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Two months ago, this column focused on the importance of the U.S. mid-term congressional elections for the country’s upstream industry. It was imperative that the Republican Party, which already controlled the House of Representatives, gain a majority in the Senate, so that the GOP would have a chance to box President Barack Obama and his anti-oil-and-gas policies into a corner.
Thankfully, the Republicans on Nov. 4, as expected, wrested control of the Senate from the Democrats, performing better than expected. The GOP gained eight seats, boosting their total from a minority of 45 seats in the 113th U.S. Congress, ending Jan. 3, to a majority of 53 seats (not counting the Louisiana run-off—more on that in a minute) in the 114th Congress, beginning Jan. 3.
Ironically, this was the first time that the Democrats lost control of the Senate in a sixth-year mid-term election since 1918. It is also the first election since 1980, in which more than two Democratic senators were defeated by their Republican challengers. In fact, the Republicans knocked off four Democratic Senators—Mark Begich (Alaska), Mark Pryor (Arkansas), Mark Udall (Colorado) and Kay Hagen (North Carolina). The GOP also picked up another four seats where the Democratic incumbents chose to retire—Tom Harkin (Iowa), John Walsh (Montana), Tim Johnson (South Dakota) and Jay Rockefeller (West Virginia).
Due to the Republican takeover, some Senate committee assignments related to oil and gas will shift around,. Johnson and Udall had been on the Energy & Natural Resources Committee, and will be gone. Likewise, Rockefeller had chaired the Commerce, Science & Transportation panel, and its members had included Begich, Pryor and Walsh. The new chairman of that committee is likely to be Sen. John Thune (South Dakota), who has been the ranking Republican. At the Finance Committee, which oversees oil and gas tax matters, Rockefeller had been a member, and now he must be replaced.
The chairmanship of the Energy & Natural Resources Committee will most likely go to its ranking Republican, Lisa Murkowski (Alaska). Ironically, the question of who will be the ranking Democrat in the next Congress was still tied up in the Louisiana senatorial race, which had failed to yield a majority winner on Nov. 4 and was headed for a run-off on Dec. 6. Unfortunately, the timing of the run-off election was too late to include the result on this page. Nevertheless, incumbent Democratic Sen. Mary Landrieu (current chair of the Energy Committee), was fighting for her political life against Republican challenger, U.S. Rep. Bill Cassidy. By all indications, Landrieu was expected to lose, as indicated by various statewide polls.
A Landrieu defeat would cause several more dominoes to tumble. Her defeat would mark the removal of the last so-called Deep South Democrat in the Senate. It also would necessitate the Democrats picking someone else to be their ranking Energy member. In addition, her defeat would push the Republican majority in the Senate to 54 seats, which would be the largest Senate gain by any party since 1980, and the largest Senate pick-up in a mid-term election since 1958.
House remains in good hands. There was never any doubt that the GOP would retain control of the House; the only question was by what margin. After holding a 234-201 majority during the last two years, the Republicans outperformed all predictions by the so-called experts, and added at least 10 seats to their total. I say at least 10, because three seats were still undetermined at press time—one race undergoing a recount in Arizona, and two seats in Louisiana that were in the Dec. 6 run-offs.
If the GOP picks up all three seats (which seemed possible) for a 247 total, then it would be their largest majority since not only 1947-1949 (when they held 246 seats), but also since the 1929-1931 session, when there were 267 Republicans in the House. Needless to say, we don’t see any major changes in the leadership of the various House committees affecting oil and gas policy.
As we’ve mentioned before, once they control both houses next month, the Republicans will attempt to battle Mr. Obama by first trying to “de-fund” some of his more controversial programs, while also passing pro-business and pro-oil and gas measures. Yet, the Democrats may try to filibuster some of these votes in the Senate. And let us not forget, that Mr. Obama’s White House, which disrespects the U.S. Constitution almost daily, may try to implement controversial energy measures through “Executive Orders.” It should be quite an interesting period over the next 24 months.
A quick thought on oil prices. As oil prices have plummeted to $70/bbl and below, this editor has begun to see some uncomfortable similarities with the collapse of 1986 (okay, some of you out there, quit whining and hear me out). As those of you about 50 and over will remember, the Saudis in 1986 were upset about losing market share to new, high-cost production in other regions, so they flooded the market with additional oil. The U.S. government, under Ronald Reagan, encouraged the Saudis to do this, knowing full well that this could erode the hard currency earnings of the Soviet Union (now principally Russia) and also provide a “jump-start” to the U.S. economy via lower oil prices (which all happened).
Fast-forward to today: Could it be, that as the Saudis have expressed, once again, their discontent with market share (this time by not cutting output to prop up prices), as well as displeasure with greater U.S. output, that the Obama administration has taken a cue from the Reaganites? Could the “Obamanistas” be encouraging Riyadh to over-produce, knowing that it would hurt, yet again, Russia’s hard-currency earnings, as well as provide a gasoline price bonanza to U.S. consumers? It’s worth thinking about…. 
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