Oil Association Head Warns Texas Industry Faces California Style Regulatory Shift

Tim Stewart, president of the U.S. Oil and Gas Association, warned that Texas risks adopting a regulatory environment similar to California's following the midterm elections. Speaking on Fox Business, Stewart expressed fear that the state could undergo a process he described as Californication, where businesses may relocate due to increased oversight.

Stewart did not directly state that the incoming administration of Governor Gina Hinojosa would intentionally cut production. Instead, he focused on the potential for overregulation. He noted that companies in California often move to Texas to escape strict rules, implying that Texas could become the next destination for such firms if its policies tighten.

The concern stems from recent political shifts in the Lone Star State. Hinojosa, who won the governorship earlier this week, has prioritized reducing emissions from fossil fuel operations. During her time in the Texas House, she authored HB 1174, a bill that required oil and gas operators to include a gas capture plan in their permitting applications for new wells.

Stewart pointed to California and Colorado as examples of states where Democratic control has led to industry changes. In California, crude production has dropped as companies leave under climate mandates targeting 100% carbon neutrality by 2045. In Colorado, stricter permitting processes introduced in recent years have reduced drilling activity and pollution levels.

Texas remains a central player in the national energy market, having produced more than 40 percent of the country's crude oil in 2025. Stewart acknowledged that the Hinojosa campaign focused more on data centers than on a direct attack on oil and gas. However, industry leaders view increased regulation as the primary threat to their operations.

Environmental groups see the election results as a mandate for change. Adrian Shelley, state director for Public Citizen, stated that the new state leadership has a clear directive to rein in the data center industry. Shelley added that the era of Texas being unequivocally open for business may be ending as the new administration takes office.