Posted on 01/29/2025 7:50:24 AM PST by Red Badger
Investors in energy stocks panicked this week over the release of a new, cheaper AI model, ignoring an argument that reducing the energy needs of such models could actually increase demand for energy overall.
Why it matters:
The news could end up being bullish for those stocks, which lost more than $40 billion in value on Monday.
How it works:
The Jevons Paradox, as first formulated in 1865 by English economist William Stanley Jevons, states that greater efficiency in the use of any given resource can result in increased demand for that resource.
His example was coal:
After the Watt steam engine was introduced — which burned much less coal than its predecessors — demand for coal rose substantially, as Watt's engines were built into a wide range of applications.
What they're saying:
"This positive supply shock will massively increase demand for AI compute and applications of all sorts," says Nouriel Roubini, an economist at New York University.
Morgan Stanley energy analysts concurred in a note Tuesday, saying "there are multiple indications" the Jevons Paradox applies to the cost of compute in AI applications. Between the lines: The cost of compute has been one of the primary constraints in the development of AI. If it comes down, then it is possible that many more companies and research departments will get into the space.
It's worth noting that DeepSeek was developed by a Chinese hedge fund, rather than by a dedicated AI company or university department. Cheaper AI might also mean AI getting embedded much more rapidly in things like consumer products.
Driving the news:
Notwithstanding the knee-jerk investor panic, Chevron and GE Vernova said Tuesday they are building new power plants co-located next to data centers.
The plants will generate enough electricity to power 3 million homes, but won't even be connected to the grid. The data centers will use every watt they produce 24/7.
The bottom line:
Between electric vehicles and the seemingly bottomless thirst from data centers for electricity, don't hold your breath waiting for demand to fall.
AI Ping!....................
It will be interesting to see what the heat island effect of these datacenters will be.
Or Deep Seek is a False Value scam created to drive up it’s value and leave the suckers holding the bag when it crashes
They will probably determine that the Chinese AI software was stolen from US companies.
If it is a scam, I am more inclined to believe the CCP wanted to drive down some stocks in order to increase ownership of those stocks.
Once they hit 50%+1, they could use their majority power to transfer that company over to China.
I’d never heard of “Jevon’s Paradox” before but it is absolutely right. Did the demand for clothing go down when steam-driven looms were invented? Did the demand for cotton go down when Eli Whitney perfected the cotton gin? Did the demand for powered transportation go down when the steamboat and railroad caused prices to go down? There are so many examples.
If only the demand for this crappy modern article style went down. Think of the bits that could be saved if they eliminated crap headlines that add zero value to the writing. This information should be self-evident in the paragraphs themselves.
Why it matters:
How it works:
His example was coal:
What they’re saying:
Driving the news:
The bottom line:
When I was in school, we were taught good writing entailed an Introductory paragraph; Body paragraphs; and a Conclusion paragraph. Paragraphs were supposed to have “topic sentences.” It seems that has been supplanted with the “Useless and Insulting Headings” style.
cleaning leftists -> Copilot
“Sorry, I cannot chat about this. Would you like to talk about something else?”
Of no greater meaning than Web2.0. By same charlatans. Great potential as super browsers, sifting thru data. Actual sentience? Not a chance.
Now that we know the whole AI industry is a huge energy suck, so much so that changes in AI technology have significant impacts on the energy markets....
The next time some lefty politician tells you that he needs to control what type of car you drive, what types of food you eat, how much land can be used for farming, that you need to live in a “smart city”, etc...look to see if they also support these enormous data centers to run AI and data mining.
None of this is about the environment or fossil fuels. It’s all about control and compliance.
Methinks the big traders know AI a scam, but they only care about keeping the market in a constant state of churn, and they make their money from constantly trading shares and related derivatives, not holding them.
Case in point, FTX.
When will AI decide to cut out the middleman and create it’s own language that only other AIs understand?
There have been reports of AI’s doing just that................
When will AI decide to cut out the middleman and create it’s own language that only other AIs understand?
“Can I mambo dogface to the banana patch?”
Just from what I’ve seen AI cant do several things. Just some off the top of my head. Has problems with military units. Say there was one called the 351st. AI will give it as three five one ess tea. Can’t do well with acronyms either. Has trouble with nouns and homonyms. Will get words correct and then mess up the same word later in the same text. There are more.
AI is no more of a scam than the internet was.
We are still in the early stages of AI, what about 5-10 years from now?
bttt
“We are still in the early stages of AI, what about 5-10 years from now?”
You are exactly right. So many people cannot see beyond the tips of their own noses when thinking about technical innovation. It’s weird because most everybody on FR lived through the computer and electronic communications revolution. Think back to where computers and communications were in 1970 or 1980.
I played a lot of games with my son like that when he was growing up. We would think about what the world was like when his great grand parents lived and what they witnessed. Then the same for his grandparents and for his own mom & dad. My own great grandfather was an entrepreneur in battery energy storage around 1900. He owned factories manufacturing batteries for urban rail transport, boat transport and communications and became quite wealthy.
Those games with my son gave him a good sense of the grand scope of technical innovation, its introduction, and how it impacted peoples’ lives.
I’m reading a book right now about the history of short-line railroads in the West. There were few people in California in 1849. By 1852, a state census found 200,000 people in California. Plans for railroads started being put into action in 1853 and short line construction started in 1854. Then the transcontinental railroad was completed in 1869, only 15 years later! Could those people in 1854 even conceive of a transcontinental railroad connecting California to the east? Probably not.
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