Dear Reader,

I've been called a contrarian for so long that I've started to think of it less as a label and more as a job description. And one of the positions I've held longest — one that's drawn the most eye-rolls over the years — is that coal never went away. Nor is it going away.

Coal — just like oil or natural gas — is simply an arrangement of carbon, hydrogen, and oxygen. The friendliest elements, concentrated into portable, reliable energy that actually works when you need it. I've always been a fan.

Yes, the Western world declared war on coal. Politicians made speeches. Pension funds divested. ESG consultants wrote lengthy reports about the inevitable transition. Coal was supposed to be finished — a relic of the industrial age, embarrassing to own and dangerous to defend. And yet, quietly, the world kept burning it. Global coal demand hit all-time highs even as the eulogies were being written. China kept building coal plants. India kept building coal plants. Japan — which the world thinks of as a sophisticated, technologically advanced nation — never really stopped either. The funeral kept getting scheduled. Coal kept not showing up to it.

All of that is now being laid bare by what's happening in the Gulf. The Iran war and the energy crisis it has unleashed have done something that years of data and argument couldn't: they've stripped away the comfortable fiction and shown the world exactly how exposed it really is.

All of a sudden, scores of countries — across Europe, and particularly across Asia — found themselves staring into an energy abyss they'd spent years pretending didn't exist. The Strait of Hormuz, through which roughly a fifth of the world's oil and LNG flows, is effectively closed. And the countries that depend on it most have discovered, the hard way, that dependency and vulnerability are the same thing.

Consider Japan. It imports 87% of its total energy. Of its crude oil, 95% comes from the Middle East, and roughly 70% of that travels through Hormuz. With the strait closed, two-thirds of Japan's oil supply is blocked. Not at risk. Blocked. It is now burning through emergency reserves that cover perhaps two to three weeks of stable LNG demand. South Korea is in essentially the same position — importing 98% of its energy, heavily dependent on the same routes. Australia has 38 days of fuel reserves. India, 1.4 billion people, imports 85% of its oil with heavy Middle East exposure. The list goes on.

These countries don't have a Plan B for Middle Eastern energy. That's not a criticism — it's just a simple fact. For decades, the implicit Plan B was the American security guarantee. The U.S. Navy kept the sea lanes open, and everyone could afford to pretend that their energy dependency wasn't as dangerous as it looked. But the sea lanes are no longer open. It turns out the security guarantee had fine print that nobody read carefully enough.