Domestic Energy Shipments Are Breaking Records Under the Jones Act Waiver

By Colin Grabow of Cato.

"The Jones Act is a de facto tax on Americans trading with one another. By requiring domestic waterborne commerce to use vessels that cost far more to build and operate than their international counterparts, the law raises shipping costs. That’s a real burden given the significance of transportation in a country as vast as the United States and helps explain why relatively little freight moves by water.

Conversely, economic logic holds that lowering these costs will expand commerce, which is exactly what has happened since the Trump administration issued a Jones Act waiver for energy and fertilizer shipments in March. Freed from the law’s constraints, domestic fuel shipments have surged to unprecedented levels.

PADD 5 Receipts Nearly Set a Record in Five and a Half Months

One of the most dramatic examples of this increase has been to the West Coast, Alaska, and Hawaii, collectively known as PADD 5. According to a recent Energy Information Administration analysis, waterborne shipments of crude oil and petroleum products from the Gulf Coast to PADD 5 in April and May 2026 were more than four times their level in the same months of 2025. April’s volume was more than double the previous monthly record, and shipments remained elevated in May. 

That increase has been sustained. US Maritime Administration (MARAD) data show that in less than six months, waiver shipments have already exceeded the Jones Act fleet’s annual total in every year from 2000 through 2025, with one exception. Only 2024 remains narrowly ahead (by 2.2 percent), and it appears on the verge of being surpassed." 

Jet fuel: More jet fuel has been moved to PADD 5 under the waiver than in the preceding 35 years combined (1990–2025). 

Gasoline blend stock and alkylate: More gasoline blending components and alkylate have been moved into PADD 5 than the Jones Act fleet moved from 2010 through 2025 combined. 

Finished gasoline: The waiver has seen more finished gasoline moved to the West Coast than the Jones Act fleet has moved in the last eight years combined."

"East Coast-bound shipments topped 1.2 million barrels a day in April, which was the highest monthly figure on record and about 11 percent above anything seen pre-waiver."

"In 2017, the CEO of Overseas Shipholding Group, a major Jones Act tanker operator, admitted to the Financial Times that the law was suppressing domestic oil flows: “If there was not a Jones Act, then there probably would be more movements of crude oil from Texas to Philadelphia.”" 

Despite government spending and regulations on green energy transitions, fossil fuels still accounted for 76.3% of Canada’s domestic energy consumption in 2024 compared to 76.8% in 1995

By Kenneth P. Green, Julio Mejía and Elmira Aliakbari. They are all with the Fraser Institute.

Energy Facts - Canada Edition

• Despite continued discussion about energy system transitions, fossil fuels remain central to Canada’s energy system. In 2024, they accounted for nearly 88% of domestic energy production and more than 76% of energy consumption.
• Pipelines remain essential for the country’s energy system. Over the past decade, pipeline safety has improved, with safety incidents falling by nearly 60% and the share of incidents involving product releases declining from 83.2% in 2014 to 20.6% in 2024.
• Canada’s largest energy-consuming sectors remain heavily reliant on fossil fuels: in 2024, fossil fuels supplied nearly three-quarters of industrial energy use, and more than half of residential energy use, with natural gas remaining the dominant source, particularly for space heating. Meanwhile, fossil fuels accounted for almost 99% of the transportation sector’s energy consumption in 2024.
• The energy sector is also a major economic contributor, representing 6.9% of Canada’s total economic activity. Its importance is even greater in some provinces: energy accounts for 30.1% of Alberta’s economy, 22.7% of Newfoundland & Labrador’s, and 21.5% of Saskatchewan’s.
• Energy is one of the top 10 categories of average household spending. Over the past two decades, energy prices have risen faster than overall inflation and have been more volatile than many other household expenses, increasing pressure on family budgets.
• Overall, fossil fuels remain essential to Canada’s standard of living, and ensuring reliable, affordable, and safe energy systems will remain a key priority in the years to come.

Regulated Markets Are Slow to Handle Change

From Alex Tabarrok. 

"Gowrisankaran, Langer and Reguant have an excellent paper, Energy Transitions in Regulated Markets (WP), in the latest AER.

The basic idea is that regulation designed to prevent utilities from building useless power plants can induce them to keep obsolete power plants. Some background. We regulated electric utilities under the theory that they were natural monopolies and therefore we would do better by pushing their prices down. What’s a reasonable price? Hard to say, so regulated utilities were allowed to recoup their operating costs plus a fair return on their “rate base”—their capital stock. Makes sense, but once profits depended on the size of the capital stock, utilities had an incentive to build too much—the classic Averch–Johnson effect. Regulators responded with “prudence” requirements and the rule that capital must be “used and useful.” In a stable world, that rule is a check, albeit an imperfect check, on so-called gold-plating.

But now consider what happens in a time of technological change, such as a rapid decrease in the cost of generating electricity with natural gas (driven by fracking and improvements in combined-cycle natural-gas (CCNG) technology). In a free market, large decreases in costs would cause firms to abandon coal and move to natural gas—some would do this to make profits, others to avoid losses. In short, the market forces sunk investments to be abandoned when not profitable.

But there is another possibility under regulation. Tell the regulator that your plants are still viable. Well, telling is cheap talk so you keep burning coal to prove that the plant remains useful. If you can keep your base operating that’s better than abandoning it and to signal how valuable your coal plant still is, it may even be worth while to burn coal when the cost exceeds the price of electricity! The authors have some nice data on exactly this point.

Figure 3 takes a little work to understand, but the pattern is clear. Each point represents a state. In panel A, the vertical axis shows how much less likely a coal plant is to run when the cost of coal exceeds the price of electricity. Obviously, a strongly negative coefficient is the economically sensible response: when burning coal is more expensive than buying electricity, the plant should burn less.

The red points represent restructured states and the green points regulated states. In restructured states coal burning falls when prices fall, just as expected. Coal burning in regulated states responds much less. (I.e., the red points generally lie below the green points.) Indeed, the six states with the largest reductions in coal operation are all restructured states.

One objection to this analysis might be that utilities in general are just slow to respond to prices, so on the horizontal axis the authors plot how well utilities respond to a higher price of gas. Note that these coefficients are all negative and there is no obvious difference between regulated and restructured states. In both types of states, utilities respond well to the price of gas, but only in restructured states do utilities respond strongly to the price of coal. (Why coal and not gas? Because the used-and-useful standard binds on capital whose usefulness is in doubt—which, once gas got cheap, meant coal. In other words, the utilities have to defend coal to the regulators, not gas.)

Panel B on the right shows a slightly different way of presenting the same data. The vertical axis is again how much less likely a coal plant is to run when its cost exceeds the electricity price. The horizontal axis is the fraction of generation owned by electric utilities. Regulated states tend to be vertically integrated, while restructured states opened electricity generation to competition, so utility ownership and regulatory status are closely correlated. Regulated states generally have utility ownership above 60%, while all the restructured states but one are below 30%. The best-fit line slopes upward: in other words, the more generation a state’s utilities own, the less coal dispatch responds to price. A different perspective on the same story.

That is the direct empirical evidence. The authors then construct a more ambitious structural model. In theory, regulation could produce either too much or too little investment in the new technology; their estimates imply too much. Much, too much. Not only do regulated utilities retain too much coal, they also build too much gas capacity. In short, they accumulate both too much old capital and too much new capital. Averch–Johnson on steroids.

The bottom line is that regulation under dynamic conditions is much more difficult than under static conditions. My view is that it may not even be worth the candle"

Abstract

Natural gas has replaced coal as the dominant fuel for US electricity generation. However, utilities in regulated US states have retired coal more slowly than others. We build a structural model of rate-of-return regulation during an energy transition where utilities face trade-offs between lowering costs and maintaining and using legacy capacity. A regulated utility facing carbon taxes lowers short-run coal generation 48 percent as much as a cost minimizer would. Thirty years after a sudden energy transition, a cost minimizer has retired 71 percent more coal capacity than the regulated utility. Alternative regulations may jeopardize affordability and reliability goals during energy transitions.

 

Data Centers Are Not the Problem. Bad Policy Is.

By Scott Lincicome of Cato. 

"there are actually many different types"

"data centers have been around for decades, and there are thousands already operating in the United States. They’re basically any “purpose-built building that runs large numbers of computers reliably, securely and around the clock,”"

"Several regional and national studies have found little merit to the common claim that data centers have already caused large, localized increases in Americans’ electricity bills. In fact, a brand new, peer-reviewed study found that data centers actually caused average U.S. retail electricity rates to “fall modestly” between 2015 and 2024, because the centers’ high, steady power demand helped spread a grid’s fixed costs over more usage. This finding is counterintuitive but consistent with research from 2025 that high-demand areas—including ones like North Dakota and Virginia that saw an explosion of data centers—“saw lower prices overall,” while prices rose in places like California where demand had declined"

"arguably the most viral water claim—that a single Google data center in Chile consumed more than 1,000 times the water supply of a town there—was later acknowledged by its author to be “off by a magnitude of 1,000.” They added that all U.S. data centers combined use less than 0.5 percent of the United States’ freshwater, and that “Google’s thirstiest facility, in Iowa, uses approximately what some golf courses do.”"

"U.S. data centers consumed about 17.5 billion gallons of water in 2023, according to Lawrence Berkeley National Laboratory. That sounds like a lot until you compare it with total public water supply: it’s about 0.3 percent. Beef production, cotton farming, and golf courses each quietly consume far more"

"a lot of “data center water usage” stats in various studies include non-potable water, indirect usage from nearby power plants, and water actually recirculated instead of consumed (thus causing little change to local supplies). Doing this can inflate water usage stats"

"Masley estimates that the water all American data centers will directly consume onsite in 2030 will be the equivalent of just 8 percent of U.S. golf industry usage and just 1 percent of the water used for American corn production. It’s also dwarfed by industrial usage for things like steel plants."

"The 100 billion gallons used in 2023 amount to a drop in the bucket (pun!) compared to what we use each year for golf courses (550 billion gallons) and lawns (3 trillion gallons)."

"data centers aren’t major sources of water pollution in host communities, mainly because most of their usage (e.g., for cooling) is in closed systems."

"Masley has since run the same exercise on land use and waste heat, reaching similarly benign conclusions. Air pollution too. The Taxpayers Protection Alliance, meanwhile, has debunked recent online claims that data centers generate intolerable ambient noise." (AI researcher Andy Masley has done yeoman’s work eon “data center water usage)

The source of the real problems. And how to fix them.

"None of this means data centers are perfect, and it’d be intellectually lazy to claim the pushback is entirely manufactured (though some of it surely is). Where real problems exist, however, the cause is almost always a policy choice rather than an immutable feature of data centers or AI. And that means the issues can be fixed with policy, too.

The most obvious place to start is by nixing all the subsidies that certain states and localities toss at data center projects—and their billionaire owners. Virginia’s data center sales and use tax exemption, for example, cost more than $1 billion in 2024 and is projected to cost almost double that in 2025, with benefits accruing to Google, Amazon, and other bajillion-dollar companies. Indiana’s subsidies are almost as big. Given demand for AI and every other internet-based service in the United States, these data centers will be built without all the subsidies. So, much like sports stadiums and corporate relocation incentives, the handouts are less about real economic development and more about companies playing states and localities against each other to get the sweetest deal for themselves—at taxpayers’ expense. Kill ’em all. The industry doesn’t need the help, and every subsidy dollar is one that not only diminishes data centers’ tax revenue benefits but also fuels a legitimate grievance by the pro-moratorium crowd—maybe their only legitimate grievance.

The next obvious solution is to liberalize the supply side of the electricity market, where the only serious economic risk likely exists. As Pielke notes, various studies confirm that local power prices wouldn’t rise if supply could meet new demand, yet—

The constraint is our national inability to build—hampered by permitting queues and interconnection backlogs that mean that new transmission takes six to 10 years to build—while new demand emerges much faster. A moratorium seeks to freeze demand to match a sclerotic supply side. A better response speeds the creation of supply to meet demand. That means permitting reform, faster interconnection, advanced transmission, and water system investment, including new supply. Blocking construction treats the symptom rather than the disease.

Other things, such as tariffs on transformers, electrical steel, solar panels, and other essential equipment, add to these burdens. Fix them, and some of the demand-side pressure from data centers will be released.

For the rest, Cato’s Travis Fisher and Huddleston have an even better idea: Let data center developers contract directly with private generators or build their own power, through “consumer-regulated electricity” (CRE) reforms:

[CREs] allow for privately financed, off-grid electric utilities to serve new customers under voluntary contracts. These utilities would be physically “islanded” from the regulated grid and would not be subject to economic regulation at the state or federal level. Because they would not interconnect with incumbent systems, CRE utilities would impose no costs, reliability risks, or stranded-asset exposure on existing customers.

Letting these giant, cash-rich companies pay their own way makes abundant (pun!) sense, yet utility regulations and related factors make that impossible in most places. And that, not data center demand, is the problem. Fortunately, as Fisher writes, there are some positive developments in this regard: A few states have already begun experimenting with CRE, and the White House’s voluntary Ratepayer Protection Pledge, signed by most hyperscalers, gestures at similar principles. But much more needs to be done—and fast.

Other data center issues, such as noise, pollution, and land use, have a simpler solution: localities enforcing the relevant laws they already have on the books and making local decisions about whether to permit data centers in their communities. NIMBYism drives a lot of the opposition to data center projects, and I think almost all of it is wrong. The bright side, however, is that it’s an exercise of local control, not a statewide or federal moratorium that blocks an entire industry. In the former case, a data center can move to more welcoming U.S. areas that will enjoy the direct benefits—and occasional headaches—that rapid development offers, while negotiating site-specific terms and mitigation directly with developers, the way Loudoun County did. America’s great Laboratories of Democracy can do their thing.

As Huddleston notes, on the other hand, turning a local land-use dispute into a federal ban would throw out the baby with the bathwater, generating economic harms that go far beyond a few NIMBY-captured communities." 

 

 

Industrial carbon tax and carbon capture requirements increase the cost to produce energy, making Alberta uncompetitive with U.S. counterparts

By Jack Mintz. He works at The School of Public Policy, University of Calgary.

Impact of Carbon Policies on Competitiveness in Oil, Natural Gas, and Electric Power: An Alberta–US Comparison

• This study, based on a newly developed methodology to assess the impact of corporate, royalty, and energy taxes on production, estimates the impact of taxes and carbon policies on marginal cost of production in Alberta, Texas, and New Mexico for oil, gas, and power industries.
• In the absence of carbon policies, the existing tax and royalty system in Alberta is tax competitive except for conventional oil, despite the differences in tax systems among the three jurisdictions.
• US and Canadian capital subsidies encourage carbon, capture, utilization, and storage investments but do not improve cost competitiveness since the subsidies are offset by CCUS costs for marginal investments.
• With the existing Alberta carbon tax at $95, not only is Alberta’s conventional oil tax disadvantaged but the oil sands lose most of its tax advantage compared to projects in New Mexico or Texas (with enhanced oil recovery). Natural gas production remains tax competitive. With a carbon tax at $170, oil sand investments are somewhat tax disadvantaged.
• As Alberta’s effective carbon tax rate is increased by raising the rate and/or limiting allowances, both oil and natural gas production will be heavily disadvantaged compared to Texas.
• While much focus has been paid to the impact of the carbon tax on the oil sands, the biggest impact will be on the electric power industry. The carbon tax will noticeably increase power prices in Alberta which will impact competitiveness of many industries. This illustrates well the competitiveness issue for Alberta when carbon taxes apply in Canada but not the United States.

 

After decades of warnings, new data suggest the Atlantic’s vital circulation may withstand climate warming better than feared

See Shifting currents by Paul Voosen in Science. Excerpts:

"Climate models have long warned that global warming could weaken “deep-water formation”—the density-driven sinking that is the engine of the AMOC. The logic is straightforward: As Greenland’s ice sheets melt and sea ice formation declines, North Atlantic waters will freshen. Combined with warmer sea temperatures, the freshening makes surface waters more buoyant. The AMOC was thought to have shut down abruptly during past climate warmings, and a handful of researchers now argue such a tipping point could occur this century. A sputtering AMOC could trigger a sharp cooldown in northwestern Europe, rising seas along the U.S. east coast, and shifts in tropical rainfall."

"most climate researchers think the AMOC is more resilient than these worst case scenarios make it seem. Emerging evidence suggests the AMOC may not have actually collapsed in the warm climates following ice ages. More detailed climate models suggest it could weaken but not collapse in the current surge of warming. And studies of the AMOC’s present behavior do not yet show any clear signs of trouble. They’re also exposing new facets of the circulation that could buffer any eventual weakening."

"That stately flow actually swings wildly year to year, masking any long-term trend, the first RAPID measurements showed. Swings between apparent decline and recovery have since become a hallmark of AMOC monitoring, and a recurring source of alarm and reassessment."

"Gerard McCarthy remembers well the first time he saw an AMOC decline. It was 2011, and McCarthy, now a climate scientist at Maynooth University, had just joined the RAPID team. His first task was calculating AMOC’s strength. Beginning in 2009, it plunged. “Everyone was like, ‘The new guy made a mistake,’” he recalls. Others checked the numbers. The drop held. “We all realized that something dramatic had happened.”

What happened was not caused by climate change, but rather the weather. That winter, unusual swings in air pressure weakened the jet stream and shifted wind patterns, disrupting the AMOC’s flow. The decline likely contributed to a frigid European winter in 2009 and, by leaving more heat in tropical basins, also led to an active Atlantic hurricane season the following summer."

 "It seems the AMOC is not a single conveyor belt, but a belt of belts, each part operating semiautonomously."

"OSNAP has changed the picture in other ways, including by showing that overturning occurs not so much in the Labrador Sea, as models suggested, as it does farther north, in the Irminger and Iceland basins. Additional data suggest deep-water formation is migrating even farther north, into the Arctic Ocean, following the retreat of sea ice, Årthun says. “You’re expanding the reach of this cooling machine.” The northward migration could make the AMOC more resilient to warming"

"New climate model runs that capture more realistic melt from the Greenland Ice Sheet are less dire. In two preprints posted online in the past year—one led by Chuncheng Guo, a climate scientist at the Danish Meteorological Institute (DMI), the other led by Oliver Mehling, an ocean modeler at UU—researchers created multiple simulations where carbon emissions continued until 2250 and temperatures rose by up to 7°C. In both studies the AMOC weakened, losing about 40% of its strength. But it never collapsed. Both studies also suggest the weakening is reversible"

"that resilience persisted even in the face of catastrophic warming."

 "even if atmospheric carbon dioxide levels quadrupled, driving extreme warming, the AMOC would decline by 40% after 20 or so years—but once again, it would rebound."

"Evidence from past ice ages seemed to suggest the AMOC switched off entirely when massive pulses of freshwater from the melting of the North American ice sheet poured into the Atlantic. But new work, also presented at Ocean Sciences, suggests the AMOC may not have collapsed at all during these periods." 

New York’s Data Center Self-Sabotage Gov. Kathy Hochul finds another way to hurt economic development in the state.

WSJ editorial.

The article discusses how it is regulation and not data centers that are driving up costs. 

Keeping Cool: The Air Conditioner That Changed America

The time price of air conditioning has fallen 98.6 percent since 1952. That ordinary luxury saves lives every summer.

By Gale L. Pooley. He teaches US economic history at Utah Tech University. Excerpt:

"One of the great triumphs of entrepreneurial capitalism is how quickly air conditioning traveled the familiar path from luxury to necessity. What began as an expensive convenience for a tiny elite became, within a generation, affordable to ordinary families. The market did not merely invent comfort — it democratized it.

In their report Time Well Spent: The Declining Real Cost of Living in America, Michael Cox and Richard Alm found that a 5,500-BTU air-conditioning unit cost about $350 in 1952. At the time, entry-level workers earned roughly 83 cents an hour, putting the time price at 422 hours.

Today, Walmart sells a far more efficient 6,000 BTU air-conditioning unit (with a remote control) for only $115. The current hourly wage for limited-service restaurant workers is around $19 an hour, putting the time price at six hours.

The time price has decreased by 98.6 percent. For the time it took US workers to earn the money to buy one unit in 1952, they get 70 today.

If air conditioning saves lives, why don’t more Europeans have it?

Europe’s electricity prices are typically much higher than the US, driven by higher taxes, network costs, renewable energy mandates, and energy import dependence. Customers in the US pay 17 to 19 cents per kilowatt-hour (kWh) compared to 25 to 32 cents in Europe. This means Europeans pay roughly 47 to 68 percent more per kWh than US customers.

Americans are also much richer than Europeans. According to World Bank data, American gross domestic product (GDP) per capita was $84,809 in 2024, while the European Union’s was 25 percent lower at $63,585. That $21,224 difference could buy a lot of comfortable cooling.

The European Union also prioritizes environmental targets over human comfort by imposing strict regulations for heating and cooling, making these amenities much more costly. The commission encourages citizens to use fans instead of air conditioning. Imagine the government doing that in Phoenix and Atlanta in July. Italy, Greece, and Spain even announced temperature limits in public spaces during the 2022 heatwave in an effort to meet these environmental objectives. Spain limited air conditioners to be set no lower than 80°F. No wonder European productivity is 38 percent lower than the US.

Historic preservation laws and strict landlord rules frequently ban exterior window units to maintain aesthetic uniformity.

While air conditioning ownership increases households’ electricity consumption, it may be a small price to pay for comfort and avoiding death.

The problem is not the climate but the policy mindset. Too many European regulators approach energy and technology through the ideological lens of scarcity rather than creative innovation and human flourishing. One reason such policies persist is that the officials who design them are largely insulated from the consequences of their decisions and rarely experience their costs directly. Instead, those costs are borne by millions of ordinary citizens.

Air conditioning is not ultimately a story about cooling. It is a story about knowledge. It transformed oppressive heat into comfort, inhospitable regions into thriving communities, and summer misery into year-round productivity. Coal, copper, and electricity become valuable only after humans discover how to harness them. The history of air conditioning is the history of knowledge triumphing over nature’s constraints.

The ultimate resource is neither energy nor matter. It is the infinite capacity of human beings to learn, create, and discover."

Air Conditioning, Scourge of the French Left

Heat waves kill thousands in Europe, but politicians resist the relief Americans can take for granted

By Alexander Kustov. He is an associate professor of global affairs at the University of Notre Dame. Excerpts:

"The French left argues that air conditioning is a selfish indulgence and an ecological menace. Jean-Luc Mélenchon, the country’s most prominent left-wing leader, warned that cooling would mean “increasing the damage,” and says he wouldn’t expose his grandchildren to air conditioning because it “destroys your sinuses.”"

"The economist Alan Barreca and his colleagues found that the spread of home cooling explains most of the decline in “hot-day-related fatalities” in the U.S. since 1960."

"Air conditioning accounts for about 3% of global emissions today, and in France, where two-thirds of the power is nuclear and much of the rest is low-carbon, running a unit is close to carbon-free."

"a group of left-wing economists, among them Joseph Stiglitz, Thomas Piketty and Kate Raworth, declared economic growth “a doomed strategy” and signed on in support of a road map, developed by United Nations Special Rapporteur Olivier De Schutter, for a new “degrowth economy.” Its policies aim to reduce material consumption, shorten the workweek, and impose caps on personal income. Underlying this road map is the idea that wanting to be comfortable is shameful."

"In France, a condominium owner generally needs the consent of the other owners to install air conditioning. In the country’s heritage zones, a state architect can veto any unit visible from the street. In England and Wales, an air conditioner that has no heating function requires permission. The canton of Geneva issues a permit for comfort cooling only to people who prove they need it. Spain forbids public and commercial buildings from cooling below 80 degrees."

"The left’s most respectable voices are telling grandmothers to draw down the shutters and wait it out." 

As Europe Sweats, Some Politicians Talk of Air-Conditioning, Not Climate Action

Heat-related deaths and disruptions to daily life are forcing politicians to reckon, in different ways, with a rapidly warming planet

By Michael D. Shear and Jeanna Smialek of The NY Times. Excerpts:

"In the context of northern Europe’s traditionally mild, temperate climate, some left-wing and green parties opposed air-conditioning and have instead favored renovating buildings with architectural fixes to keep them cool when it gets hot. But the dangers to health posed by this week’s heat wave are piling pressure on that view — and changing minds.

In the Belgian city of Ghent, which is run mostly by left-of-center politicians, the municipal website this week discouraged citizens from using air-conditioners, saying that “the best air-conditioner is a tree” and advising they use fans and request a free tree to plant outside their houses.

Maurits Vande Reyde, a right-wing member of the Flemish Parliament, responded to Ghent’s recommendations on social media.

“It is absurd that all governments in our country, under pressure from left-green mumbo-jumbo, advise against the use of air-conditioning,” he wrote on Tuesday. “The most efficient and best solution. How many deaths would the government already have on its conscience with this kind of absurd advice?”

After The New York Times sent a request for comment, Ghent removed wording that read “avoid air-conditioners,” replacing it with the phrase “cool smartly.”

Thomas Dierckens, a spokesman for the mayor of Ghent, said in a written comment that the city was not against air-conditioning — noting that it had installed 30 portable air-conditioners into day care centers this week.

Marine Tondelier, the head of the Green Party in France, acknowledged that she was “breaking a taboo” when she said on Tuesday that “there are places where we can no longer do without air-conditioning.”

In London, Sadiq Khan, the center-left Labour Party mayor, said on Thursday that air-conditioning would need to be installed in the capital’s schools, offices and hospitals, as he warned that London needed to “act now” to strengthen its resilience ahead of worse heat waves to come. And at the European level, Terry Reintke, co-president of the European Parliament’s Green group, said in an interview that some air-conditioning was necessary, alongside longer-term solutions like planting more green spaces."

Record-breaking heat waves are challenging the Europe’s longstanding resistance to cooling technology, spawning new political battles

See Europe Is Hot as Hell. Why Doesn’t It Want Air Conditioning? by Matthew Dalton of The WSJ. Excerpts:

"European infrastructure was designed for a climate that was much cooler than today. Temperatures in the northern half of the continent rarely rose above 90 degrees Fahrenheit and temperatures over 100 were almost unheard of. 

Rail lines and electrical grids weren’t built to withstand extreme heat. Many of the continent’s buildings lack design features that would keep them cooler in the summer, such as shutters to block out the sun.

Most of the continent’s homes and institutions lack air conditioning. In Italy, around 56% of homes are equipped with the technology, a figure that falls to 25% in France and 5% in the U.K. Europe’s summer heat waves often claim tens of thousands of lives, far more than in the U.S., a difference that scientists say is partly due to the lack of air conditioning."

"Europe is the fastest warming continent, with temperatures that are already around 2.5 degrees Celsius warmer than in the preindustrial era, compared with around 1.4 degrees for the earth as a whole.

Last week, Paris topped 40 degrees Celsius (104 degrees Fahrenheit) on Wednesday and Thursday. That has only happened on three other days since official records began in the 19th century: in 1947, 2019 and 2022."

"Authorities across Europe have tried to avoid air conditioning on a large scale. The side effects from a big increase in air conditioning are considered to be large: The devices are costly; they are energy hungry; and they eject hot air into the street, warming cities even more. Moreover, they are a nuisance in dense urban neighborhoods, afflicting residents with the omnipresent hum of compressors."

In London, city regulations require developers to adopt cooler design measures—natural ventilation, shutters on windows and better insulation—before installing air conditioning in new buildings. Paris and Berlin have plans to incorporate more plants into the city landscape, reducing the heat-magnifying effect of stone during a heat wave. Paris opened the Canal Saint-Martin for swimming during the latest heat wave.

The problem is such measures are considerably less effective than air conditioning at reducing the threat of extreme heat, according to the Intergovernmental Panel on Climate Change, the U.N.’s official climate science body. In its latest report on adaptation in Europe, the IPCC rates air conditioning as a highly-effective response to heat waves, while mechanical ventilation was rated medium-effectiveness and urban greenery was given a low rating.

Measures such as mechanical ventilation or shading don’t work when the heat is relentless, experts say. During the latest heat wave, 85-degree Fahrenheit temperatures at night didn’t allow buildings to cool down before the sun rose to bake them again.

Radhika Khosla, a climate scientist at Oxford University, said countries should mix better building design with air conditioning to limit the devices’ energy consumption. “You want to use it for what it’s really needed as opposed to making it your go-to solution,” she said."

"In some European cities, installation of an air conditioner in an apartment requires approval from the entire building. Local officials also get a say, to make sure the system respects architectural norms, noise laws and the city’s energy goals. 

In Geneva, the installation of an air conditioner is subject to strict energy-usage rules. London officials have forced homeowners to remove air conditioning because they haven’t resorted to other cooling methods, such as ceiling fans."

"First, residents [in Paris] must gain approval from the neighbors. Then, if the system is visible from the street, local officials can refuse if it mars the iconic, limestone facades of the city’s Haussmannian buildings."

"Under French law, a building association can block the installation of a system if it produces more than five decibels during the day or three at night, roughly the noise of a light breeze." 

Works in Progress: Grid Connection Auctions

From Alex Tabarrok.

"The latest issue of Works in Progress is superb. Every article is interesting.

Chris Gillett points out something surprising: the US has plenty of electricity generation capacity ready to go, the problem is connecting it to the grid. Grid connection is complicated because on the grid, supply must equal demand at every moment in time. Even without speeding the process, however, we could get more power connected to the grid if we rationalized the ordering of connections.

The main flaw of the interconnection process is that it uses a first-come, first-served queue. This means that high-priority requests can spend years stuck at the back of the line behind other less important ones.

In essence, we have an airport congestion problem in which small Cessnas can bump 747s. Auctions for connection rights are the solution, as pointed out for airports by Vickrey and the classic paper by Rassenti, Smith and Bulfin. Gillett also emphasizes that some loads should be allowed to connect on a flexible basis: if a data center can disconnect or use backup power during the few peak hours each year, it should not have to wait years for firm service.

Gillett also has a very nice explanation of how market prices balance electricity from different sources:

Market prices signal to power plant developers about levels of supply and demand. In the same way, prices balance different energy sources based on the strengths and weaknesses of each. For instance, as more solar panels are built, the value (and therefore price) of power during the middle of the day, when the sun is shining most, adjusts downward. From December 2020 to September 2025, maximum solar output in ERCOT increased from 4 to 29.8 gigawatts. And from 2020 to 2025, the value of power at 1pm relative to the highest-priced hour decreased from 92.9 percent to 38.7 percent. As one technology type becomes overbuilt, prices reflect that and developers react accordingly.

The evolving daily price shape in response to the abundance of solar energy was a signal that the grid needed storage capacity, and power plant developers responded. From 2020 to October 2025, ERCOT went from having almost no battery storage to a combined battery discharge of 8.6 gigawatts. The same process has played out in California and many European markets."

Why the ‘Hormuz Shock’ Isn’t the ’70s All Over Again

Things would be a lot worse absent our current energy diversity

Letter to The WSJ.

"Daniel Yergin’s analysis of the worldwide oil market in his op-ed “Energy Markets Limit the Hormuz Shock” (June 3) is right on target. Diversification of energy sources, together with normal supply and demand responses, is limiting the Hormuz shock. We are experiencing pain, but this is clearly not, as many have claimed, a historic energy crisis. Today’s oil prices, adjusting for inflation, are more than 15% below their peak four years ago, indicating that markets worked then and are working now.

Two implications follow. First, whatever Iran’s degree of control over the strait going forward, its incentive will be to keep oil flowing. Continued restrictions on shipments through the strait will erode Iran’s future influence on energy markets, much as the Organization of Petroleum Exporting Countries’ clout diminished after the shocks in the 1970s. Second, the priority must be eliminating Iran’s nuclear capability rather than reopening the strait: Closing the strait is causing a temporary energy shock, whereas a nuclear-armed Iran would pose a permanent global threat."

Edward A. Snyder

William S. Beinecke professor of economics and management

Yale University" 

Related post:

Energy Markets Limit the Hormuz Shock (2026) 

Energy Markets Limit the Hormuz Shock

The world’s supply of fuel is much more diversified than it was during the energy crises of the 1970s

By Daniel Yergin. Excerpts:

"Today there is much more variety in world oil and natural gas than during the 1970s. The shale revolution has transformed the U.S. from the world’s largest importer of oil to the world’s largest producer of oil and natural gas and largest exporter of liquefied natural gas.

Overall, the Western Hemisphere now produces more oil than the Middle East did before the crisis. Canada is the world’s fourth-largest oil producer. Brazil produces four times as much oil as Venezuela; and in Guyana, where production began only seven years ago, output almost equals Venezuela’s. In Argentina’s Vaca Muerta region, shale oil production has grown sixfold since 2020. The current disruption will propel more oil and gas investment in the Western Hemisphere and Africa."

"Saudi Arabia built variety in the form of a pipeline system that now moves 7 million barrels of oil a day west to the Red Sea. Abu Dhabi built a pipeline looping around the Strait of Hormuz and plans to double capacity by 2027. France, which once depended on oil for electric generation, now relies mainly on nuclear. Japan led the development of the LNG industry to push oil out of its electric generation."

"Previous crises showed that markets themselves also contribute to energy security. They adjust faster than governments intervening to manage markets, which can make matters worse.

The U.S. gasoline lines of the 1970s weren’t the result of the crises themselves. Rather they were manufactured by government policies: price controls and clumsy, bureaucratic allocation systems that dispatched gasoline to well-supplied regions and yanked it from regions in short supply."

The Environmental Defense Fund Makes It Harder to Reduce Emissions

The group has obstructed critical projects designed to move cleaner energy to consumers who need it

Letter to the WSJ. 

"I agree with the premise of Fred Krupp’s May 22 op-ed (“Natural Gas Is Escaping Into Thin Air”) that reducing methane emissions is an essential priority. It is, after all, the product that natural-gas producers are selling. Operators throughout the Appalachian Basin—America’s largest and least-methane intensive natural gas producing region—have invested billions to do exactly that.

But what Mr. Krupp fails to acknowledge is that many of the infrastructure constraints he laments are the direct result of opposition campaigns supported by his organization, the Environmental Defense Fund, and its allies.

While Mr. Krupp notes that energy companies “haven’t built the infrastructure” to bring gas to market, his organization has intervened against major pipeline projects like the Constitution Pipeline, which can safely transport abundant, low-emission natural gas into New York and New England. For nearly a decade, activist organizations have litigated, delayed and obstructed critical infrastructure projects designed to move cleaner American energy to consumers who need it most.

The result? New England consumers continue to face some of the nation’s highest winter energy prices while the region periodically turns to higher-emitting fuel oil and imported liquefied natural gas to meet demand. Imports from countries such as Trinidad and Tobago, for example, have a methane intensity four times higher than Pennsylvania-produced natural gas.

Constructive engagement on emissions is welcome. But the Environmental Defense Fund can’t simultaneously lecture industry about inadequate infrastructure while working to block the projects needed to improve reliability, lower emissions and strengthen American energy security. If we are serious about reducing emissions, the solution isn’t less natural gas—it is more modern infrastructure to deliver it efficiently and responsibly.

Jim Welty

President, Marcellus Shale Coalition" 

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."

Republicans Shill for Solar Subsidies

Tim Pawlenty was against them in 2012. Now he’ll head the industry association

By Isaac Orr and Sarah Montalbano They both work at Always On Energy Research. Excerpts:

"Minnesota’s electricity prices were 18.5% below the national average in 2007, bolstering the state’s energy-intensive industries like agriculture, manufacturing and mining. By 2017, when Minnesota met its 25% renewable mandate eight years early, the state’s all-sectors electricity prices were only 2% below the national average."

"new solar costs [in Indiana] increase from $76.79 a megawatt-hour to $159.24 a megawatt-hour once firming costs to maintain reliability are included. This is without generous federal subsidies."

"the cost for new natural-gas combined-cycle plants is only $65.03."

"In his 2011 presidential campaign, Mr. Pawlenty said that the government needs to get out “of the business of handing out favors and special deals” and allow “the free market, not freebies” to work." 

Research even shows that closing down nuclear plants increase local emissions by 6-8%

A tweet from Justin Callais. 

 

DATA CENTER MYTH V. REALITY

From Taxpayers Protection Alliance. They used 0.06 percent of water in 2025 in Maryland and 2.5 percent of electricity.