Crypto World
The Strait of Hormuz Is Exposing a Blind Spot in the Energy Transition
But, with higher fuel prices eating into airline profits, companies are now poorly positioned to take advantage of the moment. To facilitate SAF production, airlines typically agree to long-term agreements to purchase the fuel. With high levels of geopolitical uncertainty, this is not the moment for executives to commit to a price premium without a regulatory mandate. SAF may sound nice, but it remains unaffordable.
The refiners who make SAF, on the other hand, are enjoying record profit margins. But they, too, see too much uncertainty as prices fluctuate wildly. On earnings calls this summer they say they are more focused on improving operations and executing existing plans than investing in new projects.
At a national level, the thinking should be different. SAF is more expensive, but a government can now clearly see the differential as an energy security premium as well as a sustainability advantage. It’s well worth paying to protect the country’s economy in the event of a Hormuz-like situation.
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