Insight from Washington: What to watch for in the US midterm elections

By the time the polls close on November 6, Democrats may have wrested control of the US Congress for the first time since January 2011, an outcome which could have dramatic consequences for the future of Donald Trump’s presidency.

November’s US midterm elections could set the path forward for federal policy for years to come and are likely to set the tone for 2020’s presidential election.

While US oil and natural gas production is forecast to continue to shatter output records, something almost unthinkable back when Democrats last held control of the House and Senate, American energy policy is not expected to take a prominent role in these midterms. Still, voters will decide on a number of related policies, including a ballot initiative that opponents believe could stymie Colorado’s growing oil and gas industry and a push to repeal a gasoline tax in California, which may bolster demand in the country’s most populous state.

In addition, the future of oil and gas policy could become a factor in races in North Dakota, Texas and Florida.

Here’s what to watch for in the upcoming elections.

Colorado drilling

Colorado voters will decide whether to approve Initiative 97, a ballot measure that will increase land setback from new oil and gas development and hinder future output in the DJ Basin. Colorado is the seventh largest oil-producing state in the US and the sixth largest gas producer. If approved, the measure would require any new oil and gas development on non-federal land, including reopening plugged wells, to be at least 2,500 feet away from homes and schools. These new rules could cause Colorado oil production to drop by 50% within three to five years, predicted Dan Eberhart, CEO of Denver-based drilling services company Canary, in a recent interview with the S&P Global Platts Capitol Crude podcast.

California gas tax

California voters will vote on Proposition 6, which would repeal a tax increase approved by Governor Jerry Brown last year. The measure increased gasoline taxes by 12 cents per gallon and diesel taxes by 20 cents per gallon. The bill, which also raised vehicle fees, was designed to repair highways, roads, mass transit and other transportation projects. Proposition 6, if passed, would also require California voters to approve any fuel tax increase in the future, even if approved by state lawmakers.

Washington state carbon tax

Washington voters will decide the fate of Initiative 1631, which would set a fee, or tax, of $15 per metric ton on carbon emissions beginning in 2020. The fee, opposed by the oil and gas industry, would increase by $2 per ton each year plus inflation. If it passes, Washington would be the first state in the US to set a fee on carbon emitters. A carbon tax was defeated by Washington voters in 2016.

Races to watch

In North Dakota, where a statewide oil output record was recently broken, the race between Senator Heidi Heitkamp, a Democrat, and Congressman Kevin Cramer, her Republican challenger, could delve into the state’s future as an oil and gas producer.

In Florida, Senator Bill Nelson, a Democrat, has squared off with his Republican challenger, current Governor Rick Scott, over the Trump administration’s plans to expand offshore oil and gas production. Scott secured a pledge from Interior Secretary Ryan Zinke to keep oil rigs out of Florida waters, but Nelson has stressed this can be easily reversed. Interior officials said that all aspects of the offshore plan are still under consideration.

In Texas, the top producing state, Senator Ted Cruz, a Republican, is expected to face a fight over a number of energy policy issues with Congressman Beto O’Rourke, his Democratic challenger, over climate change action and reform of the Renewable Fuel Standard.

Election math

The US Senate currently has 51 Republicans and 49 Democrats, including two independents, and 35 seats are up for re-election in 2018, including 26 held by Democrats. Democrats will need to gain two seats to take control. The US House is currently made up of 237 Republicans, 193 Democrats and five vacancies. Democrats need to gain 25 seats in order to control the House. FiveThirtyEight(opens in a new tab), a statistical analysis website, forecasts that Democrats have nearly a 82% likelihood of winning control of the House.