Rob Thummel, principal director of the main portfolio of Tortoise, examines his expectations for oil prices, the impact of artificial intelligence in the energy sector and the political decision of the Federal Reserve.
Electricity prices have jumped over the past year, double the overall inflation rate due to the increase in demand and increased investment in aging grid infrastructure.
Prices increased by 4.5% in May on an annual basis, according to the consumer price index of the Bureau of Labor Statistics, a large measure of the cost of daily goods such as petrol, grocery and rent. The overall inflation rate of all goods and services in May was 2.4%.
The request for electricity reaches a record of all time, according to Phil Flynn, principal energy analyst in Price Futures Group and contributor to Fox Business.
This was the case even before the first major heat wave of the season brought some of the hottest temperatures observed in a century in the northeast cities on Monday, resulting in an increase in the use of the air conditioner, more demand for electricity. Flynn said that despite improving the efficiency of the air conditioner, “the overall impact on electricity consumption remains substantial but necessary for health benefits”.
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The request for electricity reaches a record of all time, according to Phil Flynn, principal energy analyst in Price Futures Group and contributor to Fox Business. (Joe Raedle / Getty Images / Getty Images)
Dangerously hot conditions should also persist, with the National Weather Service Office in New York warning on Monday that heat index values up to 110 degrees are expected in parts of southern Connecticut, northeast of New Jersey and Southeast of New York.
The National Weather Service Office of Chicago posted on X Tuesday that heat indices could continue to exceed 100 degrees in the region.
Children play in an open fire mouth while temperatures went up in the mid -90s on June 23, 2025 in Chicago, Illinois. (Scott Olson / Getty Images / Getty Images)
The rapid increase in electricity demand is also largely motivated by the data centers necessary for the training, deployment and management of artificial intelligence models, according to Flynn and Rob Thummel, main portfolio director at Tortoise Capital.
Thummel told Fox Business that data centers have a massive computing power that performs the required tasks for AI applications to work, but they count on the energy infrastructure to generate, transmit and distribute electricity.
The rapid increase in electricity demand is also largely motivated by the data centers necessary for the training, deployment and management of artificial intelligence models. (Amanda Andrade-Rhoads for the Washington Post via Getty Images / Getty Images)
The increased investment of hyperscalers that build larger data centers combined with increased calculation power contributes to higher electricity demand after decades of stagnant electricity demand, according to Thummel.
Flynn said that electricity consumption of the data center had tripled at 176 terawatts in the last decade and could double or triple in the three years.
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The International Energy Agency provides that the American economy will consume more electricity in 2030 for the processing of data than for the manufacture of all combined energy intensity products, in particular aluminum, steel, cement and chemicals, largely due to the use of artificial intelligence.
Another factor increasing costs for consumers is capital investment in electrical infrastructure, according to the Energy Information Administration (EIA).
These investments were more than doubled between 2003 and 2023 due to a combination of factors, including replacing and upgrading of the generation and aging delivery infrastructure to withstand damage caused by fires and storms, as well as public services which install the first generation of natural gas, then the wind and solar generation and the storage of batteries. New lines were connected to renewable resources and new technologies, such as smart meters, sensors and automated controls, have been added to the system, which increased costs.
Another factor increasing costs for consumers is capital investment in electrical infrastructure. (Joe Raedle / Getty Images / Getty Images)
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The problem is that the current demand goes beyond the country’s supply capacity, which “exacerbates only the problems with our aging infrastructure and electricity production methods”, according to Flynn, which added that private industries are now going to the production of private electricity to meet their needs, which requires more infrastructure investment.
Thummel said that “the American electrical network needs investment to modernize to maintain reliability and develop in anticipation of higher demand” and that “increasing the use of a lower and higher natural gas to produce electricity can help maintain the costs of managed increased consumer”.
Set the grid, however, “will be the biggest challenge for our economy in the future”, according to Flynn.
“We must increase the capacity of electricity so that we can be the leader of technologies that will lead the economy of the future, which are artificial and other data centers,” he said.
