Trump Stumped By Rise In Electricity Prices
It has been inevitable that electricity prices would rise. Supply has been flat for at least a decade. AI server farms have caused a completely unexpected surge in demand. And, global warming has boosted the use of electricity. High demand meets low supply, resulting in higher prices. Consumers, who are voters, do not like it.
According to The Hill, “Rising power prices are becoming a political liability for Republicans as electricity costs outpace inflation.” Household income in America, when adjusted for inflation, has not risen for most Americans in years. Any large increase in household expenses is an unaffordable shock.
AI service farms are run by some of the world’s largest and richest companies. They will push every button they have to compete with one another. It is an all-out war for the future of the world’s technology.Â
The demand curve for electricity is just starting to steepen. An expected $300 billion in server farm capital investment will become more next year, and more the year after.
Brownouts
One solution is for tech companies to build their own electric grids, which will prevent the need to tap into the current ones that serve the balance of America’s residences and legacy businesses. Even with that model, there is not enough energy to go around. The Trump Administration has begun taking offshore wind operations offline. Building, or rebuilding nuclear reactors will take years. Solar is growing, but not fast enough. That leaves natural gas and coal.Â
The Hill is not alone in its belief that energy prices could be the defining issue of the next presidential election. That means every Senator, all Congress members, and some state and city officials will need to take a side. Voters vote for Congressmen, governors, and mayors. Microsoft, OpenAI, and Meta don’t. However, they can afford to lobby to the tune of hundreds of millions of dollars.
The battle will become between the homeowner who can’t afford electricity and faces rolling brownouts, and companies that have tens of billions of dollars in the bank.
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