The problem is in extending the concept infinitely to assume that there must then be energy that can be located someplace and in a certain quantity, and if it cannot be located, call it potential energy. With these concepts, there is an assumption that energy is an entity, like phlogiston, which must always exist in a certain quantity. That's not what energy is. What Energy Is. So let's try to conceptualize what energy is.
Energy is observed as force setting matter in motion.
It was originally called living force. Since force and motion are interchangeable, it is arbitrary to say that energy is in one but not the other. But light also exists as something which is not setting matter in motion, while it is moving through space. Failing to find it should have been of little significance. Since it interacts thoroughly with matter, its motion should be influenced by the earth, which would negate the Michelson-Morley experiment.