What record U.S. energy exports mean for your IT budget

The U.S. has been a net energy exporter since 2019, according to the U.S. Energy Information Administration. However, energy costs have been rising, and U.S. energy exports reached record highs.

Geopolitical tensions involving Russia, Iran and Venezuela have affected global energy markets, contributing to price volatility. While the U.S. produces most of the energy it consumes domestically, these disruptions affect global LNG demand and prices, which can indirectly influence U.S. export commitments and domestic availability.

U.S. energy policy affects domestic prices mainly by changing how much energy is produced, how much is exported and how much remains available to U.S. buyers. When policy constrains supply or increases demand for exports, it can push prices higher, especially for natural gas and electricity.

Record U.S. energy exports represent a fundamental shift in energy markets that will affect everyone – including IT budgets -- for years to come. CIOs who understand this connection and act strategically will turn a budget challenge into a competitive advantage through superior cost management and operational efficiency.

Understanding the energy export and IT budget connection

The problem is on both the supply and demand sides. There are stories about data centers running up electric bills for residential customers. In recent months, Venezuela and Iran have been taken out of the supply, and for some time, Russia has been on the outs with the West due to its attack on Ukraine.

Net energy exports do not automatically mean cheap energy at home. It can mean the opposite. If supply falls or demand spikes, the U.S. cannot back out of sales and break its contracts. It must fulfill its contractual obligations.

For natural gas in particular, studies and recent reporting indicate that higher LNG exports can raise domestic gas prices, which then also feed into electricity bills because gas often sets power prices. And LNG exports are at record highs and expected to grow by 30% in 2027.

Natural gas generated about 41% of U.S. utility-scale electricity in 2025, according to the U.S. Energy Information Administration. Data centers are particularly accounting for more power consumption, with recent estimates by Goldman Sachs saying global data-center power demand could rise 50% by 2027 and as much as 165% by 2030 versus 2023.

And don't expect prices to come down any time soon, even with a resolution to the Middle East conflict. "You know, even if it's resolved tomorrow, they say that prices shoot up like a rocket, but they float down like a feather, so you know, and that you can't count on a resolution," said John Winsett, CEO of NPI, a data intelligence firm.

Executives need to keep a close eye on this issue. Electricity represents 20-30% of data center operating costs, according to IAEI Magazine. Businesses should also monitor energy costs, even if they don't own data centers. Cloud providers pass energy costs through to customers, and co-location contracts often include energy cost escalators.

There isn't a single national forecast for data center electricity costs over the next two to three years, but recent reporting points to substantial upward pressure, with some estimates suggesting electricity prices could rise up to 40% by 2030 compared with 2025. In faster-growing regions, especially data-center-heavy markets, the increase can be much steeper. A Bloomberg report says electricity prices in Virginia have already increased 267% over five years.

If you are doing a colo or outsourcing of a data center, you've got to check to see if there's an energy pass-through clause, because that clause will allow them to adjust your monthly bill by the amount that they feel is necessary.

Direct impacts on your IT budget

No type of data center is immune to price increases, regardless of whether a business has an on-premises data center, a cloud environment, a hybrid environment or co-location.

An on-premises data center operating costs tend to be more fixed than cloud and co-location because you have control over the purchasing of electricity. A colo or a cloud service provider (CSP) can have a pass-through clause, which allows them to adjust the terms of their contract if electricity prices change.

"If you are doing a colo or outsourcing of a data center, you've got to check to see if there's an energy pass-through clause, because that clause will allow them to adjust your monthly bill by the amount that they feel is necessary," said Winsett. "In a colo data center [contract], you negotiate for a fixed rate power clause, or at least an energy cost cap. The worst scenario is an uncapped variable pass-through language."

Location is also a factor in cost, as energy prices vary from one region to the next. Energy prices tend to be cheaper in areas rich in natural resources, such as liquid natural gas in Pennsylvania and coal in the West.

"A significant portion of the higher costs in the coastal regions is due to transportation, because the price at the wellhead is the price at the wellhead. It's transportation that adds a lot of cost to get the product to market, particularly New England and the Mid-Atlantic states," said Paul DeCotis, senior partner, Energy & Utilities at West Monroe Partners, a global consulting firm.

Strategic responses for IT leaders

IT leaders need to prepare for the instability caused by energy price fluctuations, and there are a few steps they can take. The first thing, according to Winsett, is to work on their cost sensitivity analysis and treat energy prices like a macro variable, just like interest rates.

"[Energy prices] have been so stable for so long that you lose muscle memory on how to do this stuff, but it's important that they bring that back up to muster, so that any of these agreements [enterprises] are making, even if it has an energy pass-through, it's collared somewhat," he said.

Another consideration is infrastructure modernization. This has the highest upfront costs for acquiring new equipment and a longer payoff period, but modernization can pay off handsomely if you are dealing with old, inefficient hardware.

"I think that over time, as hardware gets more efficient, it's able to produce more output and generally take less power. So that's always a strategy that we see data centers employ. You're generally chasing efficiency," said Dan Lawrence, CEO at OBM, a cryptocurrency software developer.

DeCotis said he's seeing much more interest in on-shoring equipment and supplies because it reduces the risk of supply disruptions when importing them from overseas. "With more onshore manufacturing of electrical equipment in systems, there's a very real security benefit when you're buying equipment," he said.

I think that over time, as hardware gets more efficient, it's able to produce more output and generally take less power. So that's always a strategy that we see data centers employ. You're generally chasing efficiency.

What CIOs are doing

Some CIOs have seen the writing on the wall, noting that they have the reporting on data center power consumption and the instability brought about by the Iran conflict. So, they are taking steps to get ahead of the power issue before it becomes unmanageable.

For instance, Lawrence said his company is seeing more battery deployments co-located with renewable power, which provides a consistent power source for a data center in a highly renewable-focused way.

DeCotis said he speaks with chief procurement officers every day, and not a day goes by that they aren't worried about the future power costs, mostly driven by token consumption now. Tokens are the currency of AI, and tasks are executed in exchange for tokens. You generate tokens through processing.

"With energy creeping up, they're watching it," he said. "It's been subsidized by their in-place contracts, so it's been protected by their in-place contracts, but as those come up for renewal, they're going to be feeling the pinch.

Lawrence said the biggest thing he's seeing out of data center operators is what he calls demand management or demand mitigation. The objective is to make them more flexible with the available compute during certain hours of the day.

For example, in a 50-megawatt data center, a business might cut the available load to 25 mW during off-peak hours and raise it to 50 mW during peak hours.

"So, a lot of the data centers are trying to make themselves look more flexible and say I'm not always going to need 50 megawatts here. Instead, I'm going to offer the very minimal necessary, and max out around these couple of periods where I get my 50 megawatts for the rest of the day," he said.

Andy Patrizio is a technology journalist with almost 30 years' experience covering Silicon Valley who has worked for a variety of publications on staff or as a freelancer, including Network World, InfoWorld, Business Insider, Ars Technica and InformationWeek.