US Data Center Energy Train Wreck

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The U.S. Data Center Energy Train Wreck

May 26, 2024 Stu Turley

The “Energy Transition” Won’t Happen – Mark Mills

May 25, 2024 Stu Turley

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Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

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Michael Tanner: [00:00:15] What’s going on, everybody? Welcome into the Tuesday, May 28th, 2024 edition of the Daily Energy News Beat stand up. Here are today’s top headlines. First up, the U.S. Data Center energy train wreck has arrived. Love this one. Next up, U.S. power demand surge spurs 133 new gas plants amid climate targets. Next up the quote energy transition won’t happen. A great opinion piece by friend of the show Marc Mills. And then finally Stu will finish up with Texas Power. Demand breaks may record again as prices soar in heatwave. I’ll tell you much. I am dying, Stu, so this would be an interesting one to cover. He will then toss. I will quickly cover what happened in the oil and gas markets today. Overall markets. We were closed on Monday as we were celebrating Memorial Day. So, we will just quickly touch on where oil and gas prices went, and then we’ll let you guys get out of here and start your first, short week. As always, I’m Michael Tanner, joined by Stuart Turley. We want to quickly say, you know, just to, to all the, to it to everybody who lost it was family members who have lost their lives, in service of our country. On Memorial Day, we we thank you. We appreciate your service. And, now we’re just, hope everybody had a great off day, soaking all that in. [00:01:37][82.1]

Stuart Turley: [00:01:37] You bet. And, shout out to all of our veterans. I know that my dad was the only one that came back from Vietnam, so. Yeah. All right. Hey, the U.S. data center energy train wreck. Oh, my goodness. Ron Miller wrote it. Great article on this one. And when you sit back and think about the current data center electricity demand globally, data centers consume 1 to 1.5%, 1 to 2% of overall energy. And this will only rise to 3 to 4% by 2030. Here’s a little bit of a weirdness, though, on this. Data centers use more electricity than entire countries. Wow. Data centers. I mean that there’s a chart in there from, inner data and IEA, data centers can use more than Nigeria, Colombia, Argentina, Egypt, South Africa, Indonesia or the UK. Holy. Oh. [00:02:40][62.5]

Michael Tanner: [00:02:41] That’s. Yeah, it’s it’s pretty crazy when you’re talking about, 1 to 2% of overall world energy and then that by 2030 could be somewhere between 3 and 4%. And I love how we actually throw this, the first chart up here. Data center power demand. I mean, there’s a significant chunk right now that they’re estimating that’s going to be used for AI. It’s something that, Toby Rice talked about six months ago, and he, he, he, he got a little pushback or people were laughing at him when he was talking about that, but he was spot on considering where things are going. We saw today Tesla or excuse me, it was a couple days ago. Tesla okayed their like $7 billion supercomputer. Well, something’s going to have to cool that that that could. And as these things roll out more and more, it clearly will become, you know, I mean, OpenAI has shown you sort you can solve the AI problem by buy more compute and more power. So you got to do something with it. [00:03:35][53.8]

Stuart Turley: [00:03:35] Well, and it brings up a couple of, the, the following, articles here it is. All related. People are now going to say it’s okay to kill the, whales in order and, you know, to not go after the environment. If you take a look at the amount of compute million, compute instances, 400 terawatts are needed right now in order to do 2023 for the workload for data centers. Unbelievable statistics. I mean, it’s hard to even put your numbers around that. [00:04:10][35.1]

Michael Tanner: [00:04:11] Yeah. And and they compare the amount of, of of usage needed for a ChatGPT query and a Google search. It’s pretty unbelievable. It’s about ten times the difference. [00:04:21][10.0]

Stuart Turley: [00:04:22] It is. And and so as we go through this energy thread today U.S. power demand surge 133 new gas plant amid new climate targets. Here’s where it is absolutely horrific. And this morning I’m going to give a shout out to Irina Slav, David Blackman and, Tammy Nemeth and myself. We were on the energy realities and we had Tom Kirkman on who is battling with AI and having a great time. And we talked about this. I mean, Tom Kirkman is a nut. Absolutely love that man. And so when we talk about projected electricity use in the United States from 2022 to 2050, in terawatt hours, we’re in 2022. We’re at. About, four terawatt hours, in. [00:05:14][52.4]

Michael Tanner: [00:05:15] 24,000 terawatt hours. [00:05:17][2.0]

Stuart Turley: [00:05:18] Let’s not that excuse me for that. Yeah. Four. 4000. And now we’re going to be at 5178 terawatt hours in 2050. How are we going to get there? And then balancing the climate goals. It’s not going to happen unless we start putting in hydrogen. So here’s where it gets funny. They’re going to start putting in this old shuffle and bake. There are the 133, gas plants coming online by Duke Energy by all these other big, utilities. And they have double tagged these is saying they are hydrogen ready and capable. [00:05:58][40.4]

Michael Tanner: [00:06:00] Getting around the net zero thing. [00:06:02][1.5]

Stuart Turley: [00:06:02] Exactly. And hydrogen is not going to work. I’m just telling you right now, I love hydrogen. It takes more energy to create. It is a smaller molecule. It is corrosive. And it goes boom. And Hindenburg is not a good brand label for a car. You know, I’m going to go out on a limb. Okay. So when you take a look at how we’re getting these, the utility companies are actually playing on the, regulatory issues coming along and they’re saying, oh, they’re hydrogen ready? Right. Yeah. Yeah. They’re never going to run hydrogen. They’re just putting in natural gas plants. [00:06:44][41.3]

Michael Tanner: [00:06:44] Yeah. It’s, it’s pretty I mean, I don’t blame this is a great follow up from the last article, because it shows you if we are going to see this expansive growth of data center power, which is using more power than some countries. Well, the energy to supply those data centers has got to come from somewhere. And it’s not going to come from wind. It’s not going to come from solar. Because guess what? You want to do your ChatGPT query at night. Well, guess what’s not shining it the at night? The sun? Yes. What’s not really blowing at night? The wind. So you have this comparison of well where is that quote unquote baseload straight line energy going to come around. What a data center draws it draws a constant stream of power. Whether or not you’re utilizing that server farm or not. It’s not like you wind down half the racks. All of a sudden there’s less power. I mean, there is a little bit, but there’s also just a level of power you need to keep if any of all of those servers on. So this is a problem that people are going to have to solve. You know, we’ve already started seeing some moratoriums on new data center builds out because they haven’t been able to find the power. You know, I mean, good for them for going to natural gas. Everybody see, the free market always ends up at the right decision, regardless of how much hand-waving goes over here. It really is a testament to our free market system that in light of all of this ESG push, people are still getting these, natural gas plants approved because it’s the only way people aren’t dumb. At the end of the day. [00:08:15][90.3]

Stuart Turley: [00:08:15] We know I’m going to say some people aren’t dumb. At the end of the day, let’s go to energy. Transition won’t happen. Mark Mills I love Mark Mills. He is a, an absolute national treasure. But the fifth paragraph down, I believe, Michael, that data centers the information power plants at the center of the cloud revolution is flagged as the primary culprit for this exploding power demand. These warehouse scale buildings are chock full of all manner of computer chips. In AI surge, boost energy per tenfold. I do the Google search. You just mentioned that, one executive, operative at the friends of the Earth, but we can see AI fracturing the information ecosystem just as we need it to pull it back together. Thank you. Anyway, I just think it’s funny. The the AI, fro, are destroying any hope for renewable energy. [00:09:19][63.9]

Michael Tanner: [00:09:20] Well, they they really are. And if you know it, it’s all. Look over here for what I’m saying. You know, on one hand, we’re saying this and on the other hand, we’re going to do this. It’s do as I say, not as I do. [00:09:34][14.2]

Stuart Turley: [00:09:35] Exactly. And, so when you when you sit back and take a look at it, the hypocrisy. I’ll go into this later. I’ve got a few things I’m working on and, bigger article for us on this, but hypocrisy knows no bounds. And at the bottom line, people want their data centers, and it’s going to happen. Unfortunately, so does the government. And most of the data centers are where the big three, alphabet, the FBI, CIA and all the others are up there. All right, let’s go to Texas. Texas power demand may. Breaks may record again as saw. Oh! Oh was like, are you for. What are you doing? For our podcast listeners, Michael is over there. Just. He’s he’s panting. Do you have your fur coat on? Michael? [00:10:24][49.1]

Michael Tanner: [00:10:24] What’s up? I’m. And, you know, me too. I’m always wearing a fur coat that. [00:10:29][4.9]

Stuart Turley: [00:10:30] You know, he’s a werewolf. We could learn from you. I mean, you have a light bulb on in the room and you’re growing hair. I don’t know how you do it. Oh, you grow hair, do a light bulb. You don’t even need a full moon. But as we get into this article, Michael Power demand broke the record for the month of May for the second time. Wow. Ercot says, preliminary of 72,000MW on Friday, which set the current record for 72.2MW last Monday. Wow. The all time high, though, was 85MW, in on August 10th in 2023. [00:11:10][40.4]

Michael Tanner: [00:11:12] Yeah. And I mean, you know, we’re all expecting Ercot electrical use is going to top all time summer highs, you know, following along with some of this big population growth that we’ve seen. You know, I mean, I’ve got my, was I going to say I got my, like, AC cranked up now it’s like 67 in here. The only time I get a break, you walk outside, you just feel like you’re getting hit by this, this wave. I don’t know how people lived here before. AC me. Holy smoke. [00:11:38][25.8]

Stuart Turley: [00:11:39] And I’m a reptile because I absolutely love the heat. I just shouldn’t be outside in 200 degree heat. People don’t understand me. I love going out when it’s 9000 degrees. [00:11:49][11.0]

Michael Tanner: [00:11:51] Yeah, it’s it’s pretty crazy. Spot prices in in in air courts. North hub which does include the DFW area soared to a two week high about $141 per megawatt hour. Pretty crazy. [00:12:02][11.6]

Stuart Turley: [00:12:04] Yeah. [00:12:04][0.0]

Michael Tanner: [00:12:05] You know, Houston, it’s going to be a little bit higher down there. Obviously you’re a little bit closer to that coast, but you know, this comes back to you if we are going to see continued power and this is, you know, happening all over the South, it’s not just unique to Texas. The nice part is we just get very granular data from Ercot. So it’s why we we we pick on Texas a little bit. [00:12:24][19.3]

Stuart Turley: [00:12:26] But what we’re not picking on Texas, Texas is using all forms of energy. They are they’re doing the best they can. I got a hand it there. Scott. I would love to visit with the CEO out there. You know, the head of head honcho. I think they’re trying. I will give them that. [00:12:42][16.8]

Michael Tanner: [00:12:43] They’re trying. What does it say? Trying only counts in horseshoes and hand grenades. [00:12:46][3.2]

Stuart Turley: [00:12:47] And trying to keep the whales alive. [00:12:48][1.1]

Michael Tanner: [00:12:49] That’s a good point. Well, we can we don’t have to worry too much about that. Well, I’ll go ahead. And we’ll cover quickly what happened in the oil and gas markets today. Guys, before we do that, we’ll go ahead and pay the bills here. As always, the news and analysis you just here is brought to you by the world’s greatest website, Energy News beat.com. The best place for all your energy and oil and gas news. Doing the team do a tremendous job making sure that website stays up to speed. Everything you need to know to be the tip of the spear when it comes to the energy and the oil and gas business. Go ahead and hit the description below. Links to all of the articles. Links to the timestamps so you can jump around before or after check us out. Dashboard.energynewsbeat.com for all your data and energy news combined. [00:13:33][44.2]

Michael Tanner: [00:13:35] Mean I mean pretty chill day you know on Mondays do markets were actually closed. So we didn’t see any movement there. We did have crude oil and natural gas, futures markets open crude oil up one percentage points, mainly off the fact of two reasons. One, we saw a little bit of a geopolitical, skirmish going on with, with Egypt going ahead and attacking, that Rafah crossing, in response to what they considered was it was an Israel attack. I’ll leave it up to the political who has to decide what’s going on there. All we know is that was the main reason for prices going ahead and moving up. We also did hear that Europe, the European central banks did hint that there’s a potential rate cop upcoming for June. We all know that June 2nd is the, the OPEC, meeting of the minds. It will be virtual. This time most people. [00:14:24][48.9]

Stuart Turley: [00:14:24] Expect to see. [00:14:25][0.8]

Michael Tanner: [00:14:26] OPEC. Plus most people expect they’re going to continue the rate cuts. We may see, you know, another addition, you know, some extra cuts layered in. Remember where that 2 million barrels in terms of cuts right now. so it will be interesting to see what happens there. But overall we did see natural gas stay fairly, flat, $2.55 for that. And, you know, I forgot to mention crude oil. It’s up to 78, 55. So, again, you know, we’re starting to see again that 75 to $85 range for oil. And you know, again I’ve talked about this ad nauseum. Everyone should make money at that point. Investors should be able to make money. Oil and gas companies should be able to make money. And consumers are going to get hit a little bit. You know, I think that’s the unfortunate. Part is the person who gets, you know. You know, producers will make money. Investors will make money. You know, people working in the oil and gas industry will make money. The problem is the consumer. It’s a little bit high for consumers. I mean, I can’t you know it. You know, I remember I saw pictures from that I don’t know when it was, but it was a news article. And behind him there was a gas station, sign. And it was clearly was from like 2019 was like $0.84. [00:15:34][68.5]

Stuart Turley: [00:15:35] I remember that. [00:15:36][0.4]

Michael Tanner: [00:15:36] So now gas you know, oil prices are low. So there’s always a trade off. Someone’s always taking it in the drive through. There are no relaunches, unfortunately. But, you know, selfishly, being in the oil and gas business ourselves, we’ll take the $3 gas if that means. Or, you know, if that means there’s a marketplace of money being shipped around. So if I. [00:15:57][20.5]

Stuart Turley: [00:15:57] Was me, if we were energy independent, I’d pay three bucks. I’d be okay with three bucks if we were energy independent. But we’re not because of the energy policies of this administration. [00:16:06][9.0]

Michael Tanner: [00:16:07] Yeah. Well, you know, it’s, we we could talk we could talk for, at nauseum about that, but we’ll we’ll let it go. Short show today, guys. As always, we appreciate you guys checking us out. What should people be worried about in this short week? [00:16:20][12.8]

Stuart Turley: [00:16:21] Well. Stay alive. Keep your head on. This will be good. And and I’m going to, be down in Dallas with you on Thursday for the American, Americans for prosperity meeting with Ted Cruz and a few other great people. They’re going to be a great day. [00:16:39][18.5]

Michael Tanner: [00:16:39] Yeah. No, it’ll be a good day. We we are excited for everybody. Who gets to attend that? We got to start working on your speech because we can’t let you ramble. We gotta get you right down to two minutes. [00:16:50][10.3]

Stuart Turley: [00:16:50] Oh, no. I got to be, be on point with Ted. [00:16:52][1.9]

Michael Tanner: [00:16:53] He got to be on point. Well, that’ll be fun, guys. As always, we appreciate you guys checking us out. Energy news beat.com for Stuart Turley. I’m Michael Tanner. We’ll see you tomorrow, folks. [00:16:53][0.0][968.4]

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