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Beyond a handful of oil

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As the American occupation of Venezuela approaches quite openly, we are once again living and breathing stories of oil seizures.

When we say “story,” it is not exactly a fairy tale: The name at the head of the occupation operation, Donald Trump, states with great clarity that besides excuses like drugs, he wants to seize Venezuela’s oil. By “seizing,” he doesn’t just mean confiscating production; he also wants to prevent Venezuela from selling oil to “US adversaries.”(1)

According to OPEC, Venezuela possesses approximately 17% of global reserves, or 303 billion barrels; this means it ranks ahead of OPEC leader Saudi Arabia. According to the US Department of Energy, these reserves consist mostly of heavy oil in the Orinoco belt in central Venezuela, which makes crude oil production expensive.(2)

The US has the infrastructure suitable for this. Despite being the world’s largest oil producer, the US still imports large quantities of crude oil. Heavy oil is critically important for American refineries, especially those around the Gulf of Mexico. About 70 percent of American crude oil imports are heavy oil, and 60 percent of this comes from Canada, which has a similar “heaviness” to Venezuela.

On the other hand, a meaningful recovery in Venezuela requires time, large-scale infrastructure reconstruction, billions of dollars in capital, and the sustained participation of international oil companies. Since oil monopolies prioritize more competitive and lower-risk projects elsewhere, obtaining this level of commitment is currently quite difficult.(3)

Indeed, energy giants like Exxon and ConocoPhillips, including Chevron which currently holds a license waiver, are hesitant to re-enter Venezuela. For this reason alone, some argue that help should be sought from companies of “allied” countries, such as Eni, which is already operating in Venezuela.

Moreover, American oil monopolies already have drilling projects available in the Americas that can be extracted more cheaply. For instance, both Exxon and Chevron operate in Guyana, where Venezuela has a territorial dispute, and it is estimated that Exxon can produce there at a cost below $35 per barrel (Venezuela produces at $49 in the Orinoco region). Chevron is expected to produce oil in the Permian region for $37 to $44. ConocoPhillips’ investments in Canada project a cost of $42 per barrel. Therefore, reintroducing Venezuelan oil to international markets is not currently capable of causing the kind of price drop Trump claims.

Furthermore, even if progress could be made in “upstream” operations, Venezuela has been stagnating for some time in “midstream” and “downstream” sectors such as refining, transport, and distribution. In the country where refining capacity has remained constant for many years, capacity utilization has also been weak.

So how is it assumed that investment will flow into Venezuela and the oil industry will get back on its feet? Javier Blas from Bloomberg points out that the issue is not just Venezuelan oil, but American hegemony over oil reserves in the entire “Western Hemisphere” via the “Monroe Doctrine,” which was highlighted in the latest National Security Strategy (NSS). According to this calculation, when Canada, Mexico, and all of Latin America are included, the US captures 40 percent of the world’s entire oil production, gaining an invaluable asset against its rivals. It also gains the ability to set prices, a power once held by Arab countries and now by OPEC.

Energy prices are quite important for the predatory capital faction clustered around Trump. Access to new energy sources, including nuclear, is critical for Silicon Valley technology capital, which is investing heavily in data centers that will grow artificial intelligence. In this context, while companies like Microsoft invest in nuclear energy, American oil monopolies known as supermajors have taken action to provide energy to data centers; because natural gas, oil, and coal are still the three raw materials with the largest share in US primary energy production.

In December 2024, executives from Exxon and Chevron separately announced that their companies were preparing to enter the electricity sector. Oil companies, which usually generate electricity only for their own operations, will enter the broader electricity market at a time when demand is rising rapidly.

Rest assured, all of this will be accompanied by the plundering of nickel deposits in Venezuela, which have been found to be quite rich. Indeed, Axios counts AI companies among the winners of the so-called regime change in Venezuela. Venezuela is the richest source of critical minerals used in semiconductors that power AI data centers. According to Axios, if the US can use Venezuela instead of being dependent on China for these materials, it could get a step ahead in the AI race.

In fact, on Sunday aboard Air Force One, Commerce Secretary Howard Lutnick touched upon “mining opportunities” in Venezuela and said, “You have steel, you have minerals, you have all the critical minerals. They have a great history of mining, but that history has rusted.”

On the other hand, there is a not-so-small problem here: Even if the US frees itself from China in the supply of rare earth elements, the refining processes for these materials are done almost entirely in China. The US does not have such expertise, and acquiring it will likely take many years.

But beyond this, the financialization of both its oil and Venezuela’s debts seems much more appetizing, and this is where the main significance of Trump’s thuggery lies. Indeed, it appears that Wall Street had its eye on the “wealth” opportunities that regime change would create even before Maduro was abducted. According to Bloomberg, weeks before the invasion, Citigroup analysts predicted gains of up to 60% in the country’s bonds if Maduro were removed from office. At crowded conferences and seminars, other strategists voiced their opinions on the potential profit the new regime could offer holders of the country’s $60 billion in bonds. As pressure on Maduro mounted, traders flocked to bonds, sparking a rally:

“Investors, including American energy and shipping tycoon Harry Sargeant III, lobbied the Trump administration to create a more favorable business environment in Venezuela, highlighting the advantages for the US. Paul Singer’s Elliott Investment Management, along with a consortium of other investors, had been fighting for years for Venezuela’s most valuable foreign asset.”

In public markets, bondholders made gains of about $4 billion in a single day and saw hope for a restructuring that would yield further profits. According to the report, for private equity firms and energy investors, Donald Trump promised an even bigger prize by “pledging that the US would spend billions of dollars to fix Venezuela’s broken oil infrastructure.”

Among these promises, of course, are the receivables of companies nationalized during the Chavez era. ConocoPhillips has been trying to get approximately $12 billion in compensation for its seized assets for years. Hedge funds are looking for ways to invest in billions of dollars of financial claims linked to Venezuela. Venezuela is also considered indebted to many major companies after nationalizing assets in 2007. Following the 2017 default, the prospect of the country’s long-delayed debt restructuring is making the palms of private equity firms that buy and sell debt itch. Although Venezuela’s sovereign bond market is relatively popular, the opening of receivables and arbitration claims to financial markets is significant for American capital. This capital faction, however, sees the possibility of reviving Venezuela’s oil industry as an opportunity to pressure Venezuela to pay the debts of those who are creditors, particularly of the state oil company PDVSA.(4) After years of fruitless efforts to extract cash from the Maduro government, many companies have sold these international arbitration cases to specialized investors, including hedge funds.

Ben Cleary, partner and director at the $4 billion Tribeca Investment Partners, is sending a team of investors to Caracas to meet with potential partners and examine potential assets. US-based advisory firm Signum Global Advisors, which took investors to Ukraine last year as part of reconstruction efforts, is also planning a trip to Venezuela at the end of March. The group will consist of about 20 participants, comprised of multinational corporations and money managers.

Indeed, Bloomberg points out how Wall Street and private equity have become intertwined to reshape Venezuela through Trump’s aggressive move based on the claim of oil seizure. For example, a fund manager suggests that everything in Venezuela will depend on what kind of investments are made in the oil sector.

I would also like to remind you that asset managers invest heavily in oil monopolies. Just as the oil commodity itself is a financial product, oil monopolies are intertwined with financial markets. While asset managers like Brookfield and Blackstone are already investing in energy assets, sovereign wealth funds like the Saudi Public Investment Fund and the Abu Dhabi Investment Authority have been looking for ways to channel their billions of dollars of investments into South America for years.

The financialization of sovereign debt linked to oil seizure and the rush of private equity means the “Ukrainization” of Venezuela; that is, transforming it into a colony of transnational (but in this instance, American) capital. In any case, there really is an “oil excuse” at play. But it is not as it is assumed to be.


(1) Economists Asdrubal Oliveros and Juan Palacios, in their book Sanctions in Venezuela, found that from 2023 to 2024, exports to the US, Spain, and India increased at the expense of China and Malaysia. In 2023, the first group received 34% of Venezuelan crude oil exports, while the second group received 51.6%. In 2024, these ratios were nearly reversed, becoming 56.2% and 26.8%, respectively.

(2) According to Bloomberg’s analysis, most Venezuelan crude oil is high-sulfur and heavy, meaning it is costly and technically difficult to transport and refine compared to light and sweet quality oil. To facilitate the transport and processing of this type of crude oil, it usually needs to be mixed with a diluent (such as condensate or naphtha). Furthermore, special refining equipment is necessary to refine this type of crude oil. Consequently, such heavy and sour crude oil trades at a significant discount compared to international benchmark prices. Additionally, the production of naphtha used in transporting heavy oil is heavily dependent on Russia, and as long as sanctions persist, making progress in naphtha imports seems unlikely. Last December, a tanker carrying naphtha from Russia to Venezuela turned back due to the Trump blockade.

(3) According to POLITICO, Rystad Energy stated in a client note that “approximately $53 billion in oil and gas upstream and infrastructure investment is required over the next 15 years to keep Venezuela’s crude oil production steady at 1.1 million barrels per day”: “Going above the 1.4 million [barrels per day] level is possible, but this will require steady investment of $8-9 billion annually from 2026 to 2040, in addition to ‘maintenance’ capital requirements.”

(4) Defaulted bonds issued by Venezuela and the state oil company Petróleos de Venezuela continued their gains on Tuesday following an increase of up to 35% on Monday. According to data compiled by Bloomberg based on the latest investor filings, holders of these bonds include some of the world’s largest asset managers, such as Fidelity Investments, BlackRock, and T. Rowe Price Group.

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The system that needed Lindsey Graham

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Thomas Karat, behavior analyst

The senator died Saturday night of an aortic dissection, at seventy-one, in the middle of a campaign for a fifth term. His communications director cited the medical examiner’s preliminary finding: a rupture in the body’s largest artery, the consequence of arteriosclerotic cardiovascular disease. The tributes arrived within hours. Trump called him a true American patriot. Volodymyr Zelensky, who had met him twice in the preceding week, called him a friend who was there when it was needed most. Mark Rutte and Benjamin Netanyahu sent their own. Roger Wicker, chairman of the Armed Services Committee, said there were no words to describe Graham’s impact on the foreign and domestic policy of the United States.

There are words. The obituaries have chosen the wrong ones, and in doing so they have skipped the only question worth asking about a man like this. Not whether he was sincere in his convictions — he was, exhaustingly so — but how a senator whose reflexive answer to every foreign crisis was force spent twenty-three years being handed the committee seats, the airtime, and the ear of four presidents that let him act on it. Graham was not an aberration the system tolerated. He was a product the system manufactured, promoted, and kept in stock because he was useful.

Consider the shape of the career. In March 2003, as the bombs fell on Baghdad, Graham told the country that past disagreements should give way to a shared commitment to see the effort through. The war he blessed that day killed more than a quarter of a million Iraqi civilians by the most conservative direct-death counts, birthed the insurgency that became ISIS, and left the country a wreck. He drew no lesson from it. When Libya was broken open in 2011 and left to its warlords, he had backed the intervention. When Syria was pulled apart, he had wanted deeper involvement. Across two decades, the country would be devastated, and Graham’s response to each devastation was to locate the next one.

By February of this year the next one was Iran. On the twenty-sixth, under his own Senate letterhead, Graham published an essay that reads now like a confession left in plain sight. Iran, he wrote, was facing a Berlin Wall moment. The regime was at its weakest point since 1979, and his ultimate hope was that regime change would be achieved. He described the October 7 attacks, in his own phrasing — as a silver lining, because the Israeli campaign that followed had degraded Iran’s military. He praised Trump for pursuing, in his words, peace, not war, in the same paragraphs that celebrated a bombing campaign already under way. The strikes had a name: Operation Midnight Hammer. Graham called it the largest opportunity for peace and prosperity in the Middle East in over a thousand years.

He said the quiet part in Tel Aviv, to reporters, on February 16, less than two weeks before the strikes began. The United States was on the verge of eliminating the largest state sponsor of terrorism in the region. On Fox News, days into the war, he offered the ledger in its rawest form: when the regime goes down, he said, there would be a new Middle East, and the United States would make a tremendous amount of money. Venezuela and Iran held nearly a third of the world’s known oil reserves, he noted, and the point of the exercise was a partnership with those reserves. Regime change as a real-estate transaction. He had made the trip to Israel, the UAE, and Saudi Arabia the week before to reaffirm, he wrote, that all of it was attainable and would be extremely beneficial to the United States. Weeks earlier he had met with Mossad, telling reporters they would tell him things his own government would not.

None of this cost him anything. That is the part the eulogies cannot hold in view, because to hold it in view is to indict the institutions doing the eulogizing. A senator who spent a career being wrong about the consequences of American force — wrong about Iraq, wrong about Libya, wrong about what would follow the fall of every regime he wanted to fall — was never demoted for it. He was promoted. The record of his committee assignments tells the story in the driest possible language. For years he sat on the Armed Services Committee, from which he lectured the Senate that its love for the troops bought nothing, that only appropriations did, that a colleague worried about the budget was out of touch with the world. By the time of his death he chaired the Budget Committee and sat on Appropriations — the panels that write the numbers and bless the spending. The man who wanted every war was placed, again and again, on the committees that pay for them.

Follow the money and the shape sharpens further. Graham’s donors, across a career documented in Federal Election Commission filings, clustered where his positions pointed. The defense contractors — the makers of the aircraft, the missiles, the systems — routed money to his committees and his leadership PACs. The specific career totals sit behind a paywall that blocks automated verification, and so no single figure belongs in this account. But the pattern needs no exact number to be legible. A senator who votes for every weapons system, who calls insufficient defense spending an emergency, who treats the reduction of the military budget as a moral failure, is a senator worth funding for the people who build the weapons. The contributions were not a bribe. They did not need to be. They were an investment in a man who already believed, and who sat where belief could be converted into contracts.

The media completed the machine. Graham was a fixture of the Sunday shows and the cable green rooms for a reason that had nothing to do with wisdom and everything to do with format. He was quotable, available, and reliably hawkish, which made him the perfect guest for programs that reward certainty over accuracy and confrontation over reflection. The pipeline ran in both directions. The airtime made him a national figure, and being a national figure got him more airtime, and the whole apparatus rewarded the escalation it claimed only to be covering. When he called for bombing Iran regardless of Iran’s involvement in a given attack, and told Israel to finish the job, the remarks drew condemnation abroad and bookings at home. The market for a war hawk was deep, and he supplied it.

What made Graham durable was that his convictions never had to survive an election of ideas, only the tolerance of the institutions that housed them. He denounced Trump in 2015 as a race-baiting xenophobic bigot and a jackass, and by his second term was among the president’s most consistent defenders, having discovered that proximity to power mattered more than the content of the man wielding it. The pitch that helped start this year’s war was delivered, according to reporting on the strikes, over rounds of golf. Iran was a spoiler for everything Trump wanted, Graham told him; collapse the regime and it would be Berlin Wall stuff. The president was persuaded. The bombs fell. And when a reporter asked Graham what the plan was for the day after — the question that Iraq should have burned into every hawk in Washington — he answered that it was not his job to know. The future of Iran, he said, was for the Iranian people to determine. He had wanted the war. The consequences belonged to someone else.

That was always the arrangement. The wars were his to advocate and never his to own. He would appear on the morning shows to demand them, sit on the committees to fund them, take the money from the firms that profited from them, and when they curdled into the next disaster he would be on television again, demanding the next one, his authority somehow enhanced rather than diminished by the wreckage behind him. This is not the biography of an outlier. It is the biography of an incentive structure, wearing a man’s face.

He died with the seat already in motion. Within hours, before any burial, the reporting had turned to the scramble to replace him, to the governor who will name a temporary successor, to what his absence means for a Republican majority counting every vote. Trump told NBC he already had someone in mind. The machine that made Lindsey Graham did not pause to mourn him. It began, immediately, to fill the vacancy — because the position he occupied was never really about the man. It was about keeping the seat filled by someone who would say what he said. There is no shortage of applicants. That is the dread the eulogies are built to keep you from feeling. He is gone, and nothing that produced him has changed.

***

Thomas Karat has spent a career in multinational technology corporations and is a behavior analyst holding a Master’s in Science and Communication from Manchester Metropolitan University. His work focuses on the psychology of language in power dynamics, and his graduate thesis examined linguistic deception markers in high-stakes business negotiations. He hosts a YT podcast, SaltCubeAnalytics, and publishes at karat.substack.com

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Trump financial disclosures show millions invested in major defense contractors, analysis reveals

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US President Donald Trump’s financial disclosures released last week reveal that he has invested millions of dollars in approximately a dozen companies, including weapons manufacturers and defense contractors, according to a news analysis by Responsible Statecraft. The analysis shows that Trump, through investment firms representing him, acquired shares in defense sector companies valued at a total of between $9.7 million and $24.3 million.

The companies receiving investment included Palantir, Lockheed Martin, and General Dynamics.

According to the financial disclosures, the investment firms managing Trump’s assets invested between $1.6 million and $3.9 million in the data analytics and artificial intelligence company Palantir.

The analysis noted that Palantir developed the AI-powered Maven Smart System, which is utilized in US military operations in the war with Iran. The same analysis also claimed that the company contributed to the development of software named “Big Daddy,” which is used in Israeli military operations in Gaza.

Trump’s portfolio also includes shares in Boeing. The analysis stated that Boeing sold F-15 fighter jets valued at $8.6 billion to Israel less than three months before Trump and Israeli Prime Minister Benjamin Netanyahu initiated their joint war against Iran.

According to the financial disclosures, Trump also invested in GE Aerospace, Lockheed Martin, General Dynamics, and RTX, the manufacturer of Tomahawk missiles.

The analysis wrote that weapons produced by these companies were heavily used in the war with Iran, including Tomahawk missiles used in a US Air Force strike on a primary school in the Iranian city of Minab. The report stated that at least 168 children lost their lives in this attack.

According to Responsible Statecraft, the majority of these companies received new contracts from the Pentagon aimed at replenishing US missile stockpiles depleted during the war with Iran.

RTX signed a $373 million contract for 23 Standard Missile-3 IB interceptor missiles, while Lockheed Martin was reported to have secured a $35 billion contract intended to quadruple its production of the THAAD missile defense system.

The financial disclosures showed that Trump’s investment firms also invested in shares of Kratos Defense, Honeywell, Howmet Aerospace, L3Harris, and TransDigm.

Responsible Statecraft noted that the shares of these companies gained significant value within a year of Trump returning to office. According to the analysis, in 2025, Palantir shares rose by 135%, Kratos shares by 188%, GE Aerospace shares by 84%, and RTX shares by 61%.

In April, Trump posted on Truth Social, stating: “Palantir Technologies has proven to have very powerful capabilities and equipment on the battlefield. Ask our enemies!” Following the post, the company’s shares reportedly rose by approximately 3% within a few minutes.

Financial records showed that Trump generated more than $2 billion in income in 2025. Responsible Statecraft wrote that this amount is “unprecedented” for a sitting US president.

According to the report, the majority of this income was derived from investments linked to cryptocurrency companies such as World Liberty Financial and Binance. Trump reportedly earned hundreds of millions of dollars from “memecoins” launched through these companies, though these crypto assets later suffered sharp declines in value, resulting in losses for numerous investors.

The analysis stated that Tahnoun bin Zayed al-Nahyan, the UAE National Security Advisor and brother of the UAE President and Foreign Minister, invested $500 million in World Liberty Financial and $2 billion in Binance. Trump subsequently approved the export of advanced AI chips to the UAE, a decision that the analysis indicated created the impression of being linked to the crypto investments.

According to the analysis, Donald Trump Jr. is also connected to companies operating in the unmanned aerial vehicle and defense technology sectors. Trump Jr. is a major shareholder and advisory board member at Unusual Machines, which manufactures drone components, while his investment firm also holds stakes in Powerus and Vulcan Elements, both of which hold Pentagon contracts.

Trump Jr. serves on the board of Powerus, which markets drone systems used to intercept Iranian missiles to Gulf countries, and Eric Trump is reported to hold a financial interest in the same company.

Richard Painter, who served as the chief White House ethics lawyer during the George W. Bush administration, evaluated the situation, saying: “These countries are under great pressure to buy from the president’s sons. In this way, the president will do what they want.”

When asked last year about potential conflicts of interest arising from Trump’s business activities, White House Spokesperson Anna Kelly responded: “There are no conflicts of interest.” Trump also acknowledged the existence of conflicts of interest in an interview with the New York Times earlier this year, but argued they were not important, saying: “I realized that nobody cares.”

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US Democrats split over proposed data center moratoriums amid rising energy and climate concerns

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Democrats in the United States increasingly view the rapid expansion of data centers as a critical challenge, yet the party remains deeply divided over how to address the issue.

For many Democrats, the immense energy consumption of these facilities—which drives up household electricity bills and exacerbates climate change—makes some form of restriction an inevitable policy option. The growing public unpopularity of these centers raises the political stakes for Democrats, who are seeking solutions to protect their prospects in this year’s midterm elections on promises of lowering the cost of living.

Last month, Representative Frank Pallone Jr., the top Democrat on the House Energy and Commerce Committee, called for a moratorium on data center construction. However, senior party leadership has shown little enthusiasm for the proposal.

These internal divisions are also playing out at the state level, where at least two Democratic-controlled legislatures have passed data center moratoriums. One of those measures was vetoed, while the other is currently awaiting the governor’s signature.

Support for restricting data centers does not align strictly along traditional ideological lines. A faction of anti-establishment Republicans has backed such efforts, while other members of the Republican Party continue to debate how, or even if, to regulate the massive server farms powering the artificial intelligence boom.

In Congress, Democratic leaders have repeatedly argued that data centers must pay their fair share of rising energy costs.

Earlier this year, Senate Majority Leader Chuck Schumer stated that Democrats would push for “strong, enforceable consumer protections.”

Similarly, House Minority Leader Hakeem Jeffries expressed support for technological innovation while emphasizing, “We must ensure we are protecting the American consumer.”

However, neither leader has endorsed a specific legislative proposal to achieve these objectives. Requests for comment sent to the offices of Schumer and Jeffries went unanswered.

Jeffries also told Politico that halting data center development is “certainly not a position I am articulating at this time.”

In contrast, influential progressive figures, including Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez, argue that a total moratorium on data center construction is necessary.

In March, these lawmakers introduced legislation that would ban the construction of new data centers until Congress enacts a suite of AI safety measures, ranging from government audits of AI models to protections against mass layoffs.

Pallone voiced strong support for the concept last month during a subcommittee hearing on a separate data center bill, stating he favored “a national AI data center moratorium until we can figure out a way that this is not going to harm our nation’s air, water, and utility bills.”

Following his remarks, Pallone added: “The reality is that everything with these data centers is moving so quickly, and I am concerned about the impact on electricity consumers and the environment.”

The Data Center Coalition, an industry group backed by several major technology companies, argued that a national moratorium would deter investment in the US, damage the economy, and “send the wrong message to other industries.”

“A federal mandate to halt data center construction risks restricting access to cloud and digital services, undermines our global competitiveness, and would have significant consequences for Americans’ daily lives,” the group said in a statement in late June.

Maxwell Shulman, a policy research analyst at Beacon Policy Advisors, suggested that the primary force driving the recent push for moratoriums is a “general hostility toward AI and Big Tech.”

“People see many of these changes. They are worried about AI. They are worried about the economy and their jobs, and they feel there is very little they can do about it,” Shulman said. “They view data centers not only as the physical embodiment of AI, but also as one of the rare areas where they can actually have a say or fight back.”

Shulman added: “I think moratoriums are a blunt but effective tool to demonstrate this opposition or concern toward AI in general, not just data centers.”

Meanwhile, a narrower, bipartisan bill has been gaining momentum in Congress.

The Electricity Consumers Protection Act, led by Representative Kathy Castor, a Democrat, and Representative Gabe Evans, a Republican, would require state utility regulators to establish rules ensuring that ordinary Americans do not foot the bill for new power generation and transmission lines built to support high-load consumers like data centers.

The bill passed the House Energy and Commerce subcommittee in late June and is scheduled for consideration by the full committee.

Castor said Congress should begin by establishing regulatory safeguards, though she did not rule out supporting a construction halt in the future.

“People want guardrails. They do not want their electricity bills to go up, and they are worried about water,” Castor said last month.

When asked about her stance on a moratorium, Castor added: “If we reach a point where these guardrails are not put in place and companies simply ignore them, we will have to move to that stage.”

At the state level, Democratic governors have blocked or slowed legislative efforts to limit data center expansion. In Maine, the legislature passed a bill to ban new data center construction for 18 months, but Governor Janet Mills vetoed the measure because it did not exempt an ongoing $550 million project.

New York lawmakers passed a one-year data center moratorium in June, which is currently awaiting action from Governor Kathy Hochul. According to a report by Politico, Hochul is instead considering an executive order for a shorter, six-month halt.

Other Democratic governors have actively opposed data center moratoriums.

“Walking away from a technology that will continue to propagate is leaving the table,” Representative Abigail Spanberger, a Democrat from Virginia, told Politico this week.

In California, Democratic Governor Gavin Newsom vetoed a bill that would have required planned data centers to estimate their water usage.

As broad moratoriums encounter resistance, state-level Democratic leaders are turning to more targeted solutions, such as reassessing data center tax credits. In Illinois, Democratic Governor JB Pritzker announced in June that the state would suspend its tax incentives for data centers due to energy and water concerns.

Some Republicans have adopted a similar approach. In May, Ohio’s Republican Governor Mike DeWine instructed state officials to temporarily halt the evaluation of new tax exemption requests while lawmakers review data center growth in the state.

In Virginia, lawmakers kept data center tax incentives intact after prolonged budget debates that forced a special legislative session. Spanberger instead supported the introduction of a new tax on electricity consumption.

Meanwhile, in New Jersey, Governor Mikie Sherrill signed legislation this week that places data centers into a separate category of electricity consumers. The governor’s office stated that the measure will ensure data centers pay for their own energy use and the associated infrastructure.

Commenting on the dynamics facing state leaders, Shulman said: “There is a massive amount of investment potential and a lot of potential jobs at stake. And I really think these Democratic governors do not want to shoot their own states in the foot in the race to capture these jobs.”

Shulman added: “The goal for a Democratic governor is to send a policy signal strong enough to make voters feel they are taking a tough stance on AI, or addressing its potential negative consequences, while still trying to attract as much investment and as many jobs as possible.”

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