Jeremy Horpedahl highlights an example of a trending analysis based on data on FRED (Federal Reserve Economic Data) pertaining to gas and electricity prices in the major American cities, and it shows a remarkable market trend. Between 2015 and 2020, these prices were relatively stable, although even the FRED graph, which plots the index value with July 2020 as index=100, provides little movement. But there was a pronounced shift that occurred in the following half-decade. The FRED shows that the index rose to about 138 by mid-2025, which is a substantial increase of 38 percent.
Dissecting the 2020–2025 Surge in FRED’s Data
The graphical evidence provided by FRED is vivid enough to demonstrate that a sudden jump in the cost of electricity in the U.S. was not an accidental fluctuation but something closely connected to the movement of global processes and economic activities. As can be seen in the FRED data, the electricity prices started their ascending path in the year 2020, at the time when the COVID-19 epidemic was passing its peak. In lockdowns, FRED recorded a short declining surge as energy demand decreased.
However, demand also showed a sudden increase as the U.S. came out of the pandemic, and in 2021 alone, the EIA noted a 5.2 percent rise in both residential and industrial electricity consumption, as shown by FRED charts. What followed shortly after this was a double whammy: the global supply chain shocks and the Russia-Ukraine crisis in 2022. FRED indicated that this was also the time of a steeper climb upward in prices, with utilities making adjustments to raise prices as natural gas costs skyrocketed. As a country that uses natural gas to generate almost 40 percent of its electricity (using FRED-adjusted EIA data sources), the rise of the natural gas price, another FRED indicator, by 50 percent in just one year, greatly affected the United States.
Structural Forces Reflected in FRED’s Metrics
Beyond these shocks, FRED’s ongoing series reveals new, more persistent forces at play. Between 2020 and 2023, FRED-documented statistics capture a notable acceleration in renewable energy’s share; solar and wind expanded rapidly, growing from 11% to 21% of overall electricity generation, as confirmed by FRED-derived EIA reports. At first glance, such growth might suggest downward pressure on prices. However, FRED’s price indices over the same span show that intermittent renewables can introduce volatility, as backup gas-powered systems become necessary during periods of low wind or sun. The expansion, while essential for decarbonization, added a 10–15% premium during peak demand events, a nuance visible in FRED’s month-to-month fluctuations.
An additional trend emerging in FRED’s recent datasets is the spike in electricity demand from AI-driven data centers. Forecasts suggest that by 2030, such technology could double its current pull on the grid, necessitating new infrastructure, a point echoed in FRED’s aging capacity statistics. This, combined with the fact that price growth has exceeded general CPI inflation, a gap made stark by parallel FRED inflation time series, points to sector-specific pressures. As utilities invest to upgrade the grid and meet rising AI-era demand, FRED’s upward-sloping price line hints this may represent a new normal rather than an anomaly.
FRED Data Signals Enduring Upward Pressure
The use of the FRED lens to look at these trends is priceless. The inflation in electricity prices by 38 percent, according to a careful mapping of FRED between the years 2020 and 2025, cannot be attributed to a unique incidence. On the contrary, it represents a combination of post-pandemic economic recovery, increasing natural gas prices in the wake of the Russia-Ukraine crisis, the complicated renewable integration, and the growing technological requirements. The force of such factors, as well as the strains on infrastructure, as evinced by the datasets in FRED, will likely drive volatility and longer-duration cost pressures into the future.
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