What the energy crisis is really showing us

The US-Iran war has created geopolitical flashpoint in the Middle East that has disrupted one of the world’s most critical shipping routes. Markets are reacting. Fuel costs are climbing. And once again, something happening on the other side of the world has been showing up fast in very local ways: at the petrol pump, in grocery bills, and even in interest rates. 

Before we talk about our wallets, it’s important to remember that this conflict is not abstract. It’s families seeking shelter from bombs. It’s flattened schools, twisted infrastructure and a rising death toll. When news feeds obsess over energy supplies it’s easy to lose sight of that.  

And it’s also part of the economic story, because the same systems that tie our economy to fossil fuels are entangled with geopolitical tensions. Instability in the current markets reflects something far more serious on the ground.  

Its effects impact all of us. This is the cost of conflict – not just measured in markets but in lives, livelihoods and the price of everyday essentials.  

To be honest, this isn’t our first rodeo. We’ve seen this before. When Russia invaded Ukraine, energy prices surged globally, our household bills rose, and gas exporters recorded billions in windfall profits. 

But each time it happens, it raises the same uncomfortable question: Why is so much of our economy still built on something this fragile? 

The ripple effect 

Fossil fuels don’t just power our cars. They underpin how entire economies move. Here’s an example of how the current crisis impacts Australian households. 

This chain reaction is already playing out. A single chokepoint – the Strait of Hormuz – carries around a quarter of the world’s seaborne oil and a chunk of global gas. With that access threatened, prices rose fast as consumers sought to secure their energy supply. 

 It’s not just an energy story, either – industrial materials, minerals, fertilisers, medicines and other critical resources are also caught up in the Hormuz blockade, impacting production, healthcare and crop yields – and thus the price of food and goods around the world. 

Treasury has warned that sustained high prices could push inflation higher. Banks are factoring fuel shocks into their interest rate outlooks. And Aussie households, already under pressure, are hit harder, forking out extra for essentials while fossil fuel companies enjoy outsized profits from the available energy supply.  

It’s pretty hard to opt out of this system in Australia. Even if you don’t drive much, your food, your deliveries, your electricity infrastructure, your daily essentials, all move through supply chains that still rely heavily on fossil fuels. The impact spreads and prices rise everywhere – except your pay slip.  

You can do everything right and still feel it. Let’s say you’ve made the switch. You’ve installed solar. You drive an EV. Costs still rise, inflation still bites, markets still wobble – because despite your best efforts to steer clear of fossil fuels, you’re still living in an economy that isn’t. Key sectors like freight, aviation, agriculture and manufacturing still rely on fossil fuels. That’s the difference between individual change and systemic dependence.

It’s tempting to see moments like this as isolated events. Words like ‘crisis’ and ‘spike’ imply a temporary disruption. But analysts point out that these events are not anomalies; they keep recurring. Fuel markets are shaped by a small number of regions, companies and shipping routes that hold outsized influence over a resource that the entire global economy currently depends on. 

When something goes wrong – like conflict, sanctions or blockades – the effects can be immediate and widespread, and fragilities are laid bare.  

From an investment perspective, these events create volatility and material risks across the whole system that can outlast the initial fuel shortage. Stressed energy markets feeds into inflation, potentially raising interest rates to address that inflation, and overall market performance.  

Over time that affects returns across multiple sectors, not just energy, creating permanent changes in the way economies work. 

The investor lens 

The sad truth is that preparation for war and war can be profitable. And when fuel prices spike, not everyone loses. 

Some investors might leverage conflict and fuel shortages to their own benefit. They might even double down on investing in weapons manufacturers as defence spending bolsters those companies’ bottom lines. But zoom out, and the picture looks different. What are those investors really profiting from in the short term?  

Higher energy costs flow through to businesses and households. Inflation rises. Economic growth slows. Financial conditions tighten. The broader market absorbs the shock. In other words, short-term gains in one part of the system can translate into long-term costs across the broader economy. 

And if you’re a long-term investor – like, say, a super fund – that distinction matters. You own a relatively small number of companies; but remain exposed to the overall system.  

Superannuation isn’t just about picking winners. Large, diversified investors hold assets from across the entire economy. They invest in infrastructure, equities and bonds, asset classes with exposure to a wide range of industries and type of assets.. 

Which means when something destabilises the system, like an oil shock, it shows up everywhere: in market volatility; in inflation and interest rates, and in long-term economic growth. 

This is sometimes described as being a ‘universal owner’ – basically, meaning that holding assets across the market means that systemic risks become their risks.  

Which leads to the simple idea that when you own a slice of everything, the health of the system becomes your investment case. 

Right now, the system is showing us something important.  

Dependence comes at a cost 

A system built on fossil fuels embeds the risk that the supply of fossil fuels are disrupted. 

While it is fair to think that the risks are fully incorporated in asset prices, in practice the cost attached to a risk varies through time as circumstances change. This is because the risk is complicated and often its probability assumed more remote than it actually is. The reality is the supply of fossil fuels depends global supply chains, travel though politically sensitive regions and complicated infrastructure - which can be disrupted – as easily as blocking a 40km wide strait.  

This means price can be influenced as much by geopolitics as by supply and demand. As with many previous fuel crises, it also shows how oil can be strategically weaponised in a regional conflict.  

Which is why the transition away from fossil fuels isn’t just about emissions. It’s about changing an economic system that repeatedly proves how fragile it is. 

This crisis is what happens when essential parts of our economy still rely on a fuel system exposed to conflict zones, shipping chokepoints and actors that profit from volatility. The answer isn’t more dependence, or more fossil fuels. It’s building an energy supply that is resilient, sustainable and harder to hold hostage. It’s time to prioritise renewable infrastructure that supports economic stability, communities and the climate, not pursue short-term gains from oil companies that exist because of volatility.  

In volatile markets, outcomes become less predictable, which in superannuation can mean increasing the risk of poorer retirement outcomes.  

This means that fossil fuel companies may look profitable during a price spike, but their business model remains highly exposed to risks they can’t control - including geopolitical shocks, policy shifts and long-term demand changes. In fact, over the long term, the (fossil-fuel dominated) global energy sector has underperformed global equity markets – as measured by MSCI, a leading provider of market return information.

Making fuel fairer 

Renewable energy is known to be cheap, abundant and is growing rapidly. So let’s close our eyes and imagine we live in a different world – dominated by renewable energy. 

Wind and solar are not immune to challenges, but they operate differently. They don’t rely on imported fuel. They don’t have to be physically shipped around the globe via a complicated supply chain. They’re not anywhere near as exposed to geopolitical conflict. They reduce our reliance on volatile global fuel markets and instead generate energy locally, predictably, at lower marginal cost. And they can make Australian consumers less sensitive to fuel shocks like the one we’re seeing now.  

Australia has made real progress in renewable electricity. We’re rapidly building solar and wind capacity. The fuel crisis has also prompted a renewed demand for EVs, which has surged to record levels.   

But when it comes to oil, we’re still highly exposed. Transport in Australia still relies overwhelmingly on liquid fuels. Most of that supply is imported, which leaves us vulnerable to exactly the kind of global disruption we’re seeing now.  

There’s also a growing conversation about how Australia manages and benefits from its own energy exports. Despite being a national resource and reaping billions from Australian resources, gas exporters in Australia – such as Woodside, Shell, Chevron and Santos – pay almost no tax.  

Some proposals suggest changes to gas export taxation could generate significant public revenue – potentially tens of billions a year – easing energy prices, supporting the transition to renewables and helping buffer households from global price shocks.  

We’ll be joining a Parliamentary Inquiry into the proposal. Consensus on the idea covers different perspectives, but they reflect a broader shift: recognising that energy policy isn’t just about supply; it’s about fairness, resilience and who the system ultimately serves. 

But as Australia’s energy system moves forward in some areas, it still carries risk in others, leaving us all vulnerable to some hard-hitting shocks.  

For investors, this is a question of strategy. Do you allocate capital towards systems that embed volatility –and maybe benefit from it in the short term? Or do you invest in the ecosystems that reduce our exposure to that volatility over time?  

“The investment implication is clear; in a volatile world, resilience has a price, and it as a value,” says Ian Learmonth, CEO of the Clean Energy Finance Corporation. “Climate-aligned private assets that support energy security and strengthen supply chains are not simply ‘sustainability’ exposures, they are increasingly part of the economy’s toolkit.” 

“The question is no longer about whether the transition will proceed; that’s a given. It is how efficiently capital can be deployed through geopolitical uncertainty. The ‘security premium’ is now upon us.” 

What it means for your super  

At Future Super, we’ve always taken the view that an economy powered by renewable energy will be more resilient and less volatile. Your super isn’t invested in fossil fuel companies, because we believe these long-term risks – to economic, environmental and humanitarian considerations – are too significant to ignore. 

Instead, the investments in your super can be allocated towards climate solutions like renewable energy, and the infrastructure and industries that support a more stable, sustainable economy. Over the long term, stability looks like a better investment to us – and much less likely to spark wars. 

This becomes particularly important as members approach retirement. Different investment approaches perform differently at different times. Global market shocks like this may allow fossil fuel companies to exploit rising prices or geopolitical tension, but they can also have lasting impacts on retirement balances.  

If losses occur close to retirement they’re harder to recover from – a concept known as sequencing risk. Reducing exposure to volatility is a way we and members can of safeguarding members against risk.   

So the focus isn’t on capturing short-term spikes. It’s on what positions our members’ super for the long term; not just in managing financial risk and safeguarding stable returns, but in terms of building the world those returns exist in. 

Super isn’t a one-year investment to be chased around like an untrained labradoodle. It’s a stable 30, 40, 50-year horizon. And over that timeframe, the global outcome becomes bigger than performance of any single sector. 

It becomes: what kind of system are we all investing in? And what kind of future is our money shaping?  

This moment, like others before it, reminds us that the systems we depend on shape the risks we live with. Money doesn’t just follow the system; it helps build it.  

Despite everything we know about climate and investment risks, a large part of the global economy is still tied to a fuel source that is exposed to conflict, disruption and volatility.  

At Future Super, we believe there’s a different path. One where your super helps build a system that’s more stable, more resilient, and better aligned with the future we all want to retire into. 

Ultimately, that’s what this is about. Not just navigating the next fuel crisis, but freeing ourselves from its grip altogether, by creating a world where it holds less power over all of us. We believe that our long-term future is the best investment there is.