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# ▫️ Electricity Prices Rose Twice as Fast as Inflation Last Year
- URL: https://core-sector.ghost.io/electricity-prices-rose-twice-as-fast-as-inflation-last-year/
- Published: 2026-05-24T14:30:00.000Z
- Updated: 2026-08-28T17:07:39.000Z
- Description: Data centers will drive 40% of electricity demand growth this decade. The grid was not built for this.
- Author: Marcus Grant
- Tags: deep dive, #beehiiv, #Migrated-1787936590251, #Import 2026-08-28 17:03

![Logo core sector](https://storage.ghost.io/c/8c/09/8c09bf02-2863-4e2f-9427-328b96b722da/content/images/2026/08/header_1-t-1769531909-61.png)

## ▫️ THE CORE TOPIC

For a century, oil was the resource that moved the world. Wars were fought over it. The price of crude set the rhythm of the global economy.

That role is shifting to electricity. US data center power demand is projected to climb from 31 gigawatts in 2025 to 66 gigawatts by 2027, more than doubling in two years, according to Goldman Sachs Research. Electricity prices rose 6.9% in 2025, more than double the 2.9% headline inflation rate. Wholesale power on PJM, the largest US grid serving 67 million customers, jumped 76% in the first quarter of 2026.

The structural driver is artificial intelligence. AI data centers run dense computing around the clock, drawing power like small cities. The companies racing to build storage and generation now sit at the center of the decade's most important capital story.

## ▫️ THE MECHANISM

Electricity behaves like oil did in the 1970s: demand is surging, supply is slow to build, and whoever controls capacity holds leverage. Four gears drive the shift.

- **Demand outruns supply.** Utilities raised five-year peak demand forecasts from 38 gigawatts in 2023 to 128 gigawatts in 2024\. Generation cannot scale that fast.
- **Capacity costs explode.** On the PJM grid, capacity costs surged 398% in early 2026\. That lands on ratepayers, not tech firms.
- **Storage becomes strategic.** Utility-scale batteries shift power to peak demand. One major producer booked $12 billion in energy revenue in 2025.
- **Geography concentrates risk.** Northern Virginia holds the densest data center cluster on earth, straining one regional grid.

Whoever supplies reliable power now holds the leverage oil producers held fifty years ago.

![](https://storage.ghost.io/c/8c/09/8c09bf02-2863-4e2f-9427-328b96b722da/content/images/2026/08/electricity-t-1779548279-1.jpg)

## ▫️ THE CASE FILE

Consider October 1973\. The OPEC oil embargo cut supply to the United States. Crude prices quadrupled from roughly $3 to nearly $12 per barrel within months. Gas lines stretched for blocks. The economy entered stagflation that lasted most of the decade.

The lesson was permanent. A resource the modern economy could not function without had become a strategic weapon. Capital flowed to whoever controlled production. Energy producers that had been sleepy utilities became the most important companies in the world through the late 1970s.

Today the same dynamic is forming around electricity. The resource is different. The structure is identical.

## ▫️ THE PRESSURE TEST

Electricity as the new strategic resource is real. The risks are also real.

- **Demand forecasts vary wildly.** Estimates for 2028 data center demand range from 325 to 580 terawatt-hours. Planning on the wrong number is costly.
- **Policy can redirect the trade.** Several states now require tech firms to fund their own power.
- **Gas price volatility feeds through.** Utilities lean on natural gas, whose price swings add uncertainty.
- **Political backlash is rising.** Rate hikes up to 57% in some states made power a midterm flashpoint.

These risks are real. But investors who track where power capacity is being built have positioned ahead of the crowd that waits for the headline.

## ▫️ AUTHOR'S LENS

| I came up watching oil set the price of everything. The country that controlled the barrel controlled the decade. I am watching the same script rewrite itself around the electron.I do not chase the loudest AI stock. I follow the power. Whoever keeps the lights on for the data centers will earn more than the data centers themselves.Build the structure. Ignore the noise. | ![Marcus Grant](https://storage.ghost.io/c/8c/09/8c09bf02-2863-4e2f-9427-328b96b722da/content/images/2026/08/for_lens_-t-1769788746-60.png) |
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