If only people didn’t need to worry about heating their homes, buying food, getting to work, and the overall cost of living. If only modern nations didn’t rely on fragile energy supply chains and messy things like plastics, fertilizers, batteries, cement, steel and internal combustion engines. If only governments didn’t feel the need to compete for resources, and worry about their self-sufficiency, resiliency, and economic security. If only we could end pollution, and the climate would just stay the same. Imagine.

We could then live in a world defined more by our mental needs than our physical ones. We could prioritize having information at our fingertips, personalizing our health care and education, enjoying virtual and augmented realities, exploring the wonders and possibilities of artificial intelligence, and addressing technology’s cultural downsides. We could then say with confidence that data is indeed the new oil, and that the digital economy has superseded the dirty demands of the industrial world.

Maybe someday. But today we can’t plausibly say such things. Although AI and large language models show us what a data-driven world might someday look like, the physical world is still pre-eminent, and from food to batteries to military equipment and inflation, it dominates the political agenda. Perhaps the most we can say today is that energy is the new oil. But whether this energy comes from fossil fuels or alternatives (like renewables and nuclear), it’s uniquely vital to the modern world. Data doesn’t come close in necessity. One can imagine a world where reliable, clean, storable, and inexpensive power is taken as a given, but Putin’s horrible war has shown us that this goal won’t be achieved anytime soon.

Tempting Similarities

It’s easy to see why the “data is the new oil” meme once spread so widely. The phrase goes back to at least 2006 and is widely credited to the British mathematician and entrepreneur Clive Humby. It accurately reflects the enthusiasm of the developing Internet economy. Then and now, the parallels are numerous, most prominently the Rockefeller-like wealth and Standard Oil-like market shares within many tech sectors. There is also the general-purpose nature of both oil and information; each provides foundational capabilities for new and existing businesses alike. Then there are the less direct but aesthetically uncanny similarities. Both oil and data need to be extracted and refined. Both can also have negative externalities. Just as fossil fuels can affect the climate and the air we breathe without us necessarily knowing it, data exhaust might potentially harm society and individuals in indirect ways.

As economic analogies go, these are very strong. There are significant differences, especially the fact that data is non-rivalrous and can be copied perfectly infinitely at essentially zero marginal cost. But the data-is-the-new-oil analogy would be perfectly fine if it were not for the fact that energy generally and oil in particular is still so much more important. As long as this is the case, data can’t be the new oil. As the saying goes, to be the king, you have to beat the king, and the energy king is still standing, arguably as tall as ever.

How might this change? There are two scenarios—one appealing, one not. If the world shifts to energy sources that are clean, widely available, and inexpensive, fossil fuels will no longer reign over the global economy, and information technology will very likely take its place. But successfully making such a transition will require a breakthrough in either large-scale energy storage or nuclear power, and neither capability is currently in sight. Wind and solar still can’t answer the basic question of how a nation meets its 24-hour energy needs when the sky is dark and the wind doesn’t blow.

The more troubling scenario—and in the short term, the more probable one—that the growing tensions between America, China, and Taiwan seriously disrupt the global flow of semiconductors and related technologies. The resulting shortages, rising prices, and stagflation might well resemble the major oil shocks and embargoes of the past. No one wants data to be the new oil in this sense of scarcity and geopolitical conflict, but the possibility is becoming ever more real.

The New Space Race

The negative scenario above suggests that “semiconductors are the new oil” might be the more accurate phrase because chips, even more than data, underlie so much of the global economy, and are more vulnerable to supply-side disruptions. Semiconductors also have strong parallels with oil—essential and diverse applications, supplier dependencies, trade deficits, wealth, power, embargoes, and more. Once again, there are important differences, especially the fact that the same oil companies and countries have been selling basically the same product for many decades. In contrast, the global information technology industry is now intensely competitive. In this sense, it’s much more like the space race.

Like the space race, computer design, manufacturing, and usage are important tests of national will, capability, competitiveness, prestige, and even societal model. No one says this about fossil fuels, given that so much of the global supply comes from the Middle East, Russia, Venezuela, and other places that aren’t seen as nations to be emulated. When America bested the former Soviet Union in the race to the moon, it said a lot about the merits of two fundamentally different economic systems. If China becomes the world leader in key digital technologies, many will draw a similar conclusion.

Limits to Analogies

Whether one believes that data is the new oil or semiconductors are the new space race, analogies help us see patterns and make sense of complex situations. The data/oil analogy forces us to ask what is really driving the global economy, and this helps us see that data has yet to reach the dominant stage, even as its importance to the economy and quality of life increases. The semiconductor/space-race parallel suggests an ongoing nation-state competition whose outcome, while not yet clear, could determine global technology leadership for many years to come. However, while analogies can help us frame the past and present, they don’t necessarily help us predict the future, as history doesn’t always repeat itself. Information technologies might power a post-fossil-fuel, AI-driven economy. But they could also result in OPEC-like shortages, trade wars, and geopolitical tensions. Today’s analogies are two-edged swords, with one side hopeful, and the other best avoided.