AI Demands For Electricity
To understand just how big a challenge this is, The Financial Times reports, “America needs to find an extra 45GW for its data farms… equivalent to about 10% of all current US generation capacity, or 23 Hoover Dams.”
The only near-term solution is to build over 100 natural gas fired power plants. The electricity grid cannot handle this much increased demand, so AI Data Centers will need to be built within the large natural gas producing basins, which are Appalachia, Permian Basin, Oklahoma, South Texas and South Louisiana.
And to understand the thinking behind the gamble, Business Insider reports, “In the minds of tech CEOs, getting AI right is a binary proposition. If they get it right, they get to survive and thrive as the tectonic plates shift; if they get it wrong, it’s the end.”
As Joe Brusuelas points out, investors are making a huge gamble of their own. “Investors are anticipating a surge in productivity with the arrival of AI. But should this buoyant view fall even just a little short, there is risk that equity valuations will need to adjust lower, reflecting the fundamental condition of the real economy.”
MY TAKE: If you own AI stocks, my advice is to set you stop loss orders tight and sell covered calls.
Dan Steffens
Energy Prospectus Group |
