Democratic Win Set to Reshuffle U.S. Energy Policy

The blue wave in the midterm elections that will put Democrats in charge of the House and Senate could reshape U.S. energy policies.Democrats in charge of both chambers of Congress and its key committees, Democratic governors in key data-center development states such as Ohio, Georgia, and Texas, a Democrat in Georgia’s utilities regulator, and the first Democratic member of the Texas oil regulator since 1990 would seek to stymie the Trump Administration’s pro-fossil fuel and unchecked data center expansion.Investigations into oil deals involving the White House, including “the biggest oil deal in world history” in Venezuela, and the ‘diesel deal’ with Russia’s Vladimir Putin on the eve of the elections are likely to be top of the agenda.Policy uncertainty at the federal level will increase, as Democrats are likely to attempt to bring back some clean energy tax credits. President Donald Trump has vowed to become ‘Mr Veto’ and veto legislation he doesn’t like.The Democratic-majority Congress will need support from Republican lawmakers to overcome a presidential veto, so changes to the energy policy are unlikely to be radical, but rather a compromise. Executive orders and war powers remain a tool for President Trump, but Congress now controls appropriations and budgets, so both sides will have to make concessions – “deals” in Trump’s parlance – in many key policy areas, including energy.A Democratic-controlled Congress could push for regulation of AI, while governors from Texas to Ohio could halt the expansion plans amid concerns about how soaring power demand from AI would hit household bills. No wonder tech stocks crashed on Wednesday as most results of the midterm elections showed stunning victories in many key-race states.Investigations are coming, Democratic Senator Ed of Massachusetts said on election night.“They are going to need to plant new forests for all of the subpoenas we’ll be printing,” said Markey, who is on the environment and public works committee.In Texas, oil and gas engineer Jon Rosenthal won the open seat on the three-member Texas Railroad Commission, becoming the first Democrat on the commission since 1990. Rosenthal will be in the minority, but could influence some issues, including data center permitting and wastewater disposal from oil and gas production.The war in Iran is the biggest international issue that Congress will face, and that will influence international oil prices and U.S. fuel prices in the coming months.Analysts still believe there is currently more chance of a U.S. escalation rather than de-escalation in Iran, but the Democratic Congress, as of January 1, could pressure Trump into reaching a deal.“With war funding and appointees now subject to a hostile majority, the administration faces greater institutional pressure to pursue a Hormuz deal rather than a further round of strikes,” analysts at Rystad Energy said on the day after the elections.“A restoration of flows through the Strait of Hormuz is the prerequisite for Middle East crude supply and refined product inventories to normalize,” they noted.U.S. voters showed that the cost of living and the cost of gasoline top their concerns and punished the Administration, whose war on Iran drove fuel prices to record highs for this time of year.The first sign of whether compromises between the executive and legislative branches could work will be seen as early as November 9, when a proposed bipartisan permitting bill is scheduled for a procedural vote in the Senate.Both the oil and clean energy industries support expediting reform to build America’s energy infrastructure. But the sweeping win could embolden the most progressive Democrat lawmakers to seek bargains in texts in the bill they argue would favor the oil and gas industry over renewable energy.Analysts at TD Cowen have now lowered the odds of the bill passing Congress to about 25%, from a 40% chance before the electionWood Mackenzie analysts, however, said that “permitting reform has a path that other Democratic priorities do not.”By Tsvetana Paraskova for Oilprice.comMore Top Reads From Oilprice.comIndia’s HPCL Struggles to Secure Oil Tankers as Hormuz Risks PersistAsia’s Fuel Oil Market Signals Hopes of U.S.-Iran De-EscalationFGE NexantECA Sees Slim Chance of U.S.-Iran Deal