Is electricity dimming oil’s political power?

 

Is electricity dimming oil’s political power?

 

Surging power demand is turning electricity prices into a political flashpoint across the U.S. and Europe.

 

By Benjamin Storrow

08/30/2026 10:00 PM EDT

https://www.politico.com/news/2026/08/30/is-electricity-dimming-oils-political-power-01055292

 

Political fortunes across the globe once rose and fell with the price of gasoline.

Increasingly, they are tied to the monthly electric bill.

That new reality has political leaders across North America and Europe rushing to stave off spiking power prices with an urgency unimaginable even a year ago.

In the United Kingdom, Prime Minister Andy Burnham eliminated a tax on electricity shortly after walking through the doors of 10 Downing Street. Marine Le Pen, the leader of France’s right-wing National Rally, wants to slash power levies too — and exit Europe’s electricity market. And in the United States, voter anger over data centers’ potential impact on power bills has led governors like Pennsylvania Democrat Josh Shapiro and Texas Republican Greg Abbott to suddenly impose restrictions on the energy-hungry facilities they once championed.

“They are very concerned about their utility bills and the cost of electricity, which is something that I feel like I didn’t really see in previous cycles,” said Oscar De Los Santos, who leads the Arizona Democrats trying to ride a wave of voter discontent to victory in the state’s House of Representatives for the first time in 60 years.

The drivers of higher costs vary by country, but the growing transatlantic sensitivity can be traced back to the same source: The world is using more power than ever.

That trend is already reshaping the political map. Populist candidates as varied as progressive Democrats in the U.S. and far-right members of Alternative for Germany, or AfD, are turning high electricity prices into a political rallying cry. In Europe, the focus on electricity is an outgrowth of the continent’s attempts to cut climate pollution and curb its reliance on imported fossil fuels.

Data centers are the story in the U.S., with Democrats and Republicans alike eager to position themselves as the defenders of low electric bills with November’s midterm elections on the horizon.

President Donald Trump is promoting a plan that asks technology companies to generate or pay for the electricity of their AI facilities. In Arizona, Democrats are trumpeting their efforts to end data center tax credits in a bid to win back the State House this fall.

“You ask people, ‘Well, why do you think your electricity bill is so high?’ And more and more and more people were talking about AI data centers,” De Los Santos said.

Oil is still king of global energy markets, and politics. But a shift is underway. Last year, global electricity demand grew at twice the pace of total energy demand, as new industries hoover up electrons.

Power consumption from electric vehicles grew 38 percent in 2025, while data center electricity demand rose 17 percent, according to the International Energy Agency. Buildings were the single-largest driver of electricity demand growth last year, as rising incomes and extreme heat prompted more people worldwide to install air conditioners and heat pumps.

“There are a whole bunch of macro and micro factors that are conspiring to make electricity a lot more important than it has been,” said Eurasia Group Chair Gerald Butts, who has served as an adviser to two Canadian prime ministers, including Mark Carney. “We’re just using it for more stuff, right? And the prospect of using it for exponentially more stuff over the next 25 years is, I think, a pretty strong bet.”

IEA Executive Director Fatih Birol has labeled the coming decades “the Age of Electricity.”

“When somebody asks me, ‘is energy cheap or expensive today?’ I say it is $95 per barrel,” Birol said, referring to the price of oil in a recent interview. “Now, very soon when they ask me, ‘is energy cheaper?’ I will say 6 cents per kilowatt-hour. It will be the unit that people will look into.”

The mounting pace of global electrification is one of the reasons why oil prices — while high — didn’t rise as much as expected after the U.S. and Israel attacked Iran earlier this year.

Analysts initially predicted prices would hit at least $150 per barrel as Iran all but closed the Strait of Hormuz and global supply contracted. But the rising number of electric vehicles cut into global demand for crude, Butts said. In recent weeks, the international benchmark for oil has hovered between $85-$95 a barrel.

“It’s a big macro market signal that oil is just not as geographically constrained or as essential as it used to be,” Butts said. “Essentially, oil is not worth what it once was.”

‘Who to be mad at’

Electricity has traditionally played second fiddle to oil in terms of political importance, with governments tailoring their decisions around voters’ sensitivity to high fuel prices.

French President Emmanuel Macron abandoned a proposed fuel tax in the face of widespread protests in 2018. Four years later, then-President Joe Biden ordered up the largest withdrawal in history from the U.S. Strategic Petroleum Reserve when gasoline prices eclipsed $4 a gallon.

Oil remains atop the political priority list today, as evidenced by Trump’s repeated claims of an impending deal with Tehran and Burnham’s apparent willingness to open the North Sea to more oil and gas drilling. Both moves were made with an eye toward keeping fuel prices in check.

“The gasoline pump, for better or worse, kind of tells you who to be mad at even when you’re wrong. The electric bill makes you figure it out,” said Scott Segal, who leads the Policy Resolution Group at Bracewell, a Washington lobbying firm.

As of 2023, gasoline, diesel and other oil products made up about 40 percent of global final energy consumption, or almost twice as much as electricity.

The trend lines toward greater electrification of the global economy are clear, but it will take decades before electricity sits on par with oil, said Jason Bordoff, who leads the Center for Global Energy Policy at Columbia University.

“People are going to be increasingly sensitive to electricity prices,” Bordoff said. “That is kind of getting started now.”

In the U.S., rising power bills have helped make affordability a key issue in the November midterms — and scrambled political priorities.

Progressive challengers pledging a moratorium on data center construction have notched wins in Democratic primaries in Colorado, Michigan and Kansas, among other states. Shapiro, who is frequently mentioned as a 2028 White House contender, recently announced that data centers seeking permits in Pennsylvania will need to commit to covering the cost of connecting to the grid.

Abbott’s recent move to halt data center grid approvals was an abrupt shift for a Republican governor who spent his first three terms lavishing tax breaks and grants on data centers in a bid to lure technology companies to Texas and make the state the “epicenter” of artificial intelligence. But faced with an unexpectedly close reelection bid this fall and rising rural angst over data centers, Abbott changed course by directing state utility regulators to audit the facilities before they can connect to the grid.

Democrats in the U.S. increasingly see the growth in electric bills — and their link to data centers — as a winning issue with voters. Republicans acknowledge the vulnerability.

“You have the horseshoe-shaped politics on some of this. People farther on the right and farther on the left are coming together on issues like this,” said Doug Heye, a former spokesperson for the Republican National Committee and a longtime political operative. “Texas has made this issue a lot more interesting. You have the governor who has done a big reversal.”

‘Foundations of an electrified economy’

In Europe, countries still worry more about century-old industrial traditions than AI.

Take Germany, home to the largest manufacturing economy — and some of the highest power bills — in the EU.

Berlin has come under pressure to slash energy costs for its struggling manufacturers. While high gas prices remain an issue, the electricity price has moved into the spotlight as heavy industry seeks to electrify some of its fossil fuel-powered processes. That partly explains why the European Commission is watering down the bloc’s Emissions Trading System — even as it promotes renewable energy as a way to reduce reliance on imported fossil fuels.

“Europe’s electricity prices are structurally too high,” European Commission President Ursula von der Leyen said earlier this year.

Electricity prices in Europe are closely linked to the cost of natural gas, much of which once came from Russia. When Moscow throttled gas exports to Europe over the continent’s support of Ukraine in 2022, electricity prices soared. Export-driven economies like Germany were particularly hard hit.

Populists pounced. In France, stories of bakers paying thousands of Euros on their monthly electric bill became a rallying cry for far-right leaders like Le Pen. Germany’s far-right AfD notched a series of strong performances in state elections in 2023 and 2024 after focusing on high electricity bills, according to a recent paper by European academics.

The European Commission responded with a plan to essentially double the amount of electricity used in the economy by 2040.

“We are putting the foundations of an electrified economy in place,” von der Leyen said in a video message to an oil industry conference in Norway last week. “This is how we end our exposure to fossil fuel price shocks for good.”

In the United Kingdom, Labour’s Keir Starmer swept into power in 2024 on a pledge to get energy costs under control. When he resigned as prime minister last month, his successor immediately underscored the political salience of power bills.

On his first day, Burnham eliminated a value-added tax on electricity consumption. Only three European countries had higher electricity prices than the U.K. during the second half of last year.

“The affordability crisis is what’s driving the government’s agenda,” Michael Shanks, the U.K. Minister of State in the Department for Energy Security and Net Zero, told POLITICO. “The cost of living is too high, and we have to do what we can to bring it down.”

He cast Burnham’s Day One move to cut electricity taxes as an attempt to provide some breathing room for families struggling with high bills, but said long-term investments in the U.K.’s grid are needed to truly bring down prices.

“The only way we get genuine energy security at home, and for the electricity price to not rise and fall on a global commodity that we have no control over, is to build a system in the U.K. that we control. That is clean power, but is also power we control in the U.K.,” Shanks said. “We will always be a price taker in the international markets for oil and gas, never a price maker. We’ve got a chance to change that.”

Warning signs in America

Europe has thus far avoided a major spike in electricity bills despite the conflict in Iran, which has knocked out a fifth of global liquefied natural gas production. Some leaders say the combination of increased renewable generation and LNG shipments from countries like the U.S. have helped ward off a price spike.

But voter concern over electricity costs is unlikely to subside anytime soon. European gas storage is not on pace to meet the EU’s winter storage targets, in a potentially ominous sign for electricity prices. In the U.K., household bills are forecast to hit a three-year high this fall.

The U.S. faces a different challenge from data centers.

The energy-hungry facilities are not the driver of high electricity bills in most of the country. Utility upgrades to old poles and wires, natural gas prices and renewable energy mandates have been the primary culprits behind rising bills in recent years, according to researchers at the Lawrence Berkeley National Laboratory.

But warning signs are emerging.

In Mid-Atlantic states like Pennsylvania and Virginia, the rapid pace of data center growth has outpaced utilities’ ability to bring new power plants online, resulting in higher prices.

Even states that have so far kept up with rising power demand face an uphill battle.

Texas has thus far escaped a spike in electricity prices, thanks to a solar and battery boom. But the grid operator serving most of the state recently reported that large energy consumers are seeking to add 474 gigawatts of electricity demand to its system — or roughly five times its current peak load. Data centers account for 90 percent of that.

Voters are watching closely to see if their leaders can keep their bills in check. When POLITICO surveyed more than 2,000 American voters last month, 58 percent of respondents said data centers make electricity more expensive.

“The data is unambiguous that Texas voters, like voters across the country, are very sensitive right now to prices across the board,” said James Henson, a pollster who leads the non-partisan Texas Politics Project. “The price of electricity, and the reliability of the supply of electricity, are more salient than they’ve ever been here.”

Reporters Zia Weise, Charlie Cooper and Nicolas Camut contributed.