies who won’t militarily support the war must think our view of Iran’s radical Islamist theocrats is deluded. But then maybe they just don’t want to get their hands dirty and want the US to fix the world for them.

Remember how the big push for everyone to own a home resulted in the Great Financial Crisis? Is the big push for everyone to get a college education going to have a similar result?

Committed climate change policymakers are now able to use Iran as the scapegoat for having to backtrack on their uneconomic goals. Lucky them.

Where is that Swedish climate change poster girl? What was her name? Why has she faded from the mainstream climate crisis movement?

Do all the dystopian narratives that come out of Hollywood represent the world we live in, the future we are creating, or both?

ECONOMIC NEWS

Economy

US adds more jobs than expected
Or did job openings and hirings drop?
Job openings at 2020 level
JPM announces “American Dream Initiative”
The Las Vegas economic indicator
Weight loss drugs crushing potato farmers

Labor

Work in the US has become joyless
Hollywood’s job market is collapsing
Congratulations, here’s a pay cut

The Lone Star

The Texas lawyer who beat big tech
Texas suburbs lead US population growth
Meta goes big in El Paso

BUSINESS

Finance

There’s a run on the bank at Blue Owl
Distressed funds are targeting private credit
Vulture funds target private equity
PE investors shun middle market for scale

Real Estate

Cold storage is overbuilt
While big warehouses are back in demand
Japan going big on US housing

Tech

Tesla’s secret weapon: a giant metal box
Apple to reshore some iPhone parts
Pokémon Go wants to map the world
The robot barista is here—and is good

AI

OpenAI raises $122B
A unique perspective on tech and income taxes
Americans are mostly concerned about AI
AI creeps into the NY Times
Made-without-AI logo on the way

Energy

The wind turbine blade graveyard
The 2,000-year-old battery making a comeback
US mandates more biofuel usage
A miracle battery could rescue EVs

THE NATION

Politics

How Democrats are embracing dark money
Trump fires his AG
An AI regulation war is coming
Trump puts TSA back to work

Policy

Trump announces tariffs on pharma
Washington State raises taxes on high earners
Universities and unions are not a good match
State sales taxes never fall

Culture

There’s a Catholic surge happening
Total TV usage by media company chart
Why has crime been dropping?

GEOPOLITICS

Global

US lifts sanctions on Venezuela’s leader
US embassy reopens in Venezuela
US secures rare earth deal with Brazil
Countries with the most agricultural land
Milei gets a $16B court victory

Europe

Trump puts Europe on notice
And threatens NATO withdrawal
German inflation surges
Eurozone borrowing costs soar
UK may lose its defense start-ups
An Irish village goes smart-phone free

Ukraine

Russia hits Ukrainian gas fields
Russia wants to trade Ukraine for Iran
Musk helps Ukraine play more offense
Ukraine shows AI changing how coalitions fight

Middle East

Iran recruits children to prepare for war
There’s a collaborative discussion about Hormuz
Gulf states consider pipelines to avoid Hormuz
The US has copied Iran drone tech
Iran controls Lebanon
How the mullahs assembled their support

China

Xi keeps purging the ranks
Chinese cars may be in the US soon
China has world’s largest outdoor elevator
Coal remains China’s core energy
China seeks to curtail wasteful spending

War Creep

UK, Italy, and Japan to build fighter jet
China building another massive naval base
Japan rethinks 80 years of pacifism
Ukraine teaches us more drone lessons

MAKING A BETTER YOU

Mind

Stargazing is good for the soul
Artificial empathy comes at a cost
Finding meaning through failure

Body

Try hyrox for ultimate fitness
The kimchi miracle
Understand hunger, not calories

FUN STUFF

The Extraordinary

Amazing solar system photos from NASA
Spring flowers from Tokyo to Madrid
Stunning photos of dinosaur-era insects

Music That Found Us

Mumford & Sons’ Tiny Desk Concert
“Don’t Lie to Me,” Albert King and Stevie Ray Vaughan.
“A Song for You” Willie Nelson, Ray Charles, and Leon Russell.

Worth a Watch

The very sweet She Dances.
The outrageous Splitsville.
Two Prosecutors, totalitarian bureaucracy.

The Yum Yums

Spring-time eats.
Asparagus and golden beet salad
Crab cakes with arugula salad
Lemon butter dill salmon
Pesto and peas pasta
Roasted carrots over lemon yogurt
Classic key lime pie

Humans After AI
by Buck Roy and Nano Banana

PARTING THOUGHTS

A lion is not evil when he eats a human being, nor is a lion good when he does not eat a human being; only human beings can be good or evil.
–Dennis Prager

IN CASE YOU MISSED IT

The War Economy and Iran
March 27, 2027

The Affordability Challenge
March 20, 206

The Everything Crisis
March 13, 2026