The challenge when it comes to power demand for AI is that Europe and the US have actually gone through a very very long period of not really building out an electricity grid. Right? Electricity demand across Europe has actually fallen in the last 30 years. In the US it basically hasn't grown much at all. And now we're starting to see this huge demand from AI.
The challenge with energy demand for AI is really a geographical and localized problem. So even though it's not a huge share of the world's electricity, almost all of the world's demand is being served by a very few select locations. And that's a really really key local concern and puts pressure on local grids even if it doesn't consume a huge amount of the world's electricity.
The US is entering a period where natural gas demand is set to explode — driven by AI data centers, LNG export terminals, and industrial reshoring — but the pipeline infrastructure to move that gas simply hasn't been built. The bottleneck isn't the gas itself; it's the ability to get it from where it's produced to where it's needed.
The U.S. is facing a situation where natural gas has become the critical bottleneck for economic growth — not oil, not renewables, but gas. The buildout of data centers, the reshoring of manufacturing, and the electrification of everything are all converging on the same fuel at the same time, and the infrastructure to deliver it simply isn't there yet.
The US is going to be consuming a lot more natural gas going forward, and the infrastructure to deliver that gas is going to be a bottleneck. You're going to need more pipelines, more LNG export terminals, more storage. The question is whether the capital investment can keep up with the demand growth.
The issue is that the natural gas pipeline system wasn't built for what we're now asking it to do. You've got LNG export facilities pulling massive volumes to the Gulf Coast, data centers and AI infrastructure demanding firm power in places that never needed it before, and a renewables buildout that paradoxically increases gas demand by requiring backup generation for when the wind doesn't blow and the sun doesn't shine.
The fundamental problem is that America has been extraordinarily successful at producing natural gas, but the infrastructure to move it, store it, and export it has not kept pace with demand growth. We are essentially running a system that was designed for a different era, and the consequences of that mismatch are going to become very apparent very soon.
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