Gas Prices Fall As Electricity Price Surges
A look at energy prices over the last two years shows that the price of gasoline has fallen sharply as the supply of crude has risen. Alternatively, the price of electricity has gone up sharply. Much of this has to do with demand, particularly through AI and air conditioning use.
From the consumer’s standpoint, the drop in gas prices frees up discretionary income. During the early stages of the Russian invasion of Ukraine, gas prices neared $5. Now, across much of the US, the price of an average gallon of regular is well below $3.
The most outrageous forecast of electricity usage came from Eric Schmidt, the former chairman of Google. He says that, within a few years, AI will use 99% of all electricity generated worldwide.
Gas Prices Below $3
If Schmidt is close to correct, the price of electricity could double or triple. At some point, the issue of supply and cost will become a political issue.
A critical part of the conversation revolved around EVs. The price of electricity could rise to the point where its fuel costs no longer favor EVs over gas-powered cars. This is particularly true if gas prices continue to fall. The idea of peak oil and a drop in supply does not appear to be an issue in the next several decades.
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