Have Data Centers Actually Raised Electricity Prices?

Rising electricity prices have many causes, but data centers are not yet one of them

By Paige Lambermont.

"Data centers have commanded significant ire recently, as their power demand rises and ratepayers are concerned about price increases. But this is a faulty narrative. At least to this point, data centers have not been shown to have caused higher power prices. 

A study released in March 2026 by the Institute for Energy Research (IER) found, consistent with the findings of other recent reports, that the correlation between number of data centers and current electricity prices was statistically insignificant. That study also found that data center concentration did not have a statistically significant relationship with faster price increases. 

The most important conclusion of the IER study was that states that experienced an increase in electricity sales from 2015 to 2025 paid less on average for power than states where sales declined. This finding runs counter to the assumption that rising power demand from data centers and other sources will inherently lead to price increases in the places where it occurs. Power price increases occurred across the country between 2015 and 2025, but states with shrinking electricity sales (-9 percent  to -1 percent) averaged the highest price increases 50.6 percent on average, while states with rapid growth (25 percent-53 percent) experienced the lowest price increases, 15.4 percent on average. 

Spreading the fixed costs of the power grid across new entrants can help lower costs. When customers leave the service area, the fixed costs of that power grid don’t disappear with them but are spread across fewer ratepayers. 

There is real risk when building new generation if customers who would  consume the power do not materialize. However,  if  agreements between utilities and new customers have  realistic  timelines for the duration of the demand , new customers could prove to be beneficial rather than a guaranteed cost burden. 

The costs of the power grid, especially transmission, have increased in recent years. This is in large part due  to  aging infrastructure  and more wind and solar generation being built far from the population centers it serves.

Higher electricity prices have been and will continue to be a problem for utilities and their customers going forward. Much of this is already being attributed to data centers in the public consciousness. This is not reality, but the coinciding timelines of power price increase announcements and the announcement of plans to build new data centers has indelibly tied the two issues together in the minds of many. 

Even when a new data center hasn’t yet been built or even permitted at the time of a price increase, it’s easy to assume a connection when one is reading the news. It’s important to look more closely at what is happening in power markets. 

Looking closer, it’s clear that attributing existing price hikes to data centers is inaccurate. This could change in the future, but it’s essential to understand what has happened so far to ascertain where cost increases are coming from."

Today’s Oil Drama Is No Rerun of “That ’70s Show”

By David Henderson.

"When I talk to people about the current oil market and oil prices, I often come across three misconceptions. The first is that the high price of oil today will cause a replay of the tremendous losses and dislocations of the1970s after OPEC raised the price of oil. The second is that because the United States had become a net exporter of oil and petroleum products before the recent price increase, we American consumers should be able to buy oil at the old lower price. The third is that countries that rely more on imports will be at risk of not getting the oil they want.

On the first, there are three big differences between the 1970s: (1) the latest price increase of oil since President Trump attacked Iran is substantially smaller, percentagewise, than the increase engineered by OPEC in 1973; (2) the United States is now a net exporter, not a net importer, of petroleum and petroleum products; and (3) so far, we have avoided price controls on oil and gasoline.

The second misconception—that our status as exporter should insulate us from higher oil prices—betrays a misunderstanding of the how the oil market works and, indeed, and how markets work in general. The third misconception—that import-dependent countries will be more at risk than oil-rich countries—is closely related to the second misconception.

These are the opening three paragraphs of my latest Hoover article, “Today’s Oil Drama Is No Rerun of ‘That ’70s Show.’” The title of the piece was chosen by my Hoover editor, Charley Lindsey. He has a way with titles: I like this one better than the blah title that I chose: “An Energy Economist’s Perspective on the Oil Market.”

And:

There’s a further loss from the price controls. When US refiners who had to buy oil at the world price complained that some of their competitors were locked into contracts that provided them oil at $4.25 per barrel, the government could have seen the folly of its ways and ended the price controls. But no. As Austrian economist Ludwig von Mises explained about a century ago, when governments see their regulations causing havoc, they often step in with further regulations that also cause havoc. In this case, President Ford introduced the entitlement program that gave refiners that bought foreign oil an entitlement to buy domestic oil at the regulated price. The price of gasoline at the pump, therefore, was based on a blended price of foreign and domestic oil. For much of the rest of the decade, that program led to enough gasoline being sold to satisfy demand. But it also gave an artificial incentive to buy foreign oil and that strengthened the hand of the OPEC cartel, thus making the world price higher than otherwise. That made the loss even higher than the 2 percent of GNP estimated above."

Why Has Poverty Declined in the U.S.?

By Jeffrey Miron.

"Was President Lyndon Johnson’s “war on poverty” the main driver of declining poverty rates after 1964?

Not according to a new study. The researchers examined a measure of poverty

that accounts for all taxes and government benefits … [and] anchored [the] poverty measure to the official poverty rate in 1963. ... [They also] adjusted income thresholds for inflation and the size of each person’s household.

Using this measure, they found that

poverty fell substantially prior to the War on Poverty, primarily due to increases in market income, without a substantial rise in the dependency of working-age adults and their children on government transfers for most of their income. … These trends were particularly stark for black people, who experienced a steep decline in poverty before the War on Poverty."

The Myth of a Permanently Poor Underclass

The bottom income quintile is not a static social class but a temporary snapshot of lives in motion. Most Americans do not remain poor for life, and removing policy barriers can help more people move up.

By Vance Ginn.

"One of the most misleading ideas in American politics is that the United States has a large, fixed class of permanently poor people stuck at the bottom year after year, while everyone else moves on without them.

That story is emotionally powerful. It also happens to be a poor guide for serious policy.

Poverty is real. Hardship is real. Some people do remain trapped for long periods, and that deserves serious attention. But the popular picture of a vast, permanent underclass does not describe most Americans who show up in the bottom income quintile in any given year. As economist Anthony Davies has put it, many are there because of “retirement, homework, and diaper rash.” That line works because it captures something basic: a snapshot of income is not the same thing as a life story.

Students often have very low current earnings. So do many retirees living on savings or Social Security instead of wages. So do young parents working fewer hours, people between jobs, and entrepreneurs in low-cash-flow years. Treating all of them as members of a permanent poor class is not compassion. It is a category mistake.

The data back that up. The Federal Reserve’s Survey of Consumer Finances distinguishes between “actual” and “usual” income precisely because current-year income can be temporarily depressed. In 2010, about a quarter of families reported that their actual income was unusually low relative to normal. That matters because it means many households classified as poor in a given year are experiencing a temporary dip, not living permanently at the bottom. 

In fact, the same survey found that a large share of households in the lowest quintile by actual income ranked higher when measured by usual income instead.

The tax data tell the same story. A Treasury study tracking taxpayers from 1996 to 2005 found that about 56 percent moved to a different income quintile over the decade. More important, roughly half of those in the bottom quintile moved up by 2005, depending on the measure used. About 29 percent moved up one quintile, another 29 percent moved up at least two quintiles, and roughly five percent moved all the way from the bottom quintile to the top quintile. That is not what a rigid caste system looks like. It is a dynamic picture in which many people pass through low-income years rather than remain stuck there permanently.

 

This is where so much bad policy begins. Politicians see a one-year income snapshot and talk as if they are looking at a permanent social class. They are not. They are often looking at transition.

This does not mean every measure of mobility is strong. A lot of the confusion comes from mixing together two different questions. The first is short-run income mobility: do people move up or down within their own lives? On that question, the evidence clearly shows substantial movement. The second is intergenerational mobility: do children rise above the economic position of their parents? That is a different question, and the answer there is more mixed.

The newer Census mobility data show that income mobility varies significantly by geography, age, race, and sex. And other work has shown that absolute mobility has weakened relative to earlier generations. Those are serious concerns. But uneven mobility is not the same as a large, fixed, poor class.

The latest Archbridge Institute report on social mobility in the 50 states broadens the analysis beyond annual income. Archbridge evaluates mobility through four pillars: entrepreneurship and growth, institutions and the rule of law, education and skills development, and social capital. It also distinguishes between natural barriers such as family instability or social networks and artificial barriers created by policy, such as excessive occupational licensing, weak school choice, or heavy regulation. That is a much better framework than casually conflating poverty, inequality, and mobility. 

The state rankings tell an important story. In Archbridge’s 2025 report, Utah ranked first, followed by Vermont, Montana, Wyoming, and Idaho. At the bottom were Louisiana, Mississippi, Alabama, New York, and Arkansas. That does not prove one policy explains everything. It does show that institutions matter.

Mobility is shaped by the rules, incentives, and social conditions people live under. The poor are not static, but the barriers they face can be.

This is where the free-market case becomes especially important. If you care about mobility, you should care about growth. The AEI “Land of Opportunity” project and its essay on the greatness of growth and the American Dream make the point clearly: growth is not a side issue. Growth is the oxygen of mobility. 

A faster-growing economy creates more businesses, more jobs, more opportunity, more room for incomes to rise, and more chances for people to accumulate wealth over time. A slower-growing economy makes class lines harder and mobility weaker.

That is why policies that burden growth hurt the poor most over time. Heavy regulation, bad schools, housing shortages, excessive licensing, and weak property rights do not just reduce efficiency in the abstract. They reduce mobility in practice.

A recent article highlights how land-use rules and housing constraints quietly kill mobility by making it harder for families to move to places with better labor-market opportunities. Another essay points to research showing that economic freedom, especially lighter regulation and stronger property rights, is associated with greater intergenerational mobility.

That is the key insight the static-poor narrative misses. If policymakers really want more upward mobility, the answer is not to freeze people into permanent income categories and redistribute more aggressively. The answer is to remove the barriers that keep people from climbing.

That means stronger growth, more entrepreneurship, more housing, better schools, more school choice, lower regulatory burdens, and institutions that reward work, saving, investment, and family stability. It also means respecting people’s freedom to vote with their feet toward states, cities, and communities with better opportunity. Mobility is not just something economists measure after the fact. It is something people actively pursue when they are free to move toward better institutions and opportunities.

The myth of the static poor survives because it is politically useful. It turns a moving picture into a still frame. It makes the government look like the only answer. But it misses the reality that most Americans who are poor at one point in time do not stay there forever, that incomes often rise over time, and that wealth accumulation frequently follows when people are free to work, save, invest, and build.

The real task is not to manage a permanently poor class. It is to build a freer society where more people can rise."

Europe Demands Family Dynasties

By Alex Tabarrok.

"In the US, someone with wealth is free to give it away more or less as they see fit (spousal claims excepted, which partly reflect marital co-ownership). In much of Europe, however, there is forced heirship–a large fraction of wealth must be handed down to children which makes it harder to direct large portions of wealth to charities, foundations, or non-family causes compared to the US. (Louisiana, with its French-Spanish civil law roots, is the one state with forced heirship and even it mostly gutted it in 1995.)

Here is an excellent post by John Arnold who, if he were European, would be required to give 75% of his wealth to his three children instead of spending it on philanthropy as he and his spouse are now doing.

America’s cultural ideal has been the self-made entrepreneur while Europe’s was rooted in aristocracy, with status inherited rather than earned. Europe’s inheritance laws show this divide.

Many European countries have “forced heirship” laws that require people to leave 50-75% of their estates to their children. Want to leave the majority of your wealth to charity? not allowed. Your kids are estranged from you, struggling with addiction, or irresponsible? still required to give them the money. Want your kids to avoid a life of entitlement? tough.

Incredibly, these laws look back at transfers made during your lifetime. If you have 3 children in France, you’re required to bequeath them a minimum of 75% of your estate. Because French law calculates this based on your assets at death plus all lifetime gifts, giving away more than 25% of your wealth while alive means your heirs can legally sue to force charities or foundations to return the funds. This has limited the development of the nonprofit sector on the continent.

The cultural gap between an entrepreneurial society and one shaped by dynastic wealth is enormous. If you make it yourself, you tend to want your kids to do the same. If you inherit it, the primary goal is protecting the estate for the next gen.

Countries like Spain, France, and Italy legally entrench family dynasties, while America has historically sought to limit them through estate taxes. The result is not only a weaker culture of philanthropy and civil society in Europe, but also less economic dynamism.

It’s interesting that in Capital Piketty discusses required equal division to children as an egalitarian legacy of the revolution but, as far as I recall, never reflects on the fact that forced heirship prevents a French entrepreneur from giving his fortune away to charity. A case for laissez-faire, no?"

Health Insurance Affordability: The Trump Administration Overthinks a Short Putt

By Michael F. Cannon. 

"Last Friday, the Trump administration quietly moved a little closer to granting temporary relief from Obamacare. That action is not useless, but it does appear to signal a wasted opportunity.

The administration is preparing a regulation to change how the federal government interprets the law governing so-called “short-term limited duration insurance,” or STLDI. Only a few million people enroll in STLDI plans. The market has outsized importance, however, because it is one of only two kinds of health insurance that are exempt from Obamacare’s costliest health insurance regulations, the other being health insurance in US territories. Unlike territorial plans, STLDI is exempt from both Obamacare and nearly all other federal health insurance regulations. That is why STLDI plans can offer comprehensive health insurance to many or most Obamacare enrollees at premiums 60 percent (Congressional Budget Office) to 66 percent (Kaiser Family Foundation) below the lowest-price Obamacare plans. 

Trump’s greatest health care victory was a 2018 regulation that provided relief from Obamacare by adding consumer protections to these plans. In 2016, President Obama tried to force reluctant consumers into overpriced, low-quality Obamacare plans by arbitrarily limiting STLDI plans to three months. The Obama rule tossed patients out of their coverage after they got sick, leaving them with nothing. In 2018, Trump clarified that it was perfectly consistent with federal law for STLDI contracts to last 12 months, for insurers to renew the initial contract for up to 24 additional months, and for insurers to issue separate renewal guarantees—so that when consumers reached the 36-month limit, they could enroll in a new STLDI plan at healthy-person premiums, even if they had fallen seriously ill. Trump clarified, and two federal courts affirmed, that federal law effectively leaves this market enough freedom to offer consumers long-term health insurance protection. 

The Trump rule was a success. Premiums for comprehensive coverage fell. Consumers could purchase health insurance free from Obamacare’s quality-reducing regulations. Obamacare premiums did not spike and enrollment did not fall, as critics predicted. Instead, while the Trump rule was in place from 2018 to 2024, Obamacare premiums stabilized and enrollment increased. 

Nevertheless, in 2024, President Biden rescinded the Trump rule. Like Obama, Biden wanted to force reluctant consumers into overpriced, low-quality Obamacare plans. He limited STLDI plans to four-month contracts and prohibited all renewals—federal court rulings notwithstanding.

The only flaw in the Trump rule is that it was not permanent. While it clarified that insurers were free to offer renewal guarantees, the fact that it came from administrative rulemaking rather than legislation meant that the next president could take that freedom away at the stroke of an autopen. So insurers did not have sufficient incentive to invest in renewal guarantees.

For months, the Trump administration has been debating how to promote health insurance affordability. On one side are those who support a regulation-only strategy by which the administration reissues the 2018 rule, even though the new rule may last as little as two years. This side is apparently unaware that tremendous gains in freedom and affordability would come from codifying the Trump rule, that they are sitting on a winning messaging strategy, and that experience with the Trump rule has already negated critics’ fearmongering. The savvier side of this debate advocates for a legislative strategy by which Trump pushes Congress to make his greatest health care victory permanent and pursues regulation only as a backup.

Unfortunately, the regulation-only side appears to be winning. The president’s Great Health Care Plan doesn’t mention STLDI, much less demand that Congress codify the Trump rule. I have seen no indication from the administration that it plans to push Congress to do its job. 

It is a tremendous waste of an opportunity. The administration can reissue the 2018 rule. It can even improve on that rule. But any relief it provides would disappear with the next Democratic administration. 

President Trump needs to push legislators to legislate. I’ve already provided the arguments, data, talking points, polling, poster child, graphs, and legislative language the administration needs.

People are still struggling under the high cost of Obamacare. They need permanent relief."

Should we recriminalize marijuana?

By Tyler Cowen.

"The present and also future of mankind is a world where reasonably high levels of self-discipline are needed to do well. The journalist Daniel Akst pointed this out in his 2011 book Temptation: Finding Self-Control in an Age of Excess, and we are now living it full force.

I would rather cope with that world than face the full nanny state, backed by modern, AI-intensified surveillance techniques to boot. Concentrating more power in political authorities hardly solves the basic problem. If marijuana and sports gambling can manipulate weak individuals, so can unscrupulous political leaders. A greater realization of individual weakness does not translate into a case for more government action; if anything, it suggests the opposite. Better to allow our social problems to fester in a more decentralized fashion, rather than reinforce our social pathologies through a manipulative and dysfunctional leader at the very top.

In the longer term, we may need to look to medications, such as GLP-1 drugs and their offshoots, which seem to curb some forms of addictive behavior beyond the appetite for food. Alternatively, some individuals may choose self-surveillance, with self-imposed penalties for bad or addictive behavior. Perhaps your AI, or a hired third party, docks your bank account every time you puff on a joint. I am not convinced such services ever will become popular, but that should be taken seriously as an indicator of what people really want to do. We can at least give them better options for self-constraint. If they rarely choose such options, then perhaps for many of those people, marijuana consumption is not a matter of weakness but a very well-established preference, whether we like it or not…

In short, it is time to realize that paternalism is far less workable than in times past. Our government does not have the credibility, the control over information, or the control over our lives to pull it off.

I do understand that is in some significant ways bad news, as voluntary choice is overwhelming some of us with bad outcomes.

My response is to start by accepting some steps backward, holding paternalist tyranny at bay, and hoping some longer-run cultural and technological adjustments will make this all more workable.

If you have a better solution, I would love to hear it."