Major Houston-based oil companies report massive profits in Q2 2026

Profit Report

Exxon Mobil and Chevron made big profits in spring 2026. Photo via Chevron

American oil and gas giants raked in massive spring profits while fighting between Iran and the U.S. impeded petroleum shipments and consumers around the world paid more for fuel and confronted shortages.

The conflict, now in its sixth month, halted most shipping through the Strait of Hormuz, a narrow waterway that previously served as a delivery route for a fifth of the world's oil and natural gas. With global supplies constrained, prices for Brent crude, the international standard, soared from about $70 to above $100 a barrel for much of March, April and May, and at one point reached $126.

The money that oil companies accrued between the beginning of April and the end of June could receive extra scrutiny this year. Gasoline, diesel and jet fuel prices climbed sharply during that period, increasing costs for drivers and airline passengers. Supplies ran low in some countries, leading to sporadic fuel rationing in Australia and government office closures in Nepal and Sri Lanka.

Spring, Texas-based Exxon Mobil reported that its second quarter profits doubled to $14.53 billion, boosted by record diesel production. The oil giant brought in $116.02 billion in revenue, up 42%.

Chevron, based in Houston, nearly quadrupled its profits to $12.07 billion and revenue jumped 56% to $70.06 billion.

Six of Europe’s largest oil companies posted combined first-quarter profits of $22 billion, more than 40% higher than last year.

“There are constituencies around the world who are having a very good crisis, and the oil producers are one of them,” said Patrick Galey, fossil fuels lead at Global Witness, a nonprofit organization that investigates environmental issues. “When you compare that to the hundreds of millions of people who are struggling with rolling blackouts, with electricity curbs, rationing, waiting in line for food queues, or the disruption to fertilizers and the potential impact that that has on food prices, we don’t think that it’s a justifiable price for the rest of the world to be paying.”

Lawmakers propose taxing major oil producers for war windfalls

Energy companies such as Exxon and Chevron do not set the price of American oil, which ricocheted from $68 to $115 a barrel during the quarter. It’s driven by supply and demand, and what traders, refiners and other buyers are willing to pay.

Nevertheless, Democrats in Congress introduced bills in March to tax major oil producers for profits they show from 2026 onward and have the tax proceeds redistributed to consumers.

“It’s fair to put a windfall profits tax on inordinate windfall profits rather than cut off children’s food programs,” Sen. Sheldon Whitehouse, a Rhode Island Democrat who introduced the Senate version of the legislation.

Whitehouse's measure and a companion bill introduced by U.S. Rep. Ro Khanna of California would amend the U.S. tax code to impose a per-barrel tax on companies that produced or imported at least 300,000 barrels of oil per day in 2025.

“We cracked $4 again per gallon last weekend in gas stations that I drove by, and that’s a big expense, particularly for families that get their income from driving around from job to job in the work van or the work truck,” Whitehouse said.

The average price for a gallon of regular gasoline in the U.S., which was below $3 before the U.S. and Israel launched attacks on Iran, reached $4.11 Friday, July 31, about $1 more than last year at this time.

The UK and other European countries implemented temporary windfall profits taxes on fossil fuel companies in 2022. The UK extended that to 2030, according to Tax Foundation Europe.

“Penalizing the businesses who stood by those countries and provided that product going forward is very short-sighted,” Exxon CEO Darren Woods said in a call with investors Friday. “We canceled investments that we had planned for Europe based on the last time they passed a windfall profits tax.”

Refineries rake in cash while consumers pay more for fuel

Outfits such as Exxon and Chevron, which also own refineries, are in the best position to profit from the current market conditions, said Tom Seng, assistant professor of energy finance at Texas Christian University.

Refineries turn oil into gasoline, diesel, jet fuel and home heating oil. Higher prices for those products meant Chevron’s quarterly refinery profit was six times as big in 2026, despite processing less crude and selling less products.

“The return on refining, on a percentage basis, has skyrocketed,” Seng said. “Oil right now is priced what it is priced because of the Iran war. But in the meantime, the refineries are making money hand over fist.”

The global refining market is under-supplied, and with countries such as Russia and China no longer exporting, companies like Exxon and Chevron have to pick it up, said Rob Thummel, senior portfolio manager at Tortoise Capital. “The world is going to be short jet fuel, diesel and gasoline, so we’ll probably continue to see higher profits there.”

Globally, not all refineries have been able to get the supply of crude oil they need to meet demand since the conflict began, said Timothy Fitzgerald, a University of Tennessee professor of business economics who studies the petroleum industry.

As a result, refineries that have ample oil to work with, including those in the U.S., are turning high profits, particularly when they make jet fuel and diesel, which is priced about 41% higher in the U.S. than before the Strait of Hormuz was blocked.

"If you’re a company that owns a bunch of refinery capacity, things look pretty good," Fitzgerald said.

American refineries are running at near-full capacity and poised to benefit because some refineries in the Middle East and Russia were damaged. And Asia can't get the amount of Middle East oil needed for refining.

“Ultimately, users of the energy services pay,” Fitzgerald said. “Consumers, people like you and me buying retail motor gasoline or diesel fuel or airplane tickets. But it also means that almost everything else we buy has an embedded energy content to it ... and this is where you start to worry about it driving increases in costs.”

Not all oil and gas companies benefit in the same way

In the present geopolitical environment, some companies are winners while others are losers, Fitzgerald said.

“If you’re a company like a U.S. (oil) producer, even a U.S.-based international company like an Exxon or Chevron who’s got lots of production outside the Gulf, things are good. You’re selling your product at a higher price,” he said.

But companies in the Middle East that are not able to benefit from higher prices because they are struggling to get their liquefied natural gas out of the Persian Gulf or have a lot of damaged oil fields or processing facilities have a very different take on recent events, Fitzgerald added.

“Your ability to sell anything and the volume that you may be getting out is so curtailed that your revenues are way down and you’re incurring higher transportation costs and security costs,” he said.

Exxon and Chevron weren’t as profitable in the first quarter due to the way oil is traded; the first real opportunity they had to take advantage of higher prices oil was in April. Companies that had a lot of oil stored in floating tankers and available for spot-market trading, including some European ones, were able to benefit from March’s higher oil prices, Seng said.

BP's newly minted chairman has been ousted. Photo by Simon Cheung on Unsplash

Oil giant BP ousts new chairman over serious conduct concerns

Sudden Exit

BP has ousted its chairman over what it called serious concerns related to “important governance standards, oversight and conduct.”

The departure was abrupt and unexpected, with Albert Manifold having been appointed to the position late last year.

“Albert has helped bring a welcome focus and pace to BP’s transformation," Amanda Blanc, senior independent director, said in a statement Tuesday, May 26. "However, the board has been surprised and disappointed to learn of governance oversight and conduct issues it deems unacceptable and has taken decisive action.”

BP's board named Ian Tyler as interim chair, effective immediately.

BP, based in London and with North American headquarters in Houston, is a “supermajor,” one of the five largest oil production and exploration companies in the world when measured by revenue and profit.

Manifold, who had been the top executive at Dublin-based global building materials company CRH for 10 years, became the chair at BP in October. BP was looking for someone to revamp the oil giant and went with an industry outsider in Manifold, who had made major strategic changes at CRH.

After a new focus on renewable energy at BP in 2020, by 2025 the company was seeking a return to its roots. BP's hard reset was criticized by environmentalists, as well as some shareholders.

CEO Murray Auchincloss said last year that optimism over opportunities in renewable energy was misplaced, with the company moving “too far and too fast.”

Changes in leadership at BP in recent years has been tumultuous.

CEO Bernard Looney resigned in late 2023 after BP determined that he had misled the company over his past relationships with colleagues.

Auchincloss stepped down in December, and the company named Meg O'Neill as his successor.

Manifold’s was challenged almost immediately when shareholders defeated company resolutions this spring that would have allowed BP to reduce climate reporting requirements and move its annual meetings fully online. Some 18% of shareholders voted against Manifold’s election as chairman, a high level of opposition for an appointment that is generally rubber stamped by investors.

Legal & General, one of Britain’s largest insurers and investment companies, said at the time that Manifold was responsible for resolutions that would have had “a negative impact on shareholders’ insight into how the company is addressing financially material long-term risks, and seizing long-term value creation opportunities, associated with the energy transition,” the Times of London reported on April 23.

Glass Lewis, an influential shareholder advisor, urged investors to vote against Manifold’s election. It held that BP took “unprecedented action” by refusing to consider a resolution from a group of climate activists and pension funds hoping to force the board to create an alternative strategy should demand for fossil fuels decline, the Times reported.

Like other big oil companies, BP has struggled with falling demand in recent years.

BP’s 2025 earnings fell 16% from a year earlier to $7.49 billion as the price of Brent crude, a benchmark for international oil prices, dropped 16.9%. The company’s preferred measure of earnings is underlying replacement cost profit, which adjusts for one-time items and fluctuations in the market value of inventories. Net income plunged 86% to $55 million.

Last year there were media reports that British oil giant Shell was in talks to buy rival BP. Shell denied the reports at the time.

The search for a new chair is underway, BP said Tuesday. Shares of BP Plc slid nearly 5% in midday trading on the NYSE.

Texas' salary for geoscientists is 61 percent higher than the national median for the same position. Photo via Getty Images

Report shows geoscientists earn largest salary premium in Texas

Career Day

A move to Texas bolsters earnings for some, and a new SmartAsset study has revealed the top professions where the median annual earnings in the Lone Star State exceed the national median.

The report, "When it Pays to Work in Texas — and When It Doesn’t," published in April, analyzed over 700 occupations to determine which have the biggest "Texas premium" — meaning jobs where the price-adjusted median annual pay in Texas most exceeds the national median for the same occupation — and which jobs have the biggest “Texas penalty,” where the statewide median annual pay falls furthest below the national median. Salaries were sourced from the U.S. Bureau of Labor Statistics (BLS) and adjusted for regional price parity.

According to the report's findings, geoscientists have the biggest "Texas premium" and make a $159,903 median annual salary. Texas' salary for geoscientists is 61 percent higher than the national median for the same position (after adjusting for regional price parity).

"Texas’s large petroleum industry helps explain why employers in the state retain so many geoscientists," the report's author wrote. "In fact, the Lone Star State is home to more geoscientists than any other state except California."

There are more than 3,600 geoscientists working in Texas, SmartAsset said.

These are the remaining top 10 occupations with the biggest "Texas premiums" (salaries are price-adjusted):

No. 2 – Commercial pilots: $167,727 median Texas earnings; 37 percent higher than the national median
No. 3 – Sailors: $67,614 median Texas earnings; 36 percent higher than the national median
No. 4 – Aircraft structure assemblers: $83,519 median Texas earnings; 35 percent higher than the national median
No. 5 – Ship captains: $108,905 median Texas earnings; 27 percent higher than the national median
No. 6 – Nursing instructors (postsecondary): $100,484 median Texas earnings; 26 percent higher than the national median
No. 7 – Tax preparers: $63,321 median Texas earnings; 25 percent higher than the national median
No. 8 – Chemists: $104,241 median Texas earnings; 24 percent higher than the national median
No. 9 – Health instructors (postsecondary): $128,680 median Texas earnings; 22 percent higher than the national median
No. 10 – Engineering instructors (postsecondary): $129,030 median Texas earnings; 22 percent higher than the national median

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This article originally appeared on CultureMap.com.

Devon Energy will buy Houston-based Coterra Energy. Photo via Coterra Energy

$21.5 billion merger will create Houston-based energy powerhouse

Major Merger

Oklahoma City, Oklahoma-based Devon Energy has agreed to buy Houston-based Coterra Energy in a $21.5 billion all-stock deal, forming an energy powerhouse that will be headquartered in Houston. The combined company, boasting an enterprise value of $58 billion, will adopt the Devon brand name.

Revenue for the two publicly traded companies totaled nearly $18.8 billion in the first nine months of 2025. Devon is a Fortune 500 company, but Coterra doesn’t appear in the most recent ranking.

The deal, already approved by the boards of both companies, is expected to close in the second quarter of 2026. Once the transaction is completed, Devon shareholders will own about 54 percent of the combined company and Coterra shareholders will own 46 percent.

“This transformative merger combines two companies with proud histories and cultures of operational excellence, creating a premier shale operator,” says Clay Gaspar, Devon’s president and CEO.

The combined company will be one of the world’s largest shale producers, with third-quarter 2025 production exceeding 550 thousand barrels of oil per day and 4.3 billion cubic feet of gas per day. A significant presence in the Delaware Basin, encompassing hundreds of thousands of acres, will anchor the company’s operations. The 10,000-square-mile Delaware Basin is in West Texas and southeastern New Mexico.

The new Devon also will operate in the Permian Basin, located in West Texas and New Mexico; Marcellus Shale, located in five states in the East; and Anadarko Basin, located in the Texas Panhandle, Colorado, Kansas, and Oklahoma.

Gaspar will be president and CEO of the combined company, and Tom Jorden, chairman, president, and CEO of Coterra, will be non-executive chairman.

Trump and Republicans in Congress say the rate reset will boost energy production, jobs and affordability. Photo via Getty Images

States brace for Trump's push to make oil drilling cheap again

Energy news

A Republican push to make drilling cheaper on federal land is creating new fiscal pressure for states that depend on oil and gas revenue, most notably in New Mexico as it expands early childhood education and saves for the future.

The shift stems from the sweeping law President Donald Trump signed in July that rolls back the minimum federal royalty rate to 12.5%. That rate — the share of production value companies must pay to the government — held steady for a century under the 1920 Mineral Leasing Act. It was raised to 16.7% under the Biden administration in 2022.

Trump and Republicans in Congress say the rate reset will boost energy production, jobs and affordability as the administration clears the way for expanded drilling and mining on public lands.

States receive nearly half the money collected through federal royalties, depending on where production takes place. The environment and economics research group Resources for the Future estimates a roughly $6 billion drop in collections over the coming decade.

The stakes are highest in New Mexico, the largest recipient of federal mineral lease payments. The state could could forgo $1.7 billion by 2035 and as much as $5.1 billion by 2050, according to calculations by economist Brian Prest at Resources for the Future.

More than one-third of the general fund budget in the Democratically-led state is tied to the oil and gas industry.

“New Mexico’s impact is way bigger than Wyoming or Colorado or North Dakota,” Prest said, “and that’s just because that’s where the action is on new development.”

The effects will unfold gradually, since federal leases allow a 10-year window to begin drilling and production. Still, state officials say they're already prepping for leaner years.

“It all hurts when you’re losing revenues," said Democratic state Sen. George Muñoz of Gallup, who said lawmakers still hope to invest more in mental health care and support Medicaid, even if federal royalty payments decline. “We’ve learned that until the chicken’s got feathers, we’re not even looking at it."

The higher federal royalty rate was in place for roughly three years while leasing activity was muted, Prest said. New Mexico budget forecasters never tallied the additional income.

New Mexico's nest-egg strategy

A nearly five-fold surge in local oil production since 2017 on federal and state land in New Mexico delivered a financial windfall for state government, helping fund higher teacher salaries, tuition-free college, universal free school meals and more.

The state set aside billions of dollars in investment trusts for future spending in case the world’s thirst for oil falters, including a early childhood education fund to help expand preschool, child care subsidies and home wellness visits for pregnancies and infants.

The state's investment nest egg has grown to $64 billion, second only to Alaska's Permanent Fund. Earnings from the trusts are New Mexico's second-biggest source for general fund spending.

That sturdy financial footing shaped a defiant response to this year’s federal government shutdown, when lawmakers voted to subsidize the state’s Affordable Care Act exchange, cover food assistance and backfill cuts to public broadcasting.

But lawmakers reviewing state finances learned that predictable income fell 1.6% — the first contraction since the start of the COVID-19 pandemic.

Muñoz said matters would be worse if the state had not raised its own royalty rates this year to 25%, from 20%, for new leases on prime oil and gas tracts, while ending a sales moratorium, under legislation he co-sponsored this year.

Encouraged in Alaska

After New Mexico, the states receiving the most federal oil and gas royalties are Wyoming, Louisiana, North Dakota and Texas.

Texas, the nation’s top oil producer, shares the bountiful Permian Basin with New Mexico but has far less federal land and therefore less exposure to changes in royalty policy.

In Alaska, state officials say they are encouraged by the royalty cut, seeing potential for increased development in places like the National Petroleum Reserve-Alaska, where the massive Willow project — approved in 2023 and now under development — is viewed by some as a catalyst for further activity. The reserve is expected to hold its first lease sales since 2019.

“If reduced federal royalty rates stimulate new leasing, exploration and production, that also could increase other kinds of revenue,” said Lorraine Henry, a spokesperson for Alaska’s Department of Natural Resources.

In North Dakota, federal royalties are split evenly between the state and county governments where drilling occurs. State Office of Management and Budget Director Joe Morrissette said the industry’s future remains difficult to forecast.

“There are so many variables, including timing, price, availability of desirable tracts, and federal policies regarding exploration activities,” Morrissette said.

Houston energy leader Barbara Burger shared her key takeaways from CERAWeek 2025 with InnovationMap. Photo courtesy of CERAWeek

Houston energy expert shares key takeaways from CERAWeek 2025

guest column

What a difference a year makes.

I have been coming to CERAWeek for as long as I can remember and the Agora track within CERAWeek since it originated. Although freshness likely distorts my thinking, I cannot remember a CERAWeek that seemed so different from the previous year's than this one.

This certainly isn’t a comprehensive summary of the conference, but some of my key take forwards from last week's events.

It’s all about power.

It seemed like everyone associated with the power value chain showed up. Developers, turbine manufacturers, utilities, oil and gas, renewables, geothermal, nuclear, storage, hyperscalers, and lots of innovative companies that aim to squeeze more out of the grid we already have. Most of the companies embraced the “all of the above” sentiment and despite moderators (and some key notes) attempt to force technology picks, most didn’t take the bait.

Practical is in.

Real issues – choke points in supply chains and the workforce, permit timing, cost increases in new generation – were openly discussed both on the stage and in the countless meetings and meet ups in partner rooms and in open spaces throughout the Hilton Americas and the GR Brown.

AI was everywhere.

While there was an understanding that not all the power load growth is coming from AI and Data Centers, that segment was getting all the attention. AI went beyond the retail and human enablement to AI for Optimization and AI for Innovation. The symbiosis of Tech and Energy was evident – power is a constraint, and AI is a game changer. S&P (CERAWeek’s organizer) did a great job of weaving this theme across the conference in both the Executive and Agora sessions.

More gas… and less hydrogen.

Whether it was LNG or gas to power or methane emission management, the US’s dominance in gas was front and center. Hydrogen was largely absent from the Executive talks and where it was topical in the Agora sessions, the need for better economics was made clear.

Consistency and balance are needed for this sector.

I am unsure whether it is a “stay calm and carry on” approach, as one leader fashioned, or rather a “carry on” message and imperative. Phrases like “one extreme to another” were heard on stage and in the hallways. The oil and gas CEOs talked more openly about their base business than they had in the last four years but they also talked about their decarbonization activities as well as commercialization of new technologies and value chains.

The macro-economic picture cast long shadows.

While few talks onstage addressed tariffs, consumer sentiment, inflation and unemployment (including those from government officials), the talks in the halls and private meetings certainly did. And while some argued that “the end justifies the means,” it wasn’t an argument that most seemed to buy into.

There is a lot of tripping up on labels.

Politics makes our sector more polarizing than it should or needs to be. Climatetech, Sustainability, Cleantech – some were labels with broad objectives, and some were meant to be binary or exclusionary. "Energy Transition" for some meant a binary replacement of fossil fuels with renewables, and for others, it meant an evolution of a system in multiple dimensions. In any event, a lot of energy is being spent on the labels and the narratives. I don’t have an easy answer for this other than to fall back to longer discussions and less use of labels that have lots of meanings and can quickly move a constructive discussion onto the third rail.

Collaboration is key and vital in this uncertain world.

The attendance of approximately 10,000 spanned the breadth of energy, those who make, move, and use it from around the globe—in other words, everyone—with a strong tone of inclusion. CERAWeek, after all, is all about convening and collaboration, and this played out in the programming and the networking. The messages about practicality, consistency, balance and “all of the above” and the storm clouds of the extremes seemed to put everyone in a similar boat: Am I being too hopeful that this will lead to more and more collaboration within the sector to advance the multiple aims of affordability, reliability, security, resiliency and sustainability?

The next-generation workforce is a strategic imperative.

The NextGen cohort in Agora was launched with 100+ graduate students from all over coming to see the energy sector close up. Kudos to S&P for making this investment and to all the conference attendees who spent time talking to the students about their research, their interests, and, importantly, sharing their career stories. Relationships were born at CERAWeek.

Houston showed well for the conference and Mother Nature played nice. The days were sunny and dry, and the evening temperatures fit the outdoor events well. The schedule and pace of CERAWeek is exhausting, and most people were worn out by Thursday.

CERAWeek 2025 is in the books; the connections made, and messages heard set the tone for the year ahead.

Until CERAWeek 2026.

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Barbara J. Burger is a startup adviser and mentor. She is the independent Director of Bloom Energy and is an advisor to numerous organizations, including Lazard Inc., Syzygy Plasmonics, Energy Impact Partners and others. She previously led corporate innovation for two decades at Chevron and served on the board of directors for Greentown Labs.

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Houston researchers land $10M grant to study how climate change drives disease threats

climate health research

Researchers from Rice University, Baylor College of Medicine and the University of Texas School of Public Health have received a $10 million grant to support research and public education on how climate change is linked to public health.

The funding comes from North Carolina-based Burroughs Wellcome Fund and is known as the organization’s Climate + Health Excellence (CHEX) award. It will be used over the next five years to launch the new FORECAST initiative, led by Rice professors and co-investigators Sylvia Dee and Joseph Campan.

FORECAST will “study how a rapidly changing environment and weather drive the emergence and expansion of deadly pathogens in human populations,” according to a release from Rice.

“This grant supports novel research linking climate change projections to health care solutions while simultaneously ensuring the next generation of scientists, leaders and policymakers have the training to assess and respond to the climate change risks that we already know are increasing every year,” Dee said in the release.

The funding will go toward a variety of new initiatives and centers.

At Rice, the funding will help launch the new Center for Climate and Environmental Health, as well as cross-campus multidisciplinary collaborations, seed grants, postdoctoral and graduate positions, and more, according to the university.

The grant will also support the statewide “Middle to Medical” climate-health educational program for youth. The program will focus on teaching how pathogens spread and how climate change plays a role in the process.

“FORECAST will prepare youth across Texas to make informed health decisions that protect themselves and their families and communities from extreme weather and disease-related risks,” Nancy Moreno, a professor of education, innovation and technology at Baylor College of Medicine and co-investigator on this grant, added in the release.

Anthony Maresso, professor of molecular virology and microbiology at Baylor College of Medicine, will share expertise in viral pathogen sewage detection that was developed during the COVID-19 pandemic; while Eric Boerwinkle, dean of the UT School of Public Health, will share insights from the Texas Wastewater Environmental Biomonitoring Network, which tracks disease-causing viruses and bacteria by testing wastewater weekly at Texas sites.

“Hotter days, bigger storms, new disease threats — Texas’s future demands preparation,” Boerwinkle added in the release. “With support from the Burroughs Wellcome Fund, the FORECAST team is helping Texas detect threats earlier and respond faster, saving lives and strengthening our economy.”

EV surge could shutter 40 refineries by 2040, Wood Mackenzie report warns

ev outlook

The rise of electric vehicles could spell trouble for Houston’s oil and gas sector, a new report suggests. But the oil and gas industry stands to benefit from potential sluggishness in U.S. adoption of EVs.

If worldwide EV adoption rises as expected, global oil demand could fall by five million barrels per day by 2040, accelerating the closure of about 40 oil refineries, says the report, published by energy research and consulting firm Wood Mackenzie. The firm’s North American hub is in Houston.

Those closures might spell trouble for refinery operators with a sizable Houston-area presence, including BP, ExxonMobil, Marathon, Saudi Aramco, and Valero. In 2025, the five companies collectively earned roughly $33 billion from downstream operations, including refineries. One caveat: Each company assigns a different definition to “downstream.”

Refineries in Organization for Economic Co-operation and Development (OECD) countries, including the U.S. but excluding Middle Eastern heavyweights, “are most at risk due to their high energy costs and carbon prices,” the Wood Mackenzie report says.

On the flip side, an abundant U.S. oil supply means American drivers have less of an incentive to switch from traditional cars to electric vehicles, despite stubbornly high fuel prices, according to the report.

Wood Mackenzie predicts EVs will account for 20 percent of the U.S. personal and commercial vehicle fleet in 2040, up from three percent in 2025. That compares with a global forecast of 25 percent in 2040, up from 4 percent last year.

Another U.S. roadblock to EV adoption cited in the report: the country’s relative lack of advanced battery manufacturing.

“Without advanced battery technologies, the U.S. auto sector is at risk of ceding its home market to non-Chinese EVs and falling behind competitors internationally,” the report says.

Furthermore, according to the report, Chinese investment in EV manufacturing in the U.S. probably will remain a no-go and tariffs on Chinese EV imports likely won’t be lifted, even if Democrats resurrected EV incentives following a White House win in 2028.

“Competition among EV manufacturers in international markets will only intensify,” the report notes. “Companies that can offer competitive products in high-growth markets will be best positioned for long-term success.”

Houston’s data center capacity set to grow 80%, report says

data findings

Houston stands to benefit from constraints dogging data center markets elsewhere in Texas, a new report indicates. This comes against the backdrop of Texas surpassing Virginia as the country’s top state for data centers — and amid deepening opposition to these facilities.

The report, published by commercial real estate services provider JLL, foresees Houston continuing to gain traction in data center development as occupants seek “scalable alternatives” to Texas markets experiencing supply-and-demand imbalances.

The Houston area currently hosts data centers with 287 megawatts of capacity, well below capacity levels in the Dallas-Fort Worth, Austin-San Antonio and West Texas markets.

However, the region is witnessing a spike in capacity, with 390 megawatts of capacity under construction, according to the report. Counting newly built data centers, Houston would be home to 677 megawatts of data center capacity, an 80 percent increase from the current inventory, the report says.

Developers target West Houston for large-scale data centers

Developers increasingly are evaluating West Houston and surrounding areas for large-scale campuses capable of supporting behind-the-meter power, according to the report. Data center development in the region is likely to remain concentrated in those areas, where power is readily accessible and flood risks are lower, the report adds.

The report notes that Houston is evolving from a traditionally enterprise-focused co-location market for data centers into a “credible large-scale growth market,” buoyed by rising interest in hyperscale facilities and increased development activity.

Corporate, energy and healthcare users are still active in Houston’s data center market, the report says, with cloud computing and technology tenants making inroads. The Houston market absorbed 25 megawatts of data center capacity in the first half of this year.

Texas crowned No. 1 state market for data center capacity

The growth of Houston’s data center sector is occurring in tandem with Texas’ ascent as a data center market. The report shows Texas now boasts 26 gigawatts of existing and under-construction capacity, followed by Virginia at 13 gigawatts.

JLL declares that “Texas has cemented its position as the state for data centers.”

The “frontier” markets of West Texas, the Carolinas, Louisiana, and Ohio account for 77 percent of all capacity being developed nationwide, according to the report.

As evidence of Texas’ heightened stature in the data center sector, commercial real estate services provider Cushman & Wakefield recently ranked Dallas as the world’s No. 1 primary data center market, while Austin-San Antonio led the list of second-tier markets and West Texas topped the third-tier ranking.

These rankings underscore “Texas’ growing importance as a large-scale AI infrastructure hub,” Cushman & Wakefield says.

Opposition to new data centers in Texas grows

While businesses see the value of adding data centers in Texas, the state’s data center boom is rattling residents and politicians alike.

A recent University of Houston survey finds that although 85 percent of Houston-area residents use AI—a key driver of data center growth—nearly 63 percent oppose construction of a data center within a mile of their home. Experts estimate 6.5 gigawatts of capacity, or roughly one-fifth of the total U.S. pipeline, will join the Texas power grid by 2030, with Houston serving as a main hub.

A poll taken recently by the University of Texas/Texas Politics Project yielded similar results: 56 percent of Texans oppose development of data centers in their community.

“Texas’ grid is already facing pressure from population growth, extreme weather and rising industrial demand,” UH researcher Soran Mohtadi says. “When residents say they are concerned about data centers, they’re mostly referring to grid reliability and affordability.”

Data center backlash prompts action by politicians

Responding to Texans’ concerns over power and water consumption, Gov. Greg Abbott recently imposed a moratorium on new data centers in the state to allow time for regulatory agencies to assess the projects’ impact. Meanwhile, some state lawmakers are calling for a crackdown on data center development.

Last month, a state legislative committee chaired by Sen. Joan Huffman, a Houston Republican, held a hearing on the effects of state sales tax exemptions given to data centers. The cost of these exemptions has climbed from an estimated $14.6 million in 2014-15 to a projected $3.3 billion in 2028-29, according to law firm Holland & Knight.

Two backers of massive data centers in Texas, social media giant Meta Platforms and AI powerhouse OpenAI, agreed this week to comply with Abbott’s recently issued standards regarding data center projects—and more have followed suit.

Dan Diorio, executive vice president of state policy and government affairs for the industry-backed Data Center Coalition, fears backlash against data centers may curb economic growth in Texas.

“I worry that communities that put moratoriums ultimately create too much uncertainty and unpredictability, and what that ultimately means is that those communities may shut themselves off to data center development but also may shut themselves off to broader economic development,” Diorio told Fox 7 News in Austin.

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