Some acronyms are helpful and useful and elegant. SCUBA, self-contained underwater breathing apparatus. LASER – Light Amplification by Stimulated Emission of Radiation (technically, LABSEOR but poetic license allowed apparently). PIN – Personal Identification Number. KFC (no one wants to admit they know that one). All have become common words and save oh so much talking.
Ever heard of MBWA? Too bad if you haven’t. Look beyond its inelegance, and the fact that it sounds stupid if you try to use it like LASER. It’s presence, or absence, is rewiring the entire world. Even more than is POTUS.
MBWA is Management By Walking Around. The concept took off in popularity as management fads sometimes do, another tool by which management consultants could earn exorbitant fees – by suggesting something uncommon yet completely useful.
Why was MBWA uncommon? Because of the somewhat permanent gulf between top-of-the-pyramid decision makers and the grunts on the front line. Those at the top have strategic elements to consider, and a structure to help provide them the information they need to make the really big calls. Whether or not a line operator’s job is made easier by the location of the bolts bucket is the sort of thing left to appropriate levels far down.
But the absence of MBWA, and those insulating layers, can cause problems of absolutely epic proportions. We are now seeing that play out in real time. The world is changing rapidly, and only partially because of Trump. The real action is coming from the plains of eastern Ukraine, and it is changing everything. What is happening there is a textbook lesson for the ages; one side learning from the ground up – knowledge transfer upwards – and the other heading towards unimaginable problems caused by the opposite. And in case you found yourself on an energy website and wondering what this has to do with energy, the answer is everything. But more on that later.
MBWA as a fad gained such significance that it was studied as a phenomenon academically. Researchers from ASU, Cornell, and UofP (saved so much typing there) conduced field experiments of sending managers to visit branches. They found that, “sales at branches increased significantly in the days before the visits and the effect persisted for about a month after the visits…working through improved employee motivation” LOL. They had to have been business school profs, to analyze the entire concept in terms of sales benefits.
The real learnings, an order of magnitude more important, is what management can learn by walking around. And in the case of Ukraine, it is everything.
Now, this isn’t a screed imploring leaders to go wander around the battlefields of Ukraine, although the idea is kind of appealing. No, this is a call to arms for leaders to forget what they think they know about a lot of things – opinions buttressed by legions of well-educated establishment types.
Ukraine, faced with invasion from a vastly larger enemy that treats soldiers like firewood, seemed to have no chance against Russia. Three days into the war, Russian forces were deep inside Ukraine, capturing nearly a quarter of the country. But Ukraine, with its back against the wall, has built from the ground up a military machine that is taking the fight to Russia in ways no one imagined a year ago President Trump told President Zelenskyy in the White House in February 2025: “You don’t have the cards.” And they probably didn’t, then; but by understanding in great detail what was happening at ground level, Ukraine was able to build up systems that are pounding Russia – not just on the front line, but from deep within. And this is changing everything.
The global military industrial/strategy apparatus is about as powerful a presence as can be imagined in civilization. Military might is widely understood. Giant aircraft carriers. Hyper-expensive fighter jets that have absolutely wild performance capabilities. Giant missiles. Each a flex, a giant peacock strut showing other nations to watch out. Russia is most famous for their military parades, marching gigantic missiles and endless rows of tanks through Red Square to show the world how much fun they are. North Korea as well, “You better stop laughing at me, look at all my guns.”
Thanks to what Ukraine has been able to pull off, hopefully successfully, we are seeing that entire global military infrastructure be shredded in real time. Supporting evidence for statements like that come from all over; from burning Russian oil refineries – more than a quarter of Russian oil processing capability has been hit by drones – or from enlightened people at the heart of the military infrastructure. Here is former US Army General Petraeus, a guy who commanded US forces in Afghanistan and Iraq: “We [the US] have not remotely learned all the lessons we should have from war in Ukraine. That is the future of war right now…tanks can’t maneuver any more, they can’t survive, armoured vehicles…hopefully this is going to drive home the absolute imperative of true institutional change in the United States, overhauling the entire concepts of war, and operations, the attendant organizational changes sweeping you know, unmanned systems force equal to the army and navy, air force in Ukraine, for example…change how you train, and operate, how you educate your leaders, change obviously what you buy and even how you buy it because you want the opportunity to make software changes every week or two, hardware changes every few weeks…”
That is kind of a big deal. Military equipment manufacturers – missiles, fighter jets, armoured fighting vehicles, you name it – are a pillar of many economies, and absorb a lot of government dollars. The website Missile Defense Advocacy Alliance, a pro-missile advocacy website that “seeks to generate public support for missile defense systems” which seems to be a very odd thing to be doing; I’m not sure who is against missile defense systems, but anyways, the MDAA site lists how much missiles cost, and it is a lot (which is maybe why they need to build public support). A ‘Standard Missile 3 Block 1B costs about $10 million, a veritable bargain next to a Standard Missile 3 Bock IIA at $28 million. Stinger missiles, those cute little shoulder fired things, are $480,000 apiece. A new Abrams M1 tank is $10 million to $15 million.
Any one of those expensive pieces of equipment can be disabled or destroyed by drones costing tens of thousands of dollars. This is new information. Two years ago that imbalance was not on anyone’s radar. Today it is fact.
The US government military budget is almost $1 trillion, with much of it going to the huge companies that produce ten million dollar missiles that are not a match for hundred thousand dollar drones. You can imagine that there is high-level, silver-haired, impeccably tailored panic happening at the big legacy vendors, whose business model is disappearing before their eyes.
They can learn and adapt, by MBWA, or maybe call it MBWA-lite, by paying attention to the front lines of what is happening in Ukraine. Many countries in the world are inviting Ukrainian expertise, with good reason.
Warfare, and power itself, is being transformed before our eyes.
How quickly can leaders adapt? Now that is a big question. Ukraine is just such a great example of nimbleness under duress, which contrasts so strikingly with certain leaders, say EU and maybe even say the Great White North, that imagine they can enact rapid adaptation within the existing bureaucracy. They want action, but only if the cherished anchors of stability remain in place. In Canada, we create brand new government departments for the sole aim of making governments more efficient. It sounds too crazy to be true, but that is exactly what it is. We see a government nearly paralyzed by decades of stultifying interlacing approval chains, buttressed by a somewhat corrupt ecosystem of governmental buddies and hangers-on that ‘earn’ business through connection as opposed to competence.
Those are not good ways. Maybe the situation must be critical to adapt quickly, as Ukraine is showing us. To borrow a phrase from Nassim Taleb, it is a good way to develop antifragility. Absorb and learn from mistakes to make something stronger. And do it quickly. Antifragility means not just withstanding challenges, but growing stronger from them.
And we need to pay attention and learn from those people that are adapting. Ukraine’s former Commander-in-Chief of the country’s Armed Forces, a General Zaluzhnyi, recently spoke about the global impacts of Ukraine’s evolving war effort against Russia. His observations are profound, and of the utmost geopolitical consequence. His observations, which could only have come through Ukraine’s valiant battle against a much larger foe, absolutely must be grasped and absorbed in every government around the world that doesn’t want to become a footnote. It doesn’t matter whether a country’s current leader is a Nobel Prize winner, or a PhD, or a business tycoon, or what. They had better listen to guy in camo.
Here is what he had to say. Power, as we have known it for a very long time, is gone. “International alliances, above all NATO, have lost part of their ability to guarantee the security of their members. This is due primarily to technical unpreparedness for the use of force in modern warfare. It is also driven by the political inability of democratic institutions to make unpopular decisions… All of this is unfolding against the backdrop of unprecedented scientific and technological progress and, as a consequence, the emergence of entirely new means and forms of warfare. Despite the fact that our doctrines and experience will likely play a defining role in shaping the future security environment, the emergence of new cheap and mass-produced weapons — against which no effective physical protection yet exists. This gives virtually any country the ability to project this new form of power against any opponent. These new weapons have transformed the very concept of warfare itself: from the destruction of an adversary’s military potential to the destruction of the state itself, regardless of whether a particular target or group of people belongs to the military sphere. This is a war in which there is effectively no distinction between the front line and the rear. Reaching any individual or object deep in the rear has become significantly easier and cheaper than advancing the frontline even by twenty meters.”
This is rather important information. Much of our existing state defense architecture is being blown up before our eyes. For everyone.
What does all this have to do with energy? Getting there, patience please, but a bit more background is worthwhile. Per General Zaluzhnyi again, as translated on X via a most helpful fellow, Giorgi Revishvili: “What is modern war? The era of extremely expensive precision-guided weapons, which were the true game changers of the twentieth century, has been replaced by weapons of attrition. These are cheap, mass-produced, yet highly accurate weapons that rapidly exhaust expensive weapons systems — the very systems upon which NATO doctrine is largely built. These weapons of attrition continue to evolve systematically and effectively. If someone thinks these are simply drones that can quickly be purchased for an army, then they are deeply mistaken. By 2026, drones are increasingly becoming merely the final instrument of a broader technological system. Artificial intelligence is now the primary factor driving the development of these unmanned systems, leading to the final evolution of swarm capabilities and autonomy. It means that such systems are capable not only of executing human commands, but also of independently maintaining routes and recognizing obstacles. They can change trajectories, return to designated points, and maintain operational stability even after the partial loss of navigation or communications. Most importantly, they are capable of distinguishing targets and making strike decisions independently… The transformation of the tools, forms, and methods of warfare, against the backdrop of the collapse of the existing world order, requires more than simply replacing outdated weapons.”
We can read through this commentary and see that military systems are going to join the AI race as well. Big tech and their ‘hyperscale’ projects get all the headlines, because they are spending just stupid amounts of money. The four biggest tech companies in the US are spending $600 billion this year alone on AI/data center development. Nvidia, the main supplier of AI chips, is a company now worth more than $5 trillion. The reason it is worth so much, or maybe better said the reason the market values it so highly, is that Nvidia’s revenue has been growing at a crazy pace. This chart shows Nvidia’s quarterly Data Center revenue growth, illustrating how Q1 2025 data center revenue was $22.6 billion, and Q1 2027 revenue is expected to be $75 billion.
All that money is going into AI chips that will be housed in data centers that will consume vast quantities of energy. It is hard to get a grasp on firm overall numbers, because the landscape is changing so quickly, but many credible sources are building scenarios, from their own perspectives, and these perspectives are not disagreeing with each other by very much, so likelihoods are emerging. TC Energy, in the most recent quarterly results, has mapped out 45 Bcf/d of new natural gas demand in North America over the next 5-6 years, which is the equivalent of finding and bringing onstream another Permian and Haynesville. Combined. Or more than two Canada’s worth of production. TC is bringing the receipts; new capacity additions in the US are significantly oversubscribed.
A US organization called Grid Strategies built a new demand forecast from another angle, compiling new load forecasts from US regional system operators. Their data does not include any LNG demand, and even then the group forecasts 26 Bcf/d of new data center-driven natural gas demand by 2030 – quite consistent with TC’s outlook. EQT, the US’ largest natural gas producer, is perhaps unsurprisingly the most bullish, envisioning up to 300 GW or 50 Bcfe/d of data center power demand over next 5 years, almost all of which would be fired by natural gas. GE Vernova chips in, saying gas turbines are sold out for years, with the backlog at approximately 100 GW or 17 Bcf/d worth. And GE Vernova is only about a third of the gas turbine producer market; other big players are similarly backordered.
And those data centers will be built, it is just a matter of where.
It is not just the biggest tech companies that are feeling the need to join (and win) the AI race, although they are the biggest spenders. For any global leader worth their salt, that are willing to at least do some figurative if not literal MBWA with respect to the war zones of Ukraine, it is obvious that AI is the key to future defense and warfare. If the US is learning anything from Ukraine’s incredible military transformation, it will turn a large chunk of that trillion dollar budget away from hyper-expensive missiles and into AI. Here is another quote from a senior Ukrainian military leader: “Ukraine’s battlefield advantage often begins at the lowest level. Soldiers, sergeants, junior officers, volunteers and technical specialists are often the first to meet a new threat — a new drone tactic, a new assault pattern, a new electronic warfare problem. They cannot always wait for a manual. That is where Mission Command matters. A senior commander defines the intent and the desired result. The commander on the ground decides how to achieve it.” Russia is an example of old-school top down thinking – control everything, especially soldiers. Ukraine is MBWA in action.
And what do we know for certain about the future of AI? Not much – the trajectories go all over the place – EXCEPT that it requires vast quantities of energy. There is no way around that. Energy consumption is the one firm reality about AI. Down the road, AI may well be powered by nuclear or solar/space powered data centers (Elon Musk’s dream) or some combination of solar and storage and nuclear and whatever might come down the pipe. But for the next five years or so, the period that will see AI sweep through all aspects of society including (and maybe especially) through the military space, natural gas is going to be the fuel that makes it happen.
The energy world is changing so rapidly that it is disorienting. In 2022, Germany came to Canada in desperate search of new LNG supply. The Canadian federal government brushed them off, saying there was ‘no business case’ for LNG and offering instead a fictional creation called ‘green hydrogen’ for which no human has ever figured out the creation and transportation of said stuff, at scale. Now, a scant 4 years later, Canada is boasting about a new LNG supply agreement from Canada to Germany. ‘Green hydrogen’ remains on the Fiction shelf, perhaps to rise again some decade in the future.
So, we are adapting, somewhat, but by grabbing the lowest possible hanging fruit. The German LNG deal is from an LNG terminal that was more than likely to proceed anyway, although the expectation was that Asia would be the primary buyer of off take rather than the much more distant Europe. Of course, LNG development and supply contracts with any country are great news, but represent about a tenth of a percent of the sort of adaption that we should be striving for.
Leaders need to do more MBWA; they need to understand what is happening at ground level, the things that are changing at warp speed, and they have to interact with the people making it happen. And listen to them. Maybe then, if that skill set can be absorbed, Canada will find some modicum of similar urgency to governing this big cold country.
At the peak of the energy wars, The End of Fossil Fuel Insanity challenged the narrative of imminent fossil fuel demise, facing into the storm. And now everyone is coming around to this realization as well. Read the energy story for those that don’t live in the energy world, but want to find out. And laugh. Available at Amazon.ca, Indigo.ca, or Amazon.com.
Email Terry here. (His personal energy site, Public Energy Number One, is on hiatus until there are more hours in the day.)