Energy markets can change overnight.
One geopolitical decision, one supply disruption, or one infrastructure constraint can ripple through global commodity markets within hours. While headlines often focus on oil prices, the deeper story is how these events reshape production economics, infrastructure investment, and the long-term value of industrial assets.
On a recent episode of the ITC Tax Podcast, energy industry veteran James Whitland joined Mark Dzeda to discuss the rapidly evolving global energy landscape. The conversation explored Middle East supply risks, oilfield services volatility, and the surge in power demand driven by artificial intelligence.
Several important trends emerged that energy operators, industrial companies, and investors should be watching closely.
Geopolitical Events Still Influence Energy Markets
Recent tensions in the Middle East again raised concerns about the security of the Strait of Hormuz, one of the most critical shipping routes for global energy supplies.
Historically, disruptions in this region could trigger dramatic spikes in oil prices. Today the market appears more resilient.
Oil prices have moved higher, but not to the levels many analysts would have expected in earlier decades. According to Whitland, modern supply chains have made global energy markets more flexible and responsive.
Energy traders now operate with near real-time visibility into global shipments. Modern data platforms and shipping intelligence allow companies to identify alternative cargoes quickly and redirect supply where it is needed.
The result is a market that still reacts to disruption, but adapts far faster than it once could.
Supply Disruptions Affect Countries Differently
While major economies may weather temporary supply disruptions, smaller and energy-dependent nations often face far greater consequences.
Countries such as Pakistan and Bangladesh rely heavily on energy shipments that pass through the Strait of Hormuz. If those flows are interrupted, entire power systems can be affected.
In developed markets, disruptions often mean higher gasoline prices.
In developing economies, the impact can include fuel shortages and widespread power outages.
These imbalances ultimately influence global commodity pricing, investment decisions, and capital allocation across the energy sector.
Oilfield Services Remain the Most Volatile Segment
When energy markets shift, oilfield service companies usually feel the effects first.
Producers can continue selling oil even when prices decline. Service providers depend on drilling activity and development spending. Those investments can change quickly when market expectations shift.
Whitland noted that drilling demand often reacts more dramatically than commodity prices themselves. If producers slow development plans or delay projects, the service sector experiences the impact immediately.
This dynamic has driven significant consolidation across the oilfield services industry over the past decade.
At the same time, advances in drilling technology have transformed production efficiency. Today far fewer rigs are required to produce significantly larger volumes of oil and natural gas.
The United States now produces substantially more natural gas than it did fifteen years ago while operating only a fraction of the drilling rigs once required.
Technology has fundamentally reshaped the economics of energy production.
Artificial Intelligence Is Becoming a Major Energy Driver
One of the most significant long-term shifts in energy demand is being driven by artificial intelligence.
The rapid expansion of AI data centers is creating enormous demand for reliable power.
These facilities cannot rely solely on intermittent energy sources such as wind or solar. They require continuous and stable electricity supply.
For the foreseeable future, natural gas remains one of the most practical solutions.
Whitland estimates that U.S. natural gas consumption could rise significantly by the end of the decade as AI infrastructure expands. Power demand from data centers alone may drive substantial growth in electricity generation and fuel consumption.
This trend is already influencing energy investment strategies across the country.
Natural Gas Prices May Need to Rise
Meeting future demand will require significant production growth.
The challenge is that current price levels may not support the level of drilling required to expand supply quickly enough.
Whitland expects natural gas prices may need to rise in the coming years to stimulate additional drilling activity and infrastructure development.
Higher prices would encourage producers to expand operations, build pipelines, and bring new supply online.
Over time these investments would increase production capacity and help stabilize the market.
Temporary price increases may be necessary to unlock long-term supply growth.
Power Infrastructure Could Become the Real Constraint
The biggest bottleneck for AI infrastructure may not be computing technology or construction capacity.
It may be electricity generation.
Large gas turbines used for power generation are already facing significant manufacturing backlogs. In some cases delivery timelines stretch several years.
As a result, data center developers are exploring alternative solutions such as distributed natural gas generation systems that can operate independently from the grid.
Many developers are also securing long-term natural gas supply contracts to ensure stable fuel access for decades.
The energy industry is becoming a critical partner in the expansion of digital infrastructure.
The Energy Industry Is Expanding Beyond Oil and Gas
Another major takeaway from the conversation is how the definition of the energy business is changing.
Energy companies are no longer focused only on producing oil and gas.
They are increasingly participating in a broader power ecosystem that includes electricity generation, AI infrastructure, energy storage, power distribution, and emerging technologies such as lithium production.
For companies willing to adapt, these changes create opportunities well beyond traditional upstream energy markets.
Why These Trends Matter for Industrial Property Taxes
Macroeconomic shifts in the energy sector often translate directly into changes in industrial asset valuations.
Energy infrastructure, data centers, and industrial facilities are valued based on operational performance, cost structures, and long-term income potential.
When commodity prices, energy demand, or infrastructure investment patterns shift, the economics of those assets change as well.
These factors can influence:
- Replacement cost assumptions
- Capitalization rates
- Operating income projections
- Long-term asset viability
Local appraisal districts frequently rely on these variables when assessing industrial properties.
For energy operators and industrial businesses, understanding these trends early can help prevent valuation distortions that lead to inflated tax assessments.
Want to hear the full discussion?
Listen to this week’s episode of the ITC Tax Podcast as Mark Dzeda sits down with industry veteran James Wicklund to break down how geopolitical tensions, supply risks around the Strait of Hormuz, and rising data center demand are reshaping global energy markets. Discover why natural gas is becoming critical to powering technological growth and how energy companies are adapting to an increasingly complex landscape.
If your company operates energy, manufacturing, or infrastructure assets, now is the time to evaluate how shifting energy markets may impact your property tax exposure.
ITC Tax helps industrial businesses analyze valuation risk, model cost changes, and proactively manage assessments before market shifts translate into higher tax liabilities.
To learn more or schedule a strategic review, contact the ITC Tax team today.