Follow The Gas. The Energy Report 10/15/2025

If they have gas they will build it.  Natural gas prices have been struggling lately, but if you want to see where the future of the economy is right now, follow the gas.  Besides, we need to find news uses for our abundance of natural gas that is in many cases going to waste.

 Texas that produces over one quarter of the nation’s natural gas, has emerged as one of the hottest markets for data center development, and states that have banned fracking for natural gas like Vermont, New York, Maryland, Washington, and California are missing out on huge economic opportunity and the high paying jobs of the future.

Texas is absolutely thriving, in the AI world thanks to its amazing economic climate and flexible energy regulations.  With a deregulated electricity market driving competitive prices, and streamlined, business-friendly policies making it a breeze to snag permits and incentives, Texas stands miles ahead of states bogged down by heavy regulation. Plus, data centers and crypto miners can buy gas straight from producers, giving them all the juice they need for their energy-hungry operations. It’s no wonder they say everything ids big in Texas!

In the first half of 2025 alone, Dallas absorbed 575 MW of data center capacity, making it the second-busiest market in North America after Northern Virginia.

This boom is fueled by the explosive growth in AI and cloud computing demands, with Texas positioning itself as a key hub for hyperscale facilities from companies like Microsoft, Google, and Oracle.

And Today Bloomberg reported that Nscale, a data center developer specializing in AI, has made its fourth deal in two months to build a site for Microsoft in Texas. The new facility, set to open in the third quarter of 2026, will house up to 240 megawatts of power and about 104,000 Nvidia GB300 chips. Founded in 2024 after spinning off from a crypto miner, Nscale is quickly expanding to meet rising demand for AI computing resources according to Bloomberg .

Yet Northern Virginia is  also competing to dominate, with Ashburn’s “Data Center Alley”  which is still the world’s epicenter for capacity. Or in other words the opposite of Gavin Newsome’s California.

Northern VA has nearly 6,000 megawatts operating or under construction and even more in the pipeline, demand remains sky-high despite power constraints and steep land prices.  Hyperscalers and an incredibly dense fiber network keep this region as a major player.

 Also in the data center world, Atlanta, Georgia is on fire right now—thanks to cheap land, a rapidly expanding fiber network, and its close ties to major businesses, experts are saying it could even give Dallas a run for its money by 2030.

 In  Chicago, Illinois, the city is absolutely crucial for the Midwest, acting as a major network crossroads and boasting the third highest data center absorption rate in early 2025.  The CME Group has  been one of the major drivers to keep Chicago ahead in the AI race as they and their customers need that power and intelligence.

Still oil hit a 5-month low as the market is buying into the International Energy Agency (IEA) supply glut story and renewed trade tensions, But John Kemp Energy did point out something the IEA  said that should be more of a market concern in a Strategically Petroleum Reserve starved world.

According to John Kemp, citing the International Energy Agency (IEA), Saudi Arabia and its OPEC⁺ partners currently have under 4 million barrels per day of spare oil production capacity following recent output adjustments. Kemp notes that, while this limited buffer isn’t an immediate concern—since production presently exceeds consumption and global inventories are growing—it could pose significant risks by late 2026 or 2027.

He highlights that this reduced spare capacity is a key reason why long-term oil futures have stayed relatively stable between $65 and $70 per barrel this year, despite short-term prices dropping below $63 after peaking above $80 in January.

Kemp says that  OPEC⁺ members held 3.4 million barrels per day of spare capacity in September, with Saudi Arabia accounting for the majority. This spare capacity has shrunk to just 3% of global production, making it a thin buffer against disruptions like conflict or sanctions. As capacity in other OPEC⁺ countries diminishes, Saudi Arabia and the UAE gain greater influence over the oil market.

My take is that we will not get the glut that folks are looking for, and we see demand better than most are looking at. The long term looks like we are heading into a market tightening era

Good news from Reuters—French oil giant TotalEnergies is seeing better results even though oil prices and LNG output are down. European refining margins have jumped by more than 300%, mainly because of strong diesel demand and the EU’s ban on Russian oil. TotalEnergies expects its gearing ratio to look even better by the end of Q2 2025.

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Thanks,

Phil Flynn

Senior Market Analyst & Author of The Energy Report

Contributor to FOX Business Network

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