Now more than ever, the global economy runs through Texas. The boom is happening down at the state's southern tip, where SpaceX launches rockets from a beach just miles from the Mexico border. It's in full swing in the east, where ports in Houston and elsewhere are shipping a record amount of oil and natural gas to the world. There's a gold rush in the north, too, as Dallas transforms a banking backwater into a bona fide financial hub, and in the west, where tech companies are building their biggest artificial-intelligence data centers yet.
Beckoned by a growing population, abundant natural resources, nonexistent income taxes, and light regulation, companies from Oracle to Tesla to Caterpillar have relocated their headquarters to the state. Texas passed California this year as the home of the most Fortune 500 companies, with 57. For three years running, Texas has added more jobs than any other state. It has the eighth-largest economy in the world and is hot on the heels of France for seventh place.
Texas is also well positioned to lead the U.S. in the next phase of economic growth, driven by AI. It's closer than any other part of the country to solving the technology's biggest bottleneck: energy.
Texas is building more natural-gas power plants than the next seven states combined, according to energy data provider Global Energy Monitor. It's the leading state for renewable-energy generation, too, with wind and solar arrays going up much faster than even in climate-friendlier jurisdictions like the Northeast. Texas' power grid operates as an island disconnected from its neighbors, which has left it stranded during some weather emergencies but also allowed for flexible regulations that have spurred aggressive private investment.
The state is experimenting with a kind of hypercapitalism, one whose impacts are likely to be felt around the country. Its innovations are attracting imitators, who see its success as a blueprint for how to spur economic growth. But the model has also drawn a backlash. Deregulation, critics say, has stacked the deck in favor of corporations, and led to a "race to the bottom" that will impact everyone from shareholders to employees. Texas' growth is also hitting physical limits. In parts of the state, water supplies are running out. The data-center boom threatens to sap them even more.
One place to see Texas' growth spurt is at the base of a half-built tower rising at the center of downtown Dallas. When the 30-story building is completed next year, it will house Bank of America's regional headquarters and the recently opened Texas Stock Exchange, which plans to install a rolling stock ticker on the side of the building. "There's no street called Y'all Street," said Linda McMahon, the head of the city's Economic Development Corporation, a civic booster. "But this is kind of what it is."
The building overlooks a five-acre park built with oil and gas money that is itself a sign of the city's transformation over the past decade. It was once a noisy freeway dug into a trench that split the downtown in two. After the freeway was covered and grass installed, it became a gathering place, hosting office workers on their lunch breaks and thousands of soccer fans for watch parties during the World Cup.
Dallas banks have been lending money to oil producers for much of the past century. But the city was long considered an afterthought in the industry. "There were many bad places your name could land on the job placement blackboard in 1985, but the absolute worst was in the slot marked 'Equities in Dallas,' " wrote Michael Lewis in Liar's Poker, his era-defining book about high finance. "Equities in Dallas" became shorthand for career exile.
That's certainly what Aasem Khalil, the current head of Goldman Sachs Group's Dallas office, thought of the city at first. Khalil, who was raised on Long Island, N.Y., was a rising Goldman executive at the bank's New York headquarters in 2016 when he was called into the office of David Solomon, then head of investment banking, to learn about his next posting. He figured it would be some highflying locale like London. Solomon had other ideas. "When he said, 'I want you to move to Dallas,' I was like, 'You've got to be kidding me. Did I upset you? Did I do something wrong?' "
Khalil has since come around.
" 'Equities in Dallas' is a relic of the early '80s," he said in an interview at Goldman's current downtown offices, a building that was considered postmodern when it was constructed in 1985. Now, Goldman is building a much bigger headquarters about a mile away, designed by a Danish architecture firm known for its opera halls.
In a state filled with exurbs and sprawling office parks, Dallas' downtown looks different. It's filled with upscale housing, some of it converted from 1980s office stock. Young people are staying. Some of Dallas' wealthiest families -- like the Perots, Warrens, Hunts, and Crows -- have plowed their old oil, tech, and real estate money into culture and public amenities.
Goldman has increased its Dallas-area workforce to more than 4,500 from 900 in 2017. Others have been on a hiring spree, too. In the past decade, the financial industry added more than 100,000 employees in the Dallas area and now has nearly 400,000. JPMorgan Chase has more employees in Texas than in New York, home to its new $3 billion-plus headquarters.
The state's former wildcatters are now Old Money barons, looking for advisors to manage their cash. Morgan Stanley, the wealth management giant, is considering building a $1.3 billion office complex in the city, just down the street from the Dallas Fed's imposing limestone edifice. Charles Schwab moved its headquarters from San Francisco to the Dallas area in 2021.
They're not just moving for the barbecued ribs -- companies can save millions in taxes in Texas. In California, the corporate income tax rate on banks is 10.8%. In Texas, there are no corporate income taxes; the state does charge a margin tax worth 0.75% of a bank's gross profit.
Texas is making a play for business on multiple fronts. The state's top politicians aren't content with companies just moving employees to the state. They want them to shift their legal incorporation to Texas from states like Delaware, and list their stocks there, too.
The vast majority of U.S. companies are incorporated in Delaware, whose long history in adjudicating business disputes seemed to insulate it from competition. But a Delaware judge's 2024 decision to deny Elon Musk's $56 billion Tesla pay package upset the Tesla CEO and helped spur a backlash. Musk moved Tesla's legal incorporation to Texas, whose rules are considered friendlier to corporations than Delaware's.
In Texas, companies can block investors who own less than 3% of their shares from submitting shareholder proposals and filing certain kinds of lawsuits. Texas has also passed rules to curb the power of proxy advisors, which sometimes tell investors to vote against corporate policies. The state has also set up its own business courts that "deliver experienced judges and greater certainty for complex commercial disputes," according to Gov. Greg Abbott.
The rules for Texas' business courts tilt the playing field decidedly in favor of corporate insiders, some experts say. SpaceX's securities filings acknowledge as much: Its bylaws force disputes to be decided by the Texas Business Court, which the company says "may discourage lawsuits against us and our directors, officers, other managerial officials, and other employees." The courts "impose significant hurdles on prospective plaintiffs bringing derivative lawsuits against Texas corporations," according to law firm Latham & Watkins.
Texas is "basically saying, we're very friendly to management, so come incorporate here," says Natalia Renta, associate director of corporate governance and power at the nonprofit Americans for Financial Reform Education Fund. The state's shareholder ownership rules for filing lawsuits have never been attempted before and raise the specter that states will keep chipping away at the rights of small investors. Renta says Texas' moves have already inspired other states to lower guardrails protecting shareholders and give more power to corporate insiders. Both Nevada and Delaware have passed rules that make it harder for litigants to gather the evidence they need to go after corporations. "It has created a race to the bottom," Renta says.
The state sees stock trading as the next step for it to become a certified financial capital, on par with or even above New York. The Texas exchange got up and running as a stock trading venue in July, though it's still working on procuring its own listings. The exchange is on board with the Texas-ization of corporate America, says James Lee, CEO of the Texas Stock Exchange. Removing wasteful fees and onerous rules should draw more companies to public markets, he says. A stock listing is the next step to getting all the benefits of Texas' pro-business environment. "The Texas Stock Exchange is a partner in this -- lowercase p -- but we have similar goals," he says.
Nasdaq and the New York Stock Exchange have ramped up their own presence in Texas, too -- SpaceX was dual-listed on Nasdaq's New York and Texas exchanges. Nasdaq launched its exchange in March. Nasdaq Texas President Rachel Racz tells Barron's the decision to open the Texas venue was "more a response to our clients than a competitor." From a practical perspective, however, Nasdaq Texas doesn't change much for the firm's clients, whose trades run on East Coast wires and technology. It "allows companies to establish a listings presence in Texas while maintaining all of the benefits of their Nasdaq listing," she says. From a liquidity perspective, the Texas exchanges are still a blip, accounting together for less than 1% of U.S. equity market volume.
Renta worries that the Texas exchanges are engaged in their own race to the bottom. Around the time of SpaceX's listing, Nasdaq changed its rules to create a "fast-track" process for large stocks to make it into the widely held Nasdaq-100 index after just 15 trading days, raising concerns that average investors would take on inordinate risks. "And then all of a sudden, their exchange gets the listing," Renta says. Nasdaq says its fast-track program was designed to make the index better reflect the market it tracks. Racz says "that decision was made way before SpaceX."
Texas thinks it has a political edge over New York, whose left-leaning policies have sometimes rankled the business world. The Texas exchange won't ask companies to list board diversity statistics, like the Nasdaq briefly did a few years ago before its rules were struck down by a court. Texas companies listed on the exchange also don't have to worry about taxes on trades of their stock. Voters approved a constitutional amendment last year forbidding the state from levying taxes on securities transactions -- a response to a 2020 tax proposal in the New York assembly that never moved forward.
Texas politicians have pounced. Dallas Mayor Eric Johnson visited New York City in April to drum up business. He told Barron's that Dallas is "clearly winning" because it's the only city in the world with three major exchanges.
"It's unfair competition now with a clown being the mayor of New York City," said Texas State Sen. Tan Parker, a leading proponent of the exchange, on a recent podcast. He was referring to New York City Mayor Zohran Mamdani, a Democratic Socialist whose platform includes raising taxes on the rich. Mamdani's office responded with its own boast: New York remains the capital of global finance, and New Yorkers in finance are paid better because of it. On average they make $512,000, compared with the $162,000 that Texans take home, according to a Mamdani spokeswoman, citing numbers from labor market data service Lightcast. "New York City continues to attract the higher-quality, higher-paying jobs in the industry," she wrote.
If Dallas is Texas' shining star, Corpus Christi is its workhorse. Corpus sits on the Gulf of Mexico, west of Houston. Driving in from the north, its skyline is a haze of refinery towers and chemical plants. But don't be fooled: Like any great piece of luxury real estate, you can't beat the location. Corpus is the closest major port to the Permian Basin, which pumps out more than half of America's oil. And it's the only port in the country deep enough to accommodate the oil industry's monster ships -- crude carriers as long as three football fields. It now sends about 2.5 million barrels of crude oil overseas every day, up tenfold from a decade ago. That's roughly half of America's total shipments.
The city is also an export hub for liquefied natural gas exports, which went from a nonexistent industry 10 years ago to one of America's most valuable exports today.
It's no exaggeration to say that Corpus has changed America's place in the world. As recently as 2015, the U.S. banned crude oil exports to protect prices at home, a vestige of the 1970s oil crisis. Now oil is America's largest export category. Crude exports have ramped up about 40% this year, to a record 5.6 million barrels a day in April. Without America's extra exports, the oil price spike during the Iran war would likely be "significantly more severe," writes Meghan O'Sullivan, a Harvard professor who wrote a book on the geopolitical impacts of America's energy export boom.
Less than 10 hours before he started the war, President Donald Trump spoke at Corpus on Feb. 27. "We're witnessing a historic American energy boom like we've never seen," he said, standing on the dock in front of a massive oil tanker. "And this port is right at the center of the action."
"There's a lot of pride here," said Kent Britton, CEO of the port, in an interview last month. As he spoke, a barge drifted by carrying pet coke, a coal-like byproduct of oil refining. Just in front of it, a dolphin dove in and out of the water, a strange but common sight in a city that's both an industrial powerhouse and a tourist town. "Almost everything that goes out of here goes to our allies. Every ship that leaves Cheniere Energy [an LNG provider] powers a million homes in Europe for a month. Had it not been for the supply coming out of here, the lights go out in Europe."
The pride in Corpus has been tempered by a bitter irony, however. Even as the city takes a major role on the world stage, there has been growing trouble at home. Corpus Christi is running out of water.
The city has grown beyond its resources, and an extended drought exposed just how bad things have gotten. At risk: the basic human needs of over 500,000 people.
Water taps have kept flowing so far, but the signs of crisis are visible at the reservoirs that serve them. The water level at Choke Canyon Reservoir, a lake just north of the city, was just 8% full at one point last month. Just a couple of years ago, a boat launch at the reservoir drew crowds of fun-seekers fleeing South Texas' oppressive heat. Now, the pier extends out into fields of dry scrub brush.
To manage the crisis, city officials began restricting water use. Starting in December 2024, they imposed "Stage 3" limits on residents, forbidding them from watering their lawns and yards. Driveways cracked, and sidewalks sunk into the ground. At the same time, businesses kept humming along. Industrial users have been spared the cuts so far, beyond restrictions on watering lawns on their property. City statistics show that residents have cut their water use by 19% from 2023 to 2025. Large-volume users have seen a 3% drop over that same period. The disparity has caused tension.
Some residents say big energy companies are to blame. "Do we want to be known as the city sucked dry by Exxon?" one asked at a June city council meeting.
"How are you going to take away from the residents and not make the refineries cut?" Mike Ramos, who runs a pool-servicing business in town, said in an interview. "There's a lot of problems with that." Ramos said he was planning to meet with other pool business owners to figure out their legal options if the city imposes stiffer restrictions on residents.
City Manager Peter Zanoni, the top city administrator, said in an interview at Corpus City Hall that it's unfair to put all the blame on industrial users, which have gotten more efficient about water use. And he argues that the city's relative lenience on industrial users is justified: It is prioritizing water that "benefits human life and health" or "supports the development of a product."
Big corporate users say they're doing their part. ExxonMobil, which runs a chemical plant in Corpus Christi through a joint venture, is the city's biggest water user, consuming around 13 million gallons a day. An Exxon spokeswoman said the company "continuously recycles water and is always looking for additional ways to reduce its water use." Others, including Flint Hills Resources, a refining subsidiary of Koch, say they've been able to cut water use even as they ramp up fuel production.
Nonetheless, Zanoni understands why residents are upset. Industrial plants use around 60% of Corpus' water, a much higher percentage than in the average city, and their owners are thriving amid the export boom. Refineries and chemical plants need a lot of water for cooling, among other purposes.
For years, residents even subsidized water use by big companies, Zanoni says. The city council doubled industrial rates three years ago to even things out, but now several big users are challenging the decision with state regulators. Zanoni says he did a double take when he saw the blockbuster earnings report for Valero Energy, a large refiner in the city that's part of the group challenging the rate hike. "We're here worried about charging them a little bit more, and they're still fighting," he says.
"Here in Corpus Christi, there's a huge divide in the community of just regular, hardworking blue-collar families that don't make billions, and then the industry that makes billions," Zanoni says. "And people, even if they work in the industry, they hate the industry."
The Stage 3 cuts have begun to have an impact. Along with some recent rainfall, they allowed the city last week to move up to Stage 2, which still restricts many activities but allows for lawn-watering once every two weeks, in the evening or early morning. Nonetheless, the city remains on edge -- and continued drought conditions could lead to much more draconian measures. A so-called Level 1 emergency would entail 25% usage cuts across the board.
Zanoni says that in a Level 1 situation, the city will adjust the balance: It won't enforce restrictions against residential customers, but will expect industrial users to comply. As of this spring, it looked like the Level 1 emergency would come in September. Rainfall pushed the expected date back to 2028.
The city and big energy companies have been preparing for that date, building plants to convert wastewater into useful water for industrial sites. The plants are expected to convert about 16 million gallons a day, freeing up that much freshwater for residents and others. The region uses about 120 million gallons a day, so the project could provide a 10% to 15% cushion. The city has also been drilling wells near a river that feeds into the city's drinking water system, with the potential to add millions of gallons to the water supply.
The city is debating another fix -- a $978 million desalination plant in Corpus' inner harbor, to turn salty Gulf water into drinkable fresh water. Business groups argue it's a sensible long-term fix, but the plan has sparked strong opposition, too. Desalination is considerably more expensive than other methods of obtaining water. Environmentalists say it would also threaten the local ecosystem, because the process involves pumping even saltier water back into the Gulf once the water is purified. The City Council recently tabled a vote on the idea after a particularly heated meeting. Steve Perez, who owns an automobile window-tint shop in the city, says he was initially against the plant but has since come around. "We're going to end up in this situation sooner or later," he says. "Something's got to give."
Corpus isn't the only Texas city whose water supplies look precarious. The state is dependent on finite underground aquifers, man-made lakes that evaporate during droughts, and rivers like the Colorado and Rio Grande, whose resources are subject to aggressive competition from other states. "We have run out of the cheap water," said State Sen. Charles Perry, a Republican from Lubbock, in a recent state hearing on water supplies, according to the Texas Scorecard. Industrial growth will undoubtedly add to the stress. Large, water-hungry data centers have clustered in West Texas, where energy is abundant but water isn't. By 2030, a severe drought could leave the state about 20% short of meeting water demand, according to the Texas Water Development Board.
Data centers accounted for less than 1% of the state's water use last year, but by 2030, they could consume 3.7%, according to a University of Texas study. By 2040 it could be as much as 9.1%, more than the state's manufacturing sector uses today.
As water worries spread, some residents are taking things into their own hands. Kathy Sanders, a retiree in central Texas, has watched with growing unease as adjacent counties have imposed water restrictions. She has taken to capturing rainwater in barrels on her property, and is now considering springing for a $30,000 rainwater catchment system, like some of her neighbors. "The rainwater is something that's mine," she says. "We need to put our foot down to say what water belongs to us."
Water clearly could slow the pace of Texas' growth. This past week, Gov. Abbott halted new data-center approvals, demanding an audit of the projects based on their water use and other factors. Texas' natural resources have helped vault it into the lead when it comes to economic growth. They could work in the reverse, too.
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