No Mercy / No Malice: Big Energy

Investment Trends

The energy sector, historically a cornerstone of capital expenditure, continues to dominate with a projected $2.8 trillion investment in 2024. George Hahn highlights that fossil fuel companies alone account for $1 trillion of this, with ExxonMobil spending $23 billion on capital expenditures in 2023 1. Meanwhile, tech giants like Alphabet and Microsoft are rapidly increasing their capital expenditures, with Alphabet spending $12 billion in a single quarter, marking a 90% year-over-year increase 1. This shift signifies tech's growing influence, as Hahn notes, "Big tech isn't just similar to the energy business, it is the new energy business."

Training the trillion plus parameter models being stewed in a medium sized city, San Francisco requires the energy consumption of a small country.

--- George Hahn

The insatiable demand for energy and compute power underscores the convergence of these sectors, with AI's energy requirements doubling every 100 days 2.

   

Economic Impact

The economic interplay between energy and tech industries reveals a complex narrative of growth and transformation. Data centers, a critical component of tech infrastructure, currently consume 3% of U.S. power, a figure expected to triple by 2030 3. George Hahn explains that tech companies are heavily investing in energy production to support their expanding data needs, with Amazon leading as the largest corporate buyer of renewable energy 3. This convergence is reshaping the digital economy, as compute becomes the new currency, akin to traditional energy sources.

The 21st century will be defined by the recognition that the most powerful form of energy is the manipulation of information. Compute.

--- George Hahn

Scott Galloway adds that while tech firms dominate market capitalization, energy companies still lead in revenue generation, illustrating the ongoing balance of power between these sectors 4.