When people hear the phrase American energy independence, the first thing that usually comes to mind is production.

How much oil are we producing?
How much natural gas is coming out of the ground?
How much more can American producers supply?

Those are important questions.

But after nearly four decades in the oil and natural gas industry, I believe energy security is about much more than what comes out of the well.

You can have tremendous reserves underground. You can have productive wells. You can even have buyers ready to purchase the oil and gas.

But if you don't have dependable infrastructure, experienced operators, and reliable access to market, the value of that production can be significantly affected.

The recent disruptions surrounding the Strait of Hormuz provide a real-world example of why these factors matter.

For energy investors, it's an important reminder that production is only one part of the equation.

The Strait of Hormuz Is a Lesson in Energy Dependence

The Strait of Hormuz has long been one of the world's most important energy chokepoints.

Before the current disruptions, roughly 20% of global petroleum liquids consumption moved through this relatively narrow waterway. While alternative routes exist, they can handle only a portion of those volumes.

That creates a significant vulnerability for the global energy system.

When shipping through an important route becomes unreliable, producers and buyers can't simply redirect millions of barrels overnight.

Alternative pipelines may need to be used. Additional tankers may be required. Cargoes may have to travel longer distances. Insurance costs can rise. Refiners may need to source different crude grades.

Every one of those changes introduces additional time, expense, and uncertainty.

And that leads to a broader lesson:

Energy security isn't simply about how much energy you can produce. It's also about how reliably you can move that energy from where it is produced to where it is needed.

America’s Advantage: Optionality

One of the great strengths of the American energy system is the infrastructure that has been built around domestic production.

The United States has major producing regions across the country, extensive pipeline networks, storage facilities, refineries, processing plants, rail and trucking infrastructure, Gulf Coast terminals, and access to international export markets.

That creates something I consider extremely valuable in the energy business:

Optionality.

A producer with multiple transportation and marketing options isn't necessarily dependent on a single pipeline, port, customer, or foreign government.

That flexibility can become especially valuable when global markets are disrupted.

The scale of America's energy system is reflected in its growing role in global energy trade. In 2025, U.S. energy exports reached record levels and exceeded imports by a record amount. Petroleum accounted for approximately 63% of U.S. energy exports, while natural gas exports also reached a record.

That's a remarkable change from the energy landscape I entered nearly 40 years ago.

And today's disruptions demonstrate why that infrastructure matters.

We’re Seeing the Value of Infrastructure in Real Time

During the second quarter of 2026, disruptions through the Strait of Hormuz caused international buyers to search for alternative sources of supply.

The American energy system was positioned to respond.

U.S. refineries processed the most crude for a second quarter since 2019. U.S. distillate exports averaged approximately 1.56 million barrels per day—about 30% above the five-year average—while jet-fuel exports were more than twice their five-year average.

Think about what that tells us.

When another major part of the global energy system became less reliable, the United States had production, refining capacity, transportation infrastructure, and market access that could help absorb some of the pressure.

That's energy security in action.

It's not simply about producing more barrels.

It's about having a system capable of moving those barrels where they're needed.

Production connected to infrastructure.
Infrastructure connected to markets.
Markets supported by experienced operators.

That's a much more complete picture of energy independence.

Infrastructure Is Only Part of the Equation

There's another factor I believe investors should examine closely:

Who is operating the asset?

After decades in this industry, I've learned that the quality and experience of the operator can have a tremendous impact on an oil and gas investment.

Drilling a well is only the beginning.

An experienced operator must evaluate the geology, engineer the well, manage drilling and completion operations, control costs, address production issues, maintain equipment, comply with regulatory requirements, and ultimately move the hydrocarbons into the marketplace efficiently.

A good asset still needs good execution.

Infrastructure creates opportunity.

Experienced operators know how to capitalize on it.

That's why I believe investors should look beyond the headline production numbers and understand who is actually responsible for developing and operating the project.

I also pay close attention to how much capital the operator and its partners have invested alongside investors.

When experienced operators have meaningful capital at risk themselves, incentives can become much better aligned.

They have skin in the game.

What If Oil Prices Fall Next Week?

This may be one of the most important questions an energy investor can ask.

The investment case for American oil and gas shouldn't depend on oil prices moving higher every week.

Commodity prices are volatile.

We've seen that throughout the Hormuz crisis.

Military escalation can push prices higher.
Diplomatic developments can push them lower.
Inventories change.
Demand forecasts change.
OPEC+ decisions change.
Economic conditions change.

During the second quarter alone, Brent crude traded from approximately $118 per barrel to around $72.

That's a remarkable range.

But here's the important distinction:

America's pipelines didn't disappear when oil prices declined.

The producing basins didn't disappear.

The refineries didn't disappear.

The storage facilities didn't disappear.

The export terminals didn't disappear.

And experienced operators didn't suddenly forget how to produce oil.

That's why I believe investors should distinguish between commodity price movements and the underlying fundamentals of an asset.

Oil prices will always move.

The quality of the asset, the infrastructure supporting it, and the capability of the operator are much more fundamental considerations.

Energy Independence Doesn’t Mean Energy Isolation

There's another misconception worth addressing.

American energy independence doesn't mean the United States should disconnect itself from the global energy market.

In reality, America both imports and exports petroleum.

Why?

Because different refineries are designed to process different crude grades. Geography matters. Transportation costs matter. And global trade can make the overall energy system more efficient.

I believe a better definition of energy independence is resilience.

Can we produce substantial amounts of energy domestically?

Can we transport that energy efficiently?

Can we refine and process it?

Can we store it?

Do we have multiple ways to bring it to market?

And can American producers respond when global supply becomes disrupted?

Increasingly, the answer to those questions is yes.

That's a major strategic advantage.

Why This Matters to Direct Participation Investors

For investors considering Direct Participation Partnerships (DPPs) in oil and natural gas, these issues are more than just broad energy-industry observations.

They can directly influence the economics and risk profile of an investment.

A DPP investor isn't simply investing in an oil price.

They're participating in the economics of an underlying oil and gas project.

That makes the quality of the asset, the operator, and the surrounding infrastructure particularly important.

1. Market Access Can Affect the Value of Production

A productive well is only valuable if its production can ultimately reach a buyer.

Investors should understand how a project is connected to pipelines, processing facilities, storage, transportation networks, and ultimately the market.

Reliable market access can help reduce operational bottlenecks and provide greater flexibility when market conditions change.

2. Operator Experience Matters

Oil and gas development is operationally complex.

Geology, drilling, completion, production, maintenance, regulatory compliance, and cost management all require expertise.

For a DPP investor, understanding the operator's experience and track record can be just as important as looking at projected production.

3. Infrastructure Can Create Flexibility

Multiple transportation and marketing options can provide valuable flexibility.

A project that isn't dependent on a single route or customer may have more ways to respond when circumstances change.

That flexibility can become particularly important during periods of geopolitical disruption or infrastructure constraints.

4. Alignment of Interests Matters

I believe investors should also ask how much capital the operator has committed to the project.

When an operator has meaningful capital invested alongside its partners, there is an important alignment of interests.

The operator has more than a management role.

They have capital at risk.

5. Strong Investments Should Be Evaluated Beyond Today’s Oil Price

One of the biggest mistakes an investor can make is evaluating an oil and gas opportunity solely based on the current commodity price.

Oil prices can change dramatically.

Instead, investors should consider how the project performs across a range of commodity-price environments.

What does the asset look like at $60 oil?

What happens at $70?

What happens if prices move significantly higher?

The goal isn't to predict the exact price of oil six months from now.

The goal is to understand the underlying economics of the investment.

What I Want Investors to Take Away From Hormuz

The Strait of Hormuz won't dominate the headlines forever.

Eventually, conditions will change. There may be an agreement, a shift in military activity, new shipping arrangements, or some combination of events.

Oil prices will respond.

Then another geopolitical event will eventually capture the world's attention.

That's why I don't believe investors should build an energy strategy around trying to predict the next crisis.

Instead, ask better questions.

Who is operating the wells?

What is the quality of the underlying asset?

Does the operator have meaningful capital at risk?

What infrastructure supports the project?

How does production get to market?

Are there multiple transportation and marketing options?

Do the economics make sense across a range of commodity prices?

Those questions remain relevant long after today's headlines have disappeared.

The Bigger American Energy Story

The instability surrounding the Strait of Hormuz isn't important because it guarantees higher oil prices.

It doesn't.

It's important because it has highlighted something much more fundamental about energy security.

Energy security requires more than oil and natural gas in the ground.

It requires:

• Dependable production
• Experienced operators
• Transportation infrastructure
• Processing and refining capacity
• Storage
• Reliable market access
• Multiple options for moving energy when conditions change

America has spent decades building that ecosystem.

And when global energy supply chains become strained, the strategic value of that system becomes much easier to see.

That's what American energy independence means to me.

It isn't isolation from the rest of the world.

It's having the strength, infrastructure, expertise, and flexibility to produce energy at home, respond when global markets need additional supply, and keep energy moving regardless of where the price of oil closes this week.

For investors, that's an important distinction.

Because in oil and gas, the strongest opportunities aren't necessarily about predicting tomorrow's headline.

They're about understanding the asset, the operator, the infrastructure, the market, and the economics behind the production.

Summary

• Energy independence is about more than production. Having oil and natural gas underground is only part of the equation; dependable transportation, processing, storage, and market access are also essential.
• The Strait of Hormuz demonstrates the importance of infrastructure. When a major energy chokepoint becomes disrupted, transportation options and market access can become critical.
• America's infrastructure provides optionality. Multiple producing regions, pipelines, refineries, storage facilities, terminals, and export markets give U.S. producers greater flexibility.
• Experienced operators matter. Successful oil and gas development requires expertise in geology, drilling, completion, production, cost management, compliance, and marketing.
• Commodity prices are volatile. Investors should avoid evaluating an oil and gas opportunity solely on today's oil price.
• DPP investors should look beyond projected production. The operator, asset quality, infrastructure, market access, capital commitment, and underlying economics all deserve careful consideration.
• Alignment of interests is important. When operators have meaningful capital invested alongside their partners, they have additional financial incentive to execute successfully.
• Energy independence is better understood as resilience. America's ability to produce, transport, process, store, and market energy gives the country greater flexibility during global disruptions.
• The best questions are fundamental questions. Who operates the asset? How does production reach market? What infrastructure supports it? How does the investment perform across different oil-price scenarios?
• Headlines change, fundamentals endure. Geopolitical events and commodity prices will continue to fluctuate, but the quality of an asset, operator, infrastructure, and investment structure remain important considerations for long-term energy investors.