From the Daily Caller News Foundation

By David Blackmon

Which came first, the chicken or the egg? It’s one of the grand conundrums of history, and it is one that is impacting the rapidly expanding AI datacenter industry related to feeding its voracious electricity needs.

Which comes first, the datacenters or the electricity required to make them go? Without the power, nothing works. It must exist first, or the datacenter won’t go. Without the datacenter, the AI tech doesn’t go, either.

Logic would dictate that datacenter developers who plan to source their power needs with proprietary generation would build it first, before the datacenter is completed. But logic is never simple when billions in capital investment is at risk, along with the need to generate profits as quickly as possible.

Building a power plant is a multi-year project, which itself involves heavy capital investment, and few developers have years to wait. The competition with China to win the race to become the global standard setters in the AI realm is happening now, not in 2027, when a new natural gas plant might be ready to go, or in 2035, the soonest you can reasonably hope to have a new nuclear plant in operation.

Some developers still virtue signal about wind and solar, but the industry’s 99.999% uptime requirement renders them impractical for this role. Besides, with the IRA subsidies on their way out, the economics no longer work.

So, if the datacenter is the chicken in this analogy and the electricity is the egg, real-world considerations dictate that, in most cases, the chicken must come first. That currently leaves many datacenter developers little choice but to force their big demand loads onto the local grid, often straining available capacity and causing utility rates to rise for all customers in the process.

This reality created a ready-made political issue that was exploited by Democrats in the recent Virginia and New Jersey elections, as they laid all the blame on their party’s favorite bogeyman, President Donald Trump. Never mind that this dynamic began long before Jan. 20, when Joe Biden’s autopen was still in charge: This isn’t about the pesky details, but about politics.

In New Jersey, Democrat winner Mikie Sherrill exploited the demonization tactic, telling voters she plans to declare a state of emergency on utility costs and freeze consumers’ utility rates upon being sworn into office. What happens after that wasn’t specified, but it made a good siren song to voters struggling to pay their utility bills each month while still making ends meet.

In her Virginia campaign, Democrat gubernatorial winner Abigail Spanberger attracted votes with a promise to force datacenter developers to “pay their own way and their fair share” of the rising costs of electricity in her state. How she would make that happen is anyone’s guess and really didn’t matter: It was the tactic that counted, and big tech makes for almost as good a bogeyman as Trump or oil companies.

For the Big Tech developers, this is one of the reputational prices they must pay for putting the chicken before the egg. On the positive side, though, this reality is creating big opportunity in other states like Texas. There, big oil companies Chevron and ExxonMobil are both in talks with hyperscalers to help meet their electricity needs.

Chevron has plans to build a massive power generation facility that would exploit its own Permian Basin natural gas production to provide as much as 2.5 gigawatts of power to regional datacenters. CEO Mike Wirth says his team expects to make a final investment decision early next year with a target to have the first plant up and running by the end of 2027.

ExxonMobil CEO Darren Woods recently detailed his company’s plans to leverage its expertise in the realm of carbon capture and storage to help developers lower their emissions profiles when sourcing their needs via natural gas generation.

“We secured locations. We’ve got the existing infrastructure, certainly have the know-how in terms of the technology of capturing, transporting and storing [carbon dioxide],” Woods told investors.

It’s an opportunity-rich environment in which companies must strive to find ways to put the eggs before the chickens before ambitious politicians insert themselves into the process. As the recent elections showed, the time remaining to get that done is growing short.

David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.

A court document cited by La Presse in prior reporting on the case.

A major figure in an alleged Mexican cartel human-trafficking network pleaded guilty in a Montreal courthouse last week and now faces removal from Canada for conspiring to organize and facilitate the illegal entry of migrants into the United States.

The conviction targets Edgar Gonzalez de Paz, 37, a Mexican national identified in court evidence as a key organizer in a Montreal-based smuggling network that La Presse documented in March through numerous legal filings.

According to the Canada Border Services Agency, Gonzalez de Paz’s guilty plea acknowledges that he arranged a clandestine crossing for seven migrants on January 27–28, 2024, in exchange for money. He had earlier been arrested and charged with avoiding examination and returning to Canada without authorization.

Breaking the story in March, La Presse reported: “A Mexican criminal organization has established itself in Montreal, where it is making a fortune by illegally smuggling hundreds of migrants across the Canada-U.S. border. Thanks to the seizure of two accounting ledgers, Canadian authorities have gained unprecedented access to the group’s secrets, which they hope to dismantle in the coming months.”

La Presse said the Mexico-based organization ran crossings in both directions — Quebec to the United States and vice versa — through roughly ten collaborators, some family-linked, charging $5,000 to $6,000 per trip and generating at least $1 million in seven months.

The notebooks seized by CBSA listed clients, guarantors, recruiters in Mexico, and accomplices on the U.S. side. In one April 20, 2024 interception near the border, police stopped a vehicle registered to Gonzalez de Paz and, according to evidence cited by La Presse, identified him as one of the “main organizers,” operating without legal status from a René-Lévesque Boulevard condo that served as headquarters.

Seizures included cellphones, a black notebook, and cocaine. A roommate’s second notebook helped authorities tally about 200 migrants and more than $1 million in receipts.

“This type of criminal organization is ruthless and often threatens customers if they do not pay, or places them in a vulnerable situation,” a CBSA report filed as evidence stated, according to La Presse.

The Montreal-based organization first appeared on the radar in a rural community of about 400 inhabitants in the southern Montérégie region bordering New York State, La Presse reported, citing court documents.

On the U.S. side of the line, in the Swanton Sector (Vermont and adjoining northern New York and New Hampshire), authorities reported an exceptional surge in 2022–2023 — driven largely by Mexican nationals rerouting via Canada — foreshadowing the Mexican-cartel smuggling described in the CBSA case.

Gonzalez de Paz had entered Canada illegally in 2023, according to La Presse. When officers arrested him, CBSA agents seized 30 grams of cocaine, two cellphones, and a black notebook filled with handwritten notes. In his apartment, they found clothing by Balenciaga, a luxury brand whose T-shirts retail for roughly $1,000 each.

Investigators have linked this case to another incident at the same address involving a man named Mario Alberto Perez Gutierrez, a resident of the same condo as early as 2023.

Perez Gutierrez was accompanied by several men known to Canadian authorities for cocaine trafficking, receiving stolen goods, armed robbery, or loitering in the woods near the American border, according to a Montreal Police Service (SPVM) report filed as evidence.

The CBSA argued before the immigration tribunal that Gonzalez de Paz belonged to a group active in human and drug trafficking — “activities usually orchestrated by Mexican cartels.”

As The Bureau has previously reported, Justin Trudeau’s Liberal Cabinet was warned in 2016 that lifting visa requirements for Mexican visitors would “facilitate travel to Canada by Mexicans with criminal records,” potentially including “drug smugglers, human smugglers, recruiters, money launderers and foot soldiers.”

CBSA “serious-crime” flags tied to Mexican nationals rose sharply after the December 2016 visa change. Former CBSA officer Luc Sabourin, in a sworn affidavit cited by The Bureau, alleged that hundreds of cartel-linked operatives entered Canada following the visa lift.

The closure of Roxham Road in 2023 altered migrant flows and increased reliance on organized smugglers — a shift reflected in the ledger-mapped Montreal network and a spike in U.S. northern-border encounters.