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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Venezuela's Oil Won't Fix Shortages
- Venezuela has massive oil reserves but degraded infrastructure means ramping production will take years and hundreds of billions.
- Michael Kao argues this delays any oil supply shock and keeps him structurally bearish on oil.
Electrification Increased Grid Fragility
- Premature electrification increased grid fragility by adding intermittent renewables that require peaker reliability.
- Kao says natural gas becomes the default baseload solution because coal and nuclear face political and timing barriers.
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.
