Energy Musings - May 4, 2026

Energy dominance is an important geopolitical strength of the U.S. However, this strength is at risk because the U.S. lacks oil tankers and LNG carriers to transport our fuels to customers.

Without Ships, Energy Dominance Is At Risk

In 2025, the United States exported $309.9 billion in mineral fuels, oils, and distillation products, according to Trading Economics, compiled from United Nations Commission on Trade and Development data. That represented 14% of the nation’s total exports by value. The fact that energy products represented the largest component of U.S. exports supports the Trump administration’s claim of U.S. energy dominance. But that dominance has a hidden weakness that could jeopardize the energy industry’s contribution to our national economy.

Energy has become America’s most important export.

Last year, the American Petroleum Institute (API) published a report on U.S. energy exports, stating that 2024 was a record year for U.S. oil and natural gas exports. The shipments went to 101 countries worldwide, which is impressive. The API included a chart showing how each category of oil and gas – natural gas liquids, crude oil, dry natural gas, and finished petroleum products – had experienced significant growth since 2000. The chart (we divided it for ease of viewing) shows the percentage of total U.S. production of each product exported.

U.S. energy exports have grown significantly since 2000.

There is no question that U.S. oil and gas exports have been growing and will continue to grow. Our petroleum exports are proving lifesaving for nations impacted by the closure of the Strait of Hormuz to oil and gas exports. Moreover, and something often overlooked, many other critical commodity exports have ceased to be shipped—products such as helium, sulfur, fertilizers, among others. These products impact everyday living costs and industrial activity, putting jobs at risk.

While the API claimed a record in exports in 2024, last year topped those volumes, setting another record. Total natural gas exports increased 16%, with liquefied natural gas (LNG) volumes up 26%, while pipeline volumes only rose by 3.5%. Oil and refined products were a different story. Although total oil exports were essentially flat compared with 2024, the volume exported by ship increased by eight-tenths of one percent while pipeline volumes were flat. On the import side of the oil ledger, our total imports fell by 6.2%, while those arriving by ship declined by 7.5%. This meant we could use our domestic oil output more.

We previously touched on the oil export picture, which has been topical since the Hormuz closure at the end of February when the Iran war commenced. And we emphasized the volume of crude oil and refined petroleum products the U.S. imports. Especially the amount of refined products that come to the U.S. East and West Coasts. However, European and Asian nations are struggling with the loss of Middle Eastern oil supplies. Therefore, many countries are restricting the export of their refined petroleum products, opting to keep them for domestic consumption, which impacts the flow of these commodities to the U.S. It is the tight, refined product supplies on both coasts, and the loss of crude oil imports for California refineries, that prompted the Trump administration to obtain a waiver from the Jones Act requirement that all cargoes transported between U.S. ports must be carried on Jones Act-compliant, U.S.-flagged vessels. The waiver was for 60 days. The administration has requested a further 90-day extension of the waiver. The waiver has created controversy within the U.S. maritime industry, which we will address in a future Energy Musings.

The global gas market has been upended not just by the Hormuz closure, but also by the damage inflicted on Qatar’s LNG export terminal and liquefaction facilities by Iran. QatarEnergy’s CEO told the media that the damage will likely take five years to repair fully. He estimated that the company had lost 17% of its capacity, which will tighten the global LNG market for the foreseeable future.

U.S. LNG Industry

With the expansion of existing and new LNG export facilities, the U.S. will more than double its LNG export capacity by 2030. This increased supply will be in high demand, offering the U.S. an opportunity to capture more global market share. However, the U.S. has only one LNG carrier, a 31-year-old vessel, in its fleet. Crowley’s American Energy is Jones Act-compliant and is dedicated to transporting gas from the Gulf Coast to Puerto Rico.

The U.S. once possessed an LNG tanker fleet. The 16 LNG carriers were built in American shipyards between 1977 and 1980. All were built when the U.S. was pursuing an energy strategy to make it the world’s largest LNG importer. Besides building LNG tankers, the U.S. constructed four LNG import terminals – Everett, Massachusetts; Cove Point, Maryland; Elba Island, Georgia; and Lake Charles, Louisiana. Soon after these facilities and ships were in operation, the U.S. natural gas industry revived, and cheaper domestic supplies undercut the economics of LNG imports from Algeria and Southeast Asia. Only Everett continued to operate continuously, as it was well-positioned to import LNG for New England power customers.

An LNG tanker is loading a cargo.

According to a 2020 ship listing that included new vessel names, 5 of the 16 LNG tankers built earlier had been scrapped. Reviewing an International Maritime Organization listing of the current LNG fleet, none of the remaining 11 LNG tankers were active. That is not surprising, as the youngest LNG tanker would be 45 years old, and the oldest 48. Old ships are expensive to maintain and operate. They are also risky to operate due to potential metal fatigue.

The International Gas Union (IGU) annual report for 2025 showed an active global LNG fleet of 742 tankers. Included in that total were 58 ships that acted as floating LNG gasification and storage facilities, leaving a fleet of 684 tankers actively transporting LNG cargoes. The IGU reported that the industry transported 411.24 million tons of LNG in 2024. The report further noted that this required 7,095 trade voyages. The trading activity was divided into 270 million tons per annum (MTPA) of Asian imports and 100 MTPA of European LNG imports. The trade voyages associated with these two regions were 4,500 and 1,900, respectively. The remaining 41 MTPA of LNG cargoes required 695 trade journeys and went to markets in Africa and South America. The average cargo for each LNG trade journey is 5.8-6 MTPA.

If we do some math, the LNG tankers averaged just over 10 trade journeys each during 2024. That is not unreasonable, given the distances between LNG liquefaction facilities and regasification terminals. It takes one to two days to load a tanker, depending on the vessel’s size. Unloading can be completed more quickly. However, after unloading, a tanker must return to a liquefaction plant empty.

What is the significance of the lack of U.S.-flag LNG tankers? The U.S. is completely dependent on foreign-owned LNG tankers for this important industry. Consider the impact on the U.S. natural gas industry if foreign tanker owners boycott its LNG exports. The domestic gas market would need to shut down gas supplies due to insufficient storage capacity. Because a substantial amount of gas is “wet,” meaning it is produced with crude oil, the shutdown of gas wells would also reduce U.S. crude oil output. This would undercut the U.S. energy dominance mantra.

The Hormuz closure and U.S. blockade of Iran’s oil exports are a lesson that other nations will not forget. They will become options in nations’ military plans.

The Trump administration’s plan to revitalize our maritime industry involves reviving, upgrading, and expanding our shipbuilding capacity. The first major deal involved a July 2025 agreement for South Korea to invest $150 billion in U.S. shipbuilding, which was a part of a larger $350 billion Korean investment in the U.S. over a 3.5-year timeframe. However, Korea is not required to invest more than $20 billion per year.

In late 2024, Korea’s Hanwha Group purchased the Philly Shipyard for $100 million and committed to investing $5 billion in expansion and upgrading. The Philly Shipyard built only commercial vessels until 2018. However, orders ceased, and the yard faced closure. Management pursued and won a contract to build five maritime academy training ships funded by the U.S. government. Even with this order and some additional commercial orders, the yard operates at a loss.

After the Philly Shipyard was purchased, the parent company, Hanwha Group, ordered an LNG carrier at an estimated cost of $250 million. The figure has been criticized for being too low, as most U.S. commercial shipbuilding prices are about three times those of Asian shipyards.

Part of the plan approved with the Philly Shipyard purchase is that the term “U.S.-built” is construed to mean that the Korean shipyard can build vessel components and deliver them to the Hanwha Philly Shipyard for final assembly and completion. Ships built under this arrangement will be Jones Act-compliant, meaning they will be built in the U.S. by a domestic owner (Hanwha’s U.S. subsidiary) and crewed by American mariners.

This is one way to build a U.S. LNG tanker fleet. However, it will be a long, slow, and expensive process. IGU estimates that the typical LNG carrier takes 51 months to build, as these vessels are more complex than those in other commercial ship categories. Assuming the Hanwha Philly Shipyard can build its LNG carrier in that time frame, it will not be ready for service until shortly before 2030. But one new LNG carrier will not move the market needle.

In 2025, the U.S. exported 24.6 billion cubic feet per day (Bcf/d) of natural gas. Of that volume, 9.5 Bcf/d was shipped to customers in Canada and Mexico by pipeline, while 15.1 Bcf/d went by ship as LNG to nations worldwide.

Forecasts call for U.S. LNG exports to reach 21.5 Bcf/d in 2030, nearly double the 12 Bcf/d recorded in 2024. This means the industry will require more LNG carriers to distribute the increased supply.

At 15 Bcf/d of LNG, the industry will need 3 large LNG carriers per day, which means 1,095 trade journeys a year. The number of LNG carriers required will depend on cargo destinations. The distance between Houston and Rotterdam is 4,900 nautical miles, which at a ship speed of 19 knots, would take 11 days. However, a cargo going from Houston to Singapore will take 25-29 days, depending on the route. Such a cargo could go via the Suez Canal, the Panama Canal, or entirely around South America (Cape Horn), with these options being 2.4-2.7 times as long as the Rotterdam route. Therefore, LNG tankers bound for Europe could make 1½ trips per month, while those on Asian routes would make one round trip every two months.

Although the data shows U.S. LNG exports have gone to 101 countries, using European and Asian trip data allows us to determine the size of the American fleet needed to handle 100% of the country’s exports. Currently, the industry needs 90 tankers to export one month’s worth of LNG. If all the gas went to Rotterdam, we would need 60 ships to carry the month’s exports, given the less-than-one-month round-trip. However, if all the LNG went to Singapore, the industry would need 180 tankers, given the two-month round-trip schedule.

Just building a European fleet, assuming the U.S. shipbuilding industry could deliver five LNG carriers per year and that each requires 4 years to construct, would see the final ships delivered in 2042. Such a timetable would have the last of the new LNG carriers for an Asian-only fleet arriving in the early 2060s.

Conclusion

Waiting for 16-26 years for the delivery of newbuild LNG carriers is unacceptable. Furthermore, these shipbuilding timetables ignore the need for additional ships, as today’s U.S. LNG exports are expected to nearly double by 2030.

Doubling or tripling the U.S. shipbuilding industry’s deliveries is not a reasonable expectation. It is unreasonable given the current state of the U.S. shipbuilding industry. What alternative is available? The government and LNG industry must convince owners of existing LNG carriers to reflag under the U.S. registry. Such an effort will require the owners to be assured of LNG cargoes at rates that would justify their accepting higher operating expenses mandated by the U.S. ship registry. However, it is cargoes and their economics that drive the global shipping industry.

Relying on foreign shipowners for the health of our entire LNG industry is a national risk that needs to be addressed. We have a similar problem with our oil and refined petroleum products industry: we need ships to handle our exports, but also to carry the oil and products the nation needs to function efficiently.

These are hidden national security risks because they impact our critical energy industry infrastructure and operations. President Trump’s efforts to revitalize our maritime industry should receive close attention from Congress and gain a higher priority. The industry appears ready, but it needs the financial and regulatory support to move forward expeditiously.