“There never has been an energy transition. This is a lovely story, and it's just not true. … Hydro, nuclear, all those things, we kept adding them on top of each other. We never transitioned from anything to anything.”
The Great Simplification with Nate Hagens · October 2026
Nate Hagens asked whether the oil shock from the Iran war would speed up or slow down the energy transition. Berman's answer is that biomass, coal, oil and gas were each layered on top of the last and none has ever declined, so investors betting on substitution are betting on something with no historical precedent. He adds that this doesn't mean it can't be done, only that the odds are low in the near term.
Transcript
Oh, we could absolutely run an economy, but not an economy that would support 8.2 billion people. It'd be a very different civilization, and in many ways, I think a better one. It's just that, you know, you don't get from here to there in a single step. I mean, you're talking about a long transition.
So let me ask you this. We had an energy shock in the 70s, and society responded to that. We had nuclear build outs and efficiency standards, and they found oil in the North Sea. And today's options, the way things are going, are faster electrification, a return to coal. Have you seen China's 2027 expected gigawatt expansion of coal? It's massive. What else? Resource nationalism, stockpiling, and different countries are doing different things. So what do you think this 2026 Iran war energy shock could be setting in motion? And does the shock speed up or slow down the so-called energy transition story?
Well, first of all, let me just say there never has been an energy transition. This is a lovely story, and it's just not true. I mean, what has existed, and I'm talking about, you know, since 10,000 years ago, have been energy additions. And so early man used human and livestock muscle, wood and other biomass. Okay, the amount of biomass that is used today is pretty much the same as it was in 1800. We don't have good records back before then. So we never stopped using biomass. We simply layered on coal on top of it. But as a world, we have, at the very least, over the last 20 or 30 years, we've actually, we've kept our coal consumption flat or increased it slightly. So biomass, we never decreased it. Coal, we never decreased it. Then we got oil and we added that on top and that's never decreased. Natural gas came later. That's never decreased. Hydro, nuclear, all those things, we kept adding them on top of each other. We never transitioned from anything to anything. I'm not bringing this up because it's a semantic problem. It's that the entire mindset that our investment world is in is one of substitution. We're going to substitute renewables or EVs or whatever for our current system. And yet there's no historical precedent for ever doing that. That doesn't mean that you can't do it. It just means that the probability is quite low. And certainly the probability is low in the near term.
What's this going to change?
I mean, everything has changed. We just don't know it yet. And so what I think is most probable is that we'll see a run-up in prices, which we're seeing right now. We're going to see demand destruction. It'll vary from place to place, depending on the capacity of that location to get its supply chains and deal with the financial fallout. And at some point, we're going to see a version of what happened after the first oil shocks, which was, in that case, a decade and a half of essentially global recession and depression. That's why we had low oil prices. And as I've said, this is not going to play like that movie did, because the scale of our economy and the complexity of our economy today is so much greater than it was in 1980.
What about U.S. shale? What's happened since February? What did U.S. shale do in response to this crisis? What didn't it do? And what does that imply about shale for the next five years?
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