Chapter 1: Why are electricity prices rising so sharply?
Your electric bill is going up, but how much are AI data centers really to blame? Plus, could lowballing yourself help you get a job? From American Public Media, this is Marketplace. In Washington, I'm Kimberly Adams in for Kyra's doll. It's Thursday, January the 29th. Good to have you along.
If you've noticed that your electric bill has been creeping up these past few years, you're in very good company. According to the nonprofit Power Lines, electric and gas utilities asked for permission to increase rates by $31 billion last year. That's double what they asked for the year before. And in most cases, those rate increases were approved.
Chapter 2: What role do AI data centers play in energy consumption?
Marketplace's Sabree Beneshore takes a look at why this is happening.
Osiris Bali lives in Little Rock, Arkansas, and his electric and gas bills are about to explode again.
We're all experiencing this winter storm, and you have no choice but to run the heat all day long, especially if you have children.
Completely aside from the storm, his bills have already been rising.
But this went up, you know. A few hundred dollars over the last few years for gas and electricity here.
He is annoyed that the Public Service Commission keeps approving the utility's rate increases.
A lot of corporate welfare, I'll say.
Every utility market is different, but overall, electricity and natural gas are among the biggest drivers of inflation, according to nonprofit power lines. Charles Hua is executive director.
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Chapter 3: How does aging infrastructure affect energy costs?
Utility bills have gone up about 40% over the last five years. It's not just because of data centers, which are geographically concentrated. In fact, in a lot of places, it's not even mostly because of data centers. Our grid is getting old. We're not using it efficiently. So it costs a lot of money just to replace and repair and modernize our grid infrastructure.
For years, there was underinvestment in the power grid as a way to keep prices down, according to Thomas Rollins-Reese, head of power market analysis at Bloomberg. Underinvestment in the grid hasn't been a problem because U.S. power demand has been stagnant. U.S. power demand is definitely not stagnant anymore. And the long-delayed upgrade bill is catching up with all of us, he says.
Dan Pickering is co-founder of Pickering Energy Partners.
Demand growth a decade ago was running at about half a percent per year. In the last three or four years, it's ticked up to around 1.5% per year.
Just from population growth, reshoring of industrial activity, and just more things that are electric, like cars. Add on top of that data centers, and demand growth is expected to increase from 1.5% to 2.5% each year. But there's another thing driving electricity and gas costs up. The market price of natural gas, which powers a lot of power plants. Thomas Rowlands-Reese again.
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Chapter 4: What factors are driving demand for electricity?
There's a bit of an upward trend in natural gas prices right now.
One reason is because new shipping terminals are allowing us to export more of it, leaving less gas here at home and pushing up prices. In New York, I'm Sabree Beneshour for Marketplace.
Wall Street today, not a great day for some tech stocks, just to put it mildly. We'll have the details when we do the numbers. AI's influence is showing up in lots of different parts of the economy. We got one example this morning when Caterpillar reported profits that beat Wall Street's expectations.
Shares of the company that makes all that yellow, heavy construction equipment, formerly of Peoria, Illinois, now of Irving, Texas, those shares are up more than 50 percent over the last year, thanks in large part to artificial intelligence. Marketplace's Daniel Ackerman explains.
Yes, Caterpillar builds excavators and dump trucks, says Kristen Owen, an analyst with Oppenheimer, but there's one component it makes for them that's driving the boom.
When you think about what helps those big machines that we know Caterpillar for, it's large engines.
And lately, the firm is connecting more and more of its engines to electrical generators. Because there's one industry demanding a lot of them these days. AI data centers.
We have on order over 600 natural gas reciprocating engines from Caterpillar.
Connor Andrus is with Jewel Power, which develops data centers.
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Chapter 5: How do natural gas prices impact electricity costs?
It's abundant. You can scale it very quickly. And quickly is the operative term here, says David Victor, a professor of public policy at UC San Diego.
So the folks who are developing these AI data centers are in the middle of an arms race.
And power supply is often the bottleneck.
You're raising massive amounts of capital and trying to deploy that as quickly as possible. Time to market for your power projects really matters.
Connecting to the grid can take years of permitting and reviews, so many data centers are opting to power themselves with solar or wind, or even by reopening nuclear plants. Connor Andrus says he considered solar and geothermal for his data center in Utah, but...
The fact of the matter is those are hard to scale, certainly at speed.
And some of Caterpillar's competitors are sold out pretty much through the end of this decade, says Rob Wertheimer, an analyst with Melius Research.
So if you want power before that and you're not already on the list, your options have to change.
Caterpillar says right now, power generation is its fastest growing segment. I'm Daniel Ackerman for Marketplace.
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Chapter 6: What is the significance of Caterpillar's profits related to AI?
Yeah.
Yeah. So in this first sort of set or tranche of cases in a California Superior Court in Los Angeles, we are going to hear from nine individuals who are suing all four companies. And in this first case, Snap and TikTok were. settled with the plaintiff who is going by the initials KGM.
What we know about her is that she is now 20 years old, but she began using YouTube in elementary school and soon after picked up Snap and then also subscribed to Musical.ly, which is now known as TikTok, and then Instagram. And her claims are that
She just could not stop using the different apps as she became really hooked, particularly by algorithms that directed her to more and more enticing content. It also happened to be quite toxic, leading to trouble sleeping, body dysmorphia and body image issues and thoughts of self-harm.
And so she's focusing on, and all these cases are, they're focusing on the technology itself, the tools and the features that are used to get users and particularly young people to engage more. Things like infinite scroll, beauty filters that basically change your appearance on your face. And so you look almost cosmetically altered, actually.
as well as like autoplay of videos where on YouTube, I'm sure you've experienced this, where right after you watch a video, another one just starts playing. Another one comes up. That's right. And you didn't even ask for it, right? And this is all done through their algorithms recommendation.
And these are not by accident, any of these features, they're all done to get people to want to come back and every day and often and for long periods of time. What happens if these plaintiffs win?
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Chapter 7: How are job seekers using lowballing strategies in a tough market?
So what these plaintiffs are asking for are monetary damages. And in a whole second set of cases that'll begin this summer, school districts and state attorneys generals are also suing. And they're looking for really big changes within these platforms. They want Instagram to stop recommending content to young people that could be toxic. They want the autoplay feature of videos on YouTube to stop.
They want beauty filters to be banned. So they want structural changes that they will do through what's known as injunctive relief if they win You highlight in your reporting that some people are calling this social media's big tobacco moment. Do you think that comparison is apt? And how might it change the way that we even talk about social media and social media addiction in this country?
So I think it's very fair in terms of the legal strategy here in that what happened with the big tobacco trials was that over several years, attorneys generals and individuals sued the biggest tobacco companies for creating addictive products that were marketed to young people and for hiding the information that they knew internally about how harmful their products are.
The exact same thing is happening in these trials. What the plaintiffs in these trials are saying is that these companies have studied and have acknowledged and have known about the potential harms of their products for quite some time and that the CEO's
either ignored the advice and or the companies decided that it was too risky to the business model to change any of these technologies because they were so concerned about engagement going down and traffic going down.
And so that's very similar to what was claimed in the tobacco trials and that they were personal injury claims and there was a failure to warn legal argument that the companies knew what was happening and they didn't tell the public.
It also kind of shifted the conversation about smoking in America from sort of you're not able to stop because you have no willpower to you're not able to stop because these products were designed to make you not stop. I think that's such an important point.
A whole generation of young people have struggled with regulating their own use of social media, but the fault and the finger pointing being toward the young person is And I think what this will do is turn the tables so that people will interrogate more the actions of the companies.
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Chapter 8: What innovations are emerging in direct primary care models?
And that'll be a relief in some ways and a change, at least, in the way that society thinks about how maybe children in some ways have been the guinea pigs and maybe even the victims of businesses that have not put them first. At least that's what's being alleged in these cases. Cecilia Kang covers technology and regulatory policy for The New York Times. Thank you so much. Thank you.
Coming up... This is medical care. It was really dumb that it was not fixed a decade ago.
One of the more generous ways to describe America's health care system. But first, let's do the numbers. The Dow Jones Industrial Average added 55 points, one-tenth of a percent, to close at 49,071. The Nasdaq dropped 172 points, about three-quarters of a percent, to finish at 23,685. And the S&P 500 gave up nine points, one-tenth percent, to end at 69.69.
Big tech firms diverged today in the markets. Microsoft corporations sank 10 percent with concerns that they're spending too much on AI. Those concerns didn't stop meta platforms from soaring 10 percent. Amazon, which announced 16,000 job cuts yesterday, lost half a percent today. Dan Ackerman was just talking about the heavy equipment building our AI future.
Caterpillar dug up three and four tenths percent. Rival Deere and company known for John Deere tractors added one percent. Bonds rose. The yield on the 10-year T-note fell to 4.23 percent. And you're listening to Marketplace. This is Marketplace. I'm Kimberly Adams. It's no secret that the job market is tough right now, especially for new and recent college graduates.
A report from the Cengage group that came out at the end of last year found that only 30 percent of new grads they surveyed had landed a full time job. As the job market gets tougher, applicants are trying all sorts of strategies to get hired, including low-balling their own salary offers.
Megan Robinson is a freelance journalist who has a story in Slate titled, I offered to take less money to get hired. It still didn't work. Megan, thanks for joining us. Thank you. Before we get to your story, we should start with some definitions. When you talk about low-balling salary, what do you mean?
Low-balling is when job applicants offer an employer to work for less than the listed salary. Candidates do it to appear cheaper and therefore hopefully more desirable to employers. It's something I've done myself and have seen amongst other younger female job seekers. But in my own case and in the other women I interviewed, it didn't help any of us get a job.
I think it's more of a symptom of how difficult the job market is for young people right now.
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