Monetary Matters with Jack Farley Why Venezuela Won’t Solve America’s Real Energy Crisis | Michael Kao on AI, Electrification, and the Natural Gas Bottleneck
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Jan 11, 2026 Michael Kao, Chief Investment Officer of Cantos Capital Management, delves into America's energy vulnerabilities. He argues Venezuela's oil reserves won't solve U.S. energy issues anytime soon, citing OPEC's constraints and a bearish outlook on oil. Kao highlights the looming threat of natural gas, driven by the rise of AI data centers and premature electrification, which stress the power grid. He suggests that investing in natural gas mineral rights may be a wiser long-term strategy compared to volatile commodities and equities.
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Three Forces Driving Gas Demand
- Three forces—electrification, AI data centers, and LNG exports—are converging to drive electricity and gas demand sharply higher.
- Kao warns this trifecta could create a substantial natural gas squeeze in the next 3–7 years.
Electricity Demand Could Soar
- Electricity demand growth has recently been revised up to 2.5–5% annually, a tenfold rise versus prior flat growth.
- Kao equates this to adding the electricity demand of 15 New York Cities by 2030.
Gas Is Provincial, Not Global (Yet)
- Natural gas is a provincial commodity due to pipelines and high LNG transport tolls, so it doesn't trade globally like oil.
- Kao notes LNG liquefaction+transport+regas costs add ~$2.50–$3/MMBtu, limiting immediate global arbitrage.
