Too Much Oil Means Cheap Electricity
Oil has been declining as a source of electricity for four decades, and now it accounts for only 3% of the world’s total. It could move up significantly, as electricity demand rockets upward, and oil prices drop.
The US and OPEC+ are producing oil at record rates. The global electricity demand could double by the end of the decade due to AI data centers.
The calculation of fossil fuel use becomes clearer by the month. Renewables cannot meet the demand for the AI server farm. Residential and legacy businesses face a double-digit increase in electricity bills. Under extreme conditions, they may face blackouts.
Meta And Amazon Need Energy
Oil and coal were supposed to be on a quick exit path from electricity production. One thing that has become obvious as AI data centers are built is that their builders need fuel now and not later. In China, renewables are a large part of the energy mix, although the nation relies heavily on coal. In the US, the Trump Administration is dismantling renewables at an alarming rate. And the US is the world’s leader, for now, in AI development.
Something has to give. The AI data center business is controlled by some of the largest, most profitable, and most powerful companies in the world. A short list includes Microsoft, Alphabet, Amazon, and Meta. There are private companies almost as large in the AI business, led by OpenAI. None can afford to lose the race into tech’s future.
Oil is coming back.
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