Washington — Democrats took control of the House of Representatives in Tuesday's mid-term election, but Republicans retained control of the Senate as voters decided on new gasoline tax hikes and limits on drilling, both on and offshore.
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Republicans won Senate races in Texas and North Dakota, the number one and two oil-producing states, while a Democrat expected to favor stricter drilling regulations won the governor's race in New Mexico, the number three oil-producing state.
Voters in California and Missouri rejected gasoline tax increases Tuesday, while Colorado voters rebuffed new limits on oil and gas drilling and Washington voters denied a carbon tax.
DEMOCRATS IN THE HOUSE
The Democrats' return to power in the House is expected to lead to increased scrutiny on President Trump's "deregulatory" energy agenda. This change is expected to lead to a wave of House hearings on the Trump administration's efforts to expand offshore drilling, weaken Obama-era regulations on methane emissions from oil and gas operations and other federal efforts aimed at boosting domestic energy output.
Analysts expect Democrats to call Trump cabinet officials to Capitol Hill for multiple hearings, which could stymie some of the administration's policy goals.
But with split control of the House and Senate, legislative efforts are expected to largely stall over the next two years.
COLORADO FRACKING BAN
Colorado voters defeated a 2,500-foot drilling setback that would have banned most new drilling in the DJ Basin, where prolific acreage has made the state the fifth top oil producer and sixth top natural gas producer in the country.
Proposition 112 would have blocked new drilling on private land within 2,500 feet of homes or schools, compared with the current setback of 500 feet.
S&P Global Platts Analytics estimated the measure would cause Colorado's oil production to sink to 275,000 b/d by end-2023, a 54% decline from current projections, and its natural gas output would fall to 1.9 Bcf/d, down 45% from the current outlook.
The figures reflected natural well declines, assuming operators would leave currently producing wells in place but not drill any new wells after 2020, as Colorado's approved drilling permits are valid for two years.
Oil and gas interests spent more than $30 million to defeat the proposition, compared with $1 million by supporters of the measure.
PRODUCING STATE RESULTS
In North Dakota, US Representative Kevin Cramer, a Republican, defeated incumbent US Senator Heidi Heitkamp, a Democrat, after a Senate campaign in which both candidates worked to stress their oil- and natural gas-friendly credentials.
Republican Senator Ted Cruz, one of the oil industry's most vocal defenders and an advocate for reforming the Renewable Fuel Standard, beat Democrat Beto O'Rourke, who wanted to boost federal funding of climate research, rejoin the Paris climate agreement, and supported stronger land-use policies in Texas.
In New Mexico, the number three oil-producing state behind Texas and North Dakota, US Representative Michelle Lujan Grisham, a Democrat, won the race for governor. Lujan Grisham is seen as more likely to embrace drilling regulations, such as limits to methane emissions. But her reach is limited, given that a large share of the state's producing oil and natural gas leases are on federal land.
GASOLINE, CARBON TAXES
Washington state voters rejected a carbon fee that would have raised costs for oil refineries, natural gas-fired power plants and other large users of fossil fuels. The fee would have been the first of its kind in the US and, if passed, was expected to spur similar efforts to curb emissions in other states.
Missouri voters rejected an increase of 10 cents/gal in the state's gasoline tax. The proposal would have raised the state's gasoline tax from 17 cents/gal to 27 cents/gal over four years.
In early results, California voters appeared poised to reject a ballot proposition to repeal a recent gasoline tax increase and prevent state lawmakers from increasing gasoline taxes in the future without voter approval.
The proposition, which was opposed by 55% of voters with about one-fourth of the state's precincts reporting, would have repealed a 12-cent/gal gasoline tax and 20-cent/gal diesel fuel tax, which went into effect on November 1.
OFFSHORE BAN APPROVED
Florida voters on Tuesday approved an amendment to prohibit drilling, either for exploration or extraction, for oil or natural gas in state waters.
Florida's Amendment 9, which appeared to pass with more than 68% of the vote, is a state constitutional amendment which required a 60% supermajority vote for approval.
The amendment prohibits drilling in all state waters along Florida's shoreline, which includes submerged lands 10.36 statutory miles off Florida's west coast and 3 nautical miles off the east coast. The amendment will not impact the transportation of oil, refined products or LNG through state waters by pipeline or ship, nor possible future drilling in federal waters. The amendment will have no immediate impact on supply since no drilling currently takes place in state waters, but it does prohibit future development.
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