Affordability has become a major issue. American drivers believe oil is becoming increasingly affordable, frustrating drillers, while electricity consumers believe the opposite is true as prices rise. Politicians tell us not to worry because stock portfolios have appreciated, making people wealthier and able to afford more, but those with affordability problems are unlikely to have a growing portfolio of stocks or gold to cushion their rising household bills.



Essentially, the income of ordinary households barely keeps up with the prices of essential services and is far behind market increases. The future of energy pricing looks mixed. Oil prices depend on a variety of factors, including war and revolution. For example, will Venezuela re-enter the world oil market? Will the new Iranian government end sanctions? How quickly will large South American oil fields come online? What measures will Saudi Arabia take to protect its market share? How will economic activity affect demand? Undoubtedly, there are models for all of these. The consensus among citing experts is that oil prices will fall in the near future due to increased supply . But we accept this conclusion, which leads us to believe that affordability of oil prices will not be an issue for some time. In any case, this is not a problem for consumers. Producers may have other ideas.

Then we turn to electricity. Here, decisions regarding new power generation and the demand from artificial intelligence will have implications for years to come. U.S. power companies want to build gas-fired power plants, and the government wants them to build nuclear and coal-fired power plants. The AI people want large amounts of electricity quickly; they don't care how it's generated. The government wants to encourage liquefied natural gas exports, which will put pressure on U.S. natural gas prices, just as new gas generators need more natural gas to support AI loads. Residential consumers use natural gas for home heating, so they will see higher prices, as will those buying natural gas-fired power plants.

And there's more. The Trump administration's opposition to installing renewable energy could alleviate some of the pressure on natural gas demand. Renewable energy with storage capabilities is significantly cheaper than coal and nuclear power, with some projects approaching natural gas pricing. Excluding renewable energy and pushing for coal and nuclear power would increase prices for consumers. Furthermore, power companies would have to upgrade their aging grids, which would also increase costs and prices.

So when will this policy conflict awaken politicians and consumers and escalate into an affordability “crisis”? What will happen sometime in between, when American consumers will be tallying up their utility bills at the end of this super-cold winter and utility companies will likely report huge profits in their quarterly reports? In other words, perhaps not so long from now.