In brief
The demand for electricity has surged alongside the artificial intelligence revolution, prompting major shifts in the energy sector. Chevron, the second-largest oil and gas company in the U.S., has announced plans to establish natural gas power plants dedicated to servicing data centers utilized by technology firms for A.I. and other services. Partnering with Engine No. 1, a prominent San Francisco investment firm, Chevron has announced that they have started procuring essential equipment, identifying potential locations, and anticipate launching their first facility within a three-year timeframe. CEO Mike Wirth emphasized how this initiative could meet the urgent need for reliable and affordable energy in the context of rising A.I. demands.
Chevron's move is indicative of broader changes in the energy landscape, as oil companies reconsider their positions in the power generation industry—once deemed unprofitable compared to traditional oil and gas extraction. Exxon Mobil recently declared intent to enter the electricity market targeting data centers. However, the volatility of the technology and energy sectors was underscored on a recent trading day, as investor anxiety surged following breakthrough advancements in A.I. from a lesser-known Chinese startup, DeepSeek. The market responded negatively, with stocks for A.I.-related companies, including chip-maker Nvidia, plummeting by 17%, while the shares of Constellation Energy, a major power producer, dipped more than 20%. This scenario highlights the unpredictable relationship between A.I. developments and the associated electricity demand.
