High Noon at the Strait of Hormuz, Part 2: Biofuels, the swing producer, the market stabilizer

This is Part 2 of our two-part series — part one is here.

The Strait Is Still Open. But the Signal Is Clear.

The Strait of Hormuz remains navigable—for now. But the headlines are unmistakable: armed exchanges between Israel and Iran, U.S. warnings of retaliation, and a cease-fire that could dissolve overnight. This time, oil prices have dipped, not spiked. But that doesn’t mean the risk is gone.

Markets are no longer panicking. They’re absorbing.

And in that calm, we risk forgetting the lesson: America still lacks a rapid-response system for fuel price shocks. We have no domestic hedge. No swing capacity. No reserve refining strategy that favors U.S. producers over foreign suppliers. And every time global tensions flare, we’re left to watch the price of oil twitch and the energy system brace for impact—hoping this one doesn’t break it.

The solution isn’t more oil. It’s more control. More molecules, yes—but more importantly, more capacity to deploy those molecules when they’re needed most.

That’s where renewable fuels come in.

Not as a climate virtue signal. Not as a partisan talking point. But as a strategic reserve system with flexible production. One that can stabilize markets during crisis, scale up when prices spike, and act as a domestic hedge against global volatility.

We don’t need another SPR that competes with consumers by buying barrels off the market.

We need a refining reserve that works with U.S. producers—and for U.S. consumers.

Because in a world where the geopolitical clock can move faster than the market can react, resilience isn’t just about stockpiles. It’s about readiness.

I. The Problem: Fuel That Saves Can’t Sell

The U.S. energy system faces a structural vulnerability: fuels with proven environmental and performance advantages remain sidelined by systemic friction. Even as gas prices spike or war risks mount, domestic advanced biofuel facilities sit idle. The reason isn’t technical failure or market rejection. It’s misalignment.

Advanced biofuels offer high-octane performance, domestic production, and superior emissions profiles. But they face persistent exclusion because the system is optimized for incumbents. The General Theory of Evolutionary Systems & Information (GTESI) reveals why:

• Low IPR (Informational Persistence Rate): The public and policymakers lack an accurate, persistent narrative about what these fuels actually do.
• High SCD friction (Structural Coherence Delta): Infrastructure, from pipelines to pumps, is engineered for fossil fuels, blocking biofuels from market access.
• High TRFI (Thermodynamic Reinvestment-Forced Incoherence): Policy and consumer habits reinforce the status quo, resisting even high-performance alternatives.
• Untapped EED (Entropy Export Delta): The full climate, economic, and security value of these fuels remains unrealized because they are kept out of meaningful deployment.

These systemic barriers have created a perverse outcome: the fuels that could reduce emissions, stabilize supply, and lower prices are unable to scale or sell. Volatility persists. Investment stalls. And the energy system remains brittle. More about GTESI here.

II. Historical Blueprint: Swing Producers and Stability

We’ve solved this kind of volatility before—not by flooding markets, but by strategically managing capacity. Between 1880 and 1973, global oil prices were astonishingly stable. That stability wasn’t a market miracle. It was engineered.

Rockefeller and Standard Oil brought order to a chaotic market by centralizing refining and transportation, allowing for coordinated supply decisions. He didn’t seek high prices—he sought consistent ones. This coherence allowed long-term investment and public confidence.

The Texas Railroad Commission (TRC) followed suit. In the 1930s, it imposed prorationing quotas that maintained spare capacity and avoided gluts. This “swing producer” role proved crucial during the Suez Crisis and Six-Day War. The U.S. had capacity it could activate instantly. That era of stability ended when U.S. spare capacity ran dry in the 1970s.

OPEC tried to replicate this model, but internal divisions and global spot trading prevented true coordination. As McNally writes in Crude Volatility, today’s oil market is truly free—and therefore truly volatile, swinging between $30 and $100 per barrel with little warning.

Lesson learned: markets don’t stabilize themselves. But capacity—held in reserve, deployed strategically—can.

III. The Solution: A Biofuels Swing Producer – The Refining Reserve

We propose a modern analog: a Biofuels Swing Producer, built around a flexible “refining reserve.” This is not a stockpile. It’s a coordination mechanism.

The reserve would manage “warm standby” refining capacity for advanced biofuels: fermentation and upgrading systems that can rapidly scale up or down, depending on market conditions. This is domestic swing production for moments of crisis or distortion.

Key tools include:

• Guaranteed offtake contracts
• Adjustable blending mandates
• Targeted infrastructure upgrades (pumps, blenders, logistics)
• Regional distribution hubs to lower access costs

Instead of the federal government buying oil barrels, it enables U.S. producers to sell advanced fuels when they are most needed.

IV. Benefits by Stakeholder

For Industry:

• Investment Confidence: Reduces price volatility, increasing investor certainty and enabling scale-up.
• Revenue Stability: Smooths income cycles and improves access to capital.
• Infrastructure Access: Lowers SCD barriers through strategic upgrades.

For Consumers:

• Price Relief: E30 blends can deliver premium performance at significantly lower cost—as much as $1.02/gallon below premium gas.
• Real Choice: The market gains a true “fourth grade at the pump”—high-octane, low-cost, U.S.-made.
• Trust: Aligns price with performance, correcting the false equivalence between octane and cost.

For the Nation:

• Energy Security: A domestic hedge against global volatility.
• Systemic Coherence: Aligns thermodynamic, symbolic, and economic benefits.
• Rural Growth: Builds a stable demand foundation for agricultural innovation and investment.

V. Elevating the Narrative: From Mandate to Mission

Public narratives still reduce biofuels to a farm subsidy or a political compromise. But this is outdated and dangerously narrow. Like Yosemite needed John Muir to bring everyday Americans up to the mountains, knowing that they would return as conservatinoists , biofuels need a new frame.

This reserve is not just an economic tool. It’s a narrative correction. A chance to demonstrate performance, security, and economic resilience—not as an abstract promise but as a visible presence at the pump.

It can stand for:

• Freedom from volatility
• Freedom from scarcity
• Freedom from illusion

And above all: the freedom to choose a fuel that performs.

VI. Conclusion: Resilience by Design

GTESI reveals that energy transitions only work when systems align across four domains: structure, thermodynamics, information, and symbol. This alignment doesn’t happen automatically.

The Biofuels Swing Producer is a deliberate intervention:

• It restores IPR through visibility and consumer trust.
• It reduces SCD and TRFI through coordination and infrastructure.
• It unleashes EED by giving advanced biofuels their rightful role in the national energy mix.

The U.S. doesn’t lack fuel. It lacks flexibility.

This proposal doesn’t compete with oil. It complements resilience.

Let’s build the system that gives us real choices when we need them. Let’s stop treating volatility as fate. And let’s stop locking out the fuels that could stabilize, empower, and defend the American economy when it matters most.

This is not about ideology. It’s about readiness.