Because of the continuing crisis in the Strait of Hormuz and its impact on oil prices, I’ve recently learned some interesting information I’d like to share with you.

The word “strait,” as in Strait of Hormuz, actually means constricted or tight and refers to a narrow passage of water connecting two larger bodies of water. Throughout history, these narrow waterways have been critical to the trade of key resources. Almost 25% of the world’s oil goes through the Strait of Hormuz, and about the same is true for liquified natural gas, LNG, which is critical for electricity production.

When the conflict began, there were dire predictions about exorbitant oil prices due to the virtual stoppage of trade through the strait, but prices didn’t spike quite as much as predicted, because many large economies, including the United States’, drew upon oil reserves, which kept oil flowing to consumers. Key Middle Eastern oil producers also built alternative pipelines across their countries to bypass the Strait of Hormuz, keeping supplies flowing.

But another key factor is that China, the world’s largest oil importer, has been rapidly electrifying transportation while expanding nuclear, hydro, solar and wind generation. That combination has reduced global oil demand and China’s long-term dependence on imported petroleum. Using electricity produced within China rather than relying on imported oil improves its energy security while reducing exposure to geopolitical disruptions.

As China’s economy becomes more electrified, future oil shocks may have less influence on global demand than they did a decade ago, and that’s huge.

Now, we need to remember that electricity generation depends heavily on liquified natural gas. LNG cannot be easily rerouted through pipelines, and a large portion is transported through the Strait of Hormuz. Instability in the Red Sea is yet another threat to these critical supply chains.

For the United States, this creates an important economic opportunity as we are now one of the world’s largest LNG exporters. If we look at what China has done, our abundance of LNG suggests that a smart long-term strategy for the U.S. may be to accelerate electrification, especially given growing AI-related electricity demand.

Our LNG abundance gives us a natural comparative advantage that makes economic sense to leverage, especially given recent events. Global demand for LNG is only increasing and that presents a huge, lucrative export market for the U.S.

More electrification would reduce our reliance on a volatile energy source (oil) as well as our vulnerability to faraway volatile transportation routes, as we are now experiencing. And last but not least, more reliance on LNG and electrification could benefit the pocketbook of the average American.

Tatiana Bailey is executive director of the nonprofit Data-Driven Economic Strategies. Other Gazette articles, TV segments, DDES monthly economic dashboards with technical explanations, and how to sponsor their work can be found at ddestrategies.org.