From Energy Repression to Energy Dominance

Even the most powerful computers on earth have no idea how much energy America will need for the next generation. In fact, these computers use so much energy themselves that they’ve made it harder to predict electricity demand, even over the short term.

The past will certainly not serve as a reliable guide for us. For many decades now, the American energy sector has suffered under a regime of energy repression. An unprecedented combination of private sector capital and government deregulation could inaugurate a new era of energy dominance. On the other hand, backlash against AI and partisan retribution could keep us stuck in stagnation.

For the past two decades, American demand for both electricity and gasoline held flat. Growth in total factor productivity and per capita GDP also lagged. This combination is unsurprising; progress in energy tends to go hand in hand with broader economic progress.

In fact, the era of energy repression began in the 1970s, when per capita energy consumption stagnated. Since 1989, the nation’s nuclear capacity has been stagnant, with only three new reactors built since 2000, and many more shut down.

There are many indirect causes that nudged America into energy stagnation, from geopolitics to demographic change to the rise of the environmental movement. The efficient cause, however, was a system of state and federal regulation that imposed substantial burdens on power plants, electricity markets, vehicles, pipelines, and other sectors.

You might explain these trends through improved energy efficiency: we simply learned to do more with less. That definitely is part of the story. Yet since productivity growth also lagged during the era, it’s clear that the efficiency gains alone were insufficient to overcome five decades of accumulated regulatory burdens.

One major exception to the general trend was the fracking boom. From 2007 to 2019, hydraulic fracturing (fracking) rapidly increased U.S. oil and gas production, turning the U.S. into a net energy exporter for the first time since 1952 and lowering the cost of natural gas and oil for U.S. consumers. Fracking, however, did not translate into a significant increase in energy use. It merely shifted the composition of US consumption, with natural gas replacing coal generation, and the US relying more on domestic than on foreign sources to meet its energy needs.

Exiting this era of energy repression will therefore require drastic policy change. Thankfully, there are signs of hope. Support for nuclear energy has increased both inside the beltway and in public opinion polls. And some elected Democrats are wisely backing away from the party’s most harmful climate policies. It is possible, though, that rising electricity prices, the data center backlash, climate activism, and cycles of partisan retribution will return us to the energy repression regime.

Americans do not often associate “innovation” with “oil and gas,” but the numbers do not lie. According to Bloomberg, “Productivity in the oil and gas extraction sector almost tripled in the 10 years ending in 2022, compared with a near-doubling in some tech-driven industries.” As the industry increasingly incorporates AI, these productivity gains are likely to continue.

The question is whether the rest of America can catch up with its dynamic oil and gas sector. The solutions to today’s energy problems, therefore, will not be found in the Permian Basin or in the Marcellus shale.

For example, artificial intelligence is driving electricity demand to spike across the US, with Virginia and Texas leading the way. Projections of future electricity demand are highly uncertain, but the Department of Energy expects an additional 100 gigawatts of peak capacity by 2030, about half of which will come from data centers.

The Trump administration has made meeting AI’s energy demands a top priority. For example, the One Big Beautiful Bill Act (OBBBA) cut green subsidies, increased leasing, lowered royalty fees for oil and gas, and introduced some favorable tax changes. California’s electric vehicle mandate was rescinded through the Congressional Review Act. The Trump administration also formed the National Energy Dominance Council and appointed former energy executive Chris Wright to lead the Department of Energy. The Environmental Protection Agency and Department of Energy both announced ambitious deregulatory agendas, most prominently including a reconsideration of the “endangerment finding,” the government scientific finding that authorizes federal regulations of greenhouse gases.

All of this is a welcome and necessary change from the Biden administration.

Regardless, the only way to achieve enduring energy dominance is to break the cycle of retribution by passing new legislation that limits regulators' and NGOs' ability to block projects. This final category is the closest to completion among the four, though progress has recently stalled in Congress.

We do not know how much energy America will need in the future. But with these four priorities, we can ensure it produces and uses much more than it does now.  Congress and the executive branch must terminate the energy repression regime for good.

Russ Greene is the Executive Director of the Prime Mover Institute.