“Energy is the new eggs” isn’t the most intuitive summary of public opinion, but it nonetheless accurately describes a growing political reality. Eggs were the go-to example a few years ago when discussing voters’ growing frustration with inflation and rising prices, and the 2024 election in some ways ended up being a referendum on the egg price question. While egg prices are doing fine today, worries have shifted to an even more central aspect of the economy: energy prices.
When it comes to energy prices, people naturally think first about the price at the pump. Gasoline prices rose around $1.00 a gallon over the course of March, while oil prices have gyrated wildly, going from around $70 a barrel to as much as $120 a barrel. The cause of the increased prices and volatility is not a mystery. The conflict in the Middle East and the closure of the Strait of Hormuz have created massive uncertainty in the markets over fears of oil supply shortages. This situation is fundamentally similar to oil price spikes during prior conflicts in the region. During the 1990 lead up to the Gulf War, for example, oil prices more than doubled. The good news is that if and when the crisis in resolved, history indicates that prices will eventually return to normal. The bad news is that even a temporary price spike could trigger an economic downturn or have other long lasting economic consequences.
Energy price pain goes beyond just oil. Residential electricity rates rose 32 percent between 2014 and 2024.
Energy price pain, however, goes beyond just oil. Residential electricity rates rose 32 percent between 2014 and 2024. While much of that increase was in line with price rises throughout the economy, in 2025 electricity prices began increasing at double the rate of inflation. During the first half of 2025, utilities requested roughly $29 billion in rate hikes, the highest level in inflation-adjusted terms since the 1980s, and further substantial increases are expected in the coming years.
The causes of electricity price increases are less straightforward than in the case of oil. The cost of electricity generation has actually gone down in real terms. But the costs for grid infrastructure – the transmission lines that move power and the distribution system that delivers power to end users – have gone up substantially. Some of this increased spending is needed to replace aging infrastructure or to upgrade the grid to account for technological improvements. Places like California are also spending massive amounts of money to harden the grid against extreme weather events like wildfires.
There is also significant concern that data centers will raise electricity prices. After decades of flat or declining electricity usage, that usage is expected to rise substantially in the coming years because of the proliferation of data centers that power artificial intelligence. However, data centers are not the only or even the largest factor in demand growth. Growth in electricity demand from reindustrialization is more significant.
The good news is that rising electric demand doesn’t necessarily mean higher prices. It could even reduce prices, since the fixed costs of maintaining the electric grid could be spread over more users. Of the 29 states reporting rising electricity consumption over the last decade, electric prices grew more slowly than the national average in 26, while 17 of the 22 states in which power consumption fell saw electricity prices increase more quickly than the national average.
This presumes, however, that new power plants and accompanying energy infrastructure can be built quickly enough to accommodate the increased demand. That may not be reasonable. Currently, it takes an average of five years to connect a new power plant to the grid and ten years to build a new transmission line, with planning and permitting taking up the bulk of this time.
The Trump administration has taken a number of actions to combat rising energy prices, though clearly more needs to be done.
The Trump administration has taken a number of actions to combat rising energy prices, though clearly more needs to be done. The administration reversed several Biden administration energy actions — such as the pause on approval of LNG export facilities — and took steps to help increase domestic oil production, though a return to moderate oil and gas prices will most likely depend on the resolution of the conflict with Iran. The administration has also identified permitting as a key bottleneck for the energy industry, and is seeking to reduce permitting times and complexity for fossil fuel and nuclear power (though its approach to renewable energy is less favorable, to put it mildly). In addition, President Trump has put forward a Ratepayer Protection Pledge, calling on data center companies to build or procure the power needed for their own facilities in a way that does not impact other ratepayers.
A president can only do so much at the end of the day. Most electricity policy is set at the state level, and even actions taken federally through executive order or agency action are vulnerable to reversal by a new presidential administration if they are not codified into law. Dealing with rising energy prices will thus require concerted action by all levels and branches of government based on good economic principles and the lessons of history.
Josiah Neeley is a senior energy fellow at the R Street Institute.