US MIDTERMS 2022: Battle for Congress portends commodity-specific wrangling

US voters Nov. 8 will decide party control of Congress and with it whether new clean energy technologies or the country's abundant fossil fuel resources will take center stage on the legislative agenda for the next two years.

Republicans hope they can flip both chambers to make their case for rebalancing the US energy portfolio, with more attention on growing domestic oil and natural gas production. Democrats are looking to widen their margins in the House of Representatives and Senate to continue advancing policies in line with meeting President Joe Biden's ambitious climate goals.

Democrats are slightly favored to lead the Senate, according to simulations from FiveThirtyEight and the Economist. But they are expected to lose the House, though perhaps by a narrow margin rather than the red wave predicted a few months ago.

A major wildcard for both parties will be voter turnout. Registration has surged, particularly among young women, but questions remain as to who will show up come election day. Recession fears and persistent inflation are also weighing on Democrats' chances.

Here's a look at policies in play for the oil, natural gas, metals, coal and electricity sectors:

Oil and gas production

Republican flip: A Republican-controlled Congress is expected to set its sights on domestic energy production, in line with the party's long-standing agenda of unleashing American resources -- albeit with the more recent nod to the need to lower emissions. While major legislative changes are likely to be checked by a Democratic president, one area to watch is incentives for green technologies that prolong oil and gas production and make use of existing infrastructure. Antagonistic oversight of agencies could target the Environmental Protection Agency's biofuel blending requirements and vehicle tailpipe emissions standards, while the Interior Department could catch flak for its progress on offshore and onshore leasing.

Democrat gains: Major Democratic electoral gains could encourage efforts to blunt the impact of provisions favoring offshore lease sales that made their way into the Inflation Reduction Act despite qualms from progressives. House Natural Resources Committee Chairman Raúl Grijalva, Democrat-Arizona, already has floated legislation that calls for another pause on federal oil and gas leasing.

Midstream natural gas

Republican flip: Energetic oversight of Biden administration gas sector regulators is all but guaranteed if Republicans take the House or Senate. The Federal Energy Regulatory Commission could be in the hot seat over its drift toward a more rigorous approach to midstream natural gas project permitting. A Republican-controlled Senate would also hold more power over nominees for upcoming vacancies at the commission. The Pipeline and Hazardous Materials Safety Administration also could face new attention from Capitol Hill over the timing and reach of safety regulations that address corrosion and cracking. And Republicans are also expected to keep permitting reform legislation at the top of their agenda.

Democrat gains: The starting point on permitting reforms affecting gas and other energy projects may depend on whether a deal is struck at the end of the current session of Congress on legislation backed by swing vote Senator Joe Manchin, Democrat-West Virginia. Wider Democratic margins could dim Republican and industry hopes for more aggressive measures to speed permits for gas and other fossil fuel infrastructure. While some Democrats argue streamlining the process is essential to enable the buildout of clean energy, the party's progressive wing has raised alarm about the potential to clip public input, further burden environmental justice communities or lock in more fossil fuels.

Oil exports

Republican flip: Republicans want to see the US return to being a net energy exporter. With control of Congress, the party could make a policy push for greater domestic oil production, at least in the near term, that would allow European and Asian allies to turn to the US rather than OPEC and Russia for crude. Legislation of this kind could get support from the White House and Democrats who want to see the geopolitical leverage Russia and Saudi Arabia wield through their oil supplies restrained.

Democrat gains: If Democrats hold the majority, the oil sector is also bracing for the possibility of a petroleum products export ban. The administration has criticized US refiners for exporting record amounts of gasoline and diesel while failing to maintain sufficient regional inventories to meet demand when hurricanes or other supply challenges arise. If prices at the pump again turn upwards, Democrats could look to constrain exports to focus on rebuilding domestic fuel inventories.

Power

Republican flip: With a divided government, Republicans may seek to use a number of tools to block Biden's decarbonization priorities that disadvantage fossil fuels. Among them, Republicans could employ the appropriations process to reduce funding flowing into recently enacted programs. House Energy and Commerce Committee ranking member Cathy McMorris Rodgers, Republican-Washington, has already vowed "vigorous oversight" over the Department of Energy's loan programs, which Democrats recently expanded.

Democrat gains: After passing several major pieces of legislation packed with clean energy and climate funding and provisions, Democrats may focus more on other priorities, such as clean technology supply chains. The party will also need to appropriate funding to carry out programs contained in those recently enacted climate and energy laws.

State climate targets

Republican gains: Several state climate programs could be on the line if Republicans win governors' seats held by Democrats. In Oregon, Governor Kate Brown, a Democrat, created the state's greenhouse gas cap-and-trade program by executive order. If Democratic candidate Tina Kotek is defeated, Republican Christine Drazan has vowed to do away with the cap-and-trade program on day one.

Democrat gains: Democratic governors in Michigan and Wisconsin may need to hold on to their seats if they wish to protect their climate goals. In Wisconsin, Democratic Governor Tony Evers, who issued an executive order to achieve 100% carbon-free electricity consumption by 2050, faces a challenge from Republican Tim Michels. In Michigan, Democratic Governor Gretchen Whitmer signed an executive order aiming to achieve economy-wide carbon neutrality by 2050, but she must fend off a challenge from Republican Tudor Dixon. Both Republican candidates have expressed support for fossil fuel infrastructure.

Coal

Republican flip: A Republican majority in one or both chambers of Congress could push policies to delay the retirement of coal-fired power plants to reduce home heating prices and promote the baseload fuel for electricity reliability purposes, though Biden is unlikely to sign such measures into law. The US Energy Information Administration currently forecasts that coal will fall to an all-time low of 19.5% of the US generation mix in 2023 due to competition with gas and renewables.

Democrat gains: New EPA regulations to hasten the energy transition through faster coal plant retirements in favor of gas plants and renewable energy facilities would face less resistance if Democrats maintain control of Congress. The coal industry group America's Power forecast that one proposed regulation would shutter more than 10% of the existing fleet.

Nuclear

Bipartisan support has been building to help bolster domestic nuclear fuel industries and continue funding for advanced reactor prototypes, making the sector less susceptible to changing control of Congress. Bipartisan efforts are underway to add funding for domestic uranium mining, conversion and enrichment, with DOE support. Republicans have said they want to further streamline nuclear plant licensing activity, including speeding environmental reviews at the US Nuclear Regulatory Commission.

Metals

Republican flip: Energy transition and electrification initiatives are dependent on metals such as copper, lithium, nickel and cobalt. Republicans have increasingly called for more streamlined permitting to allow mining developers to get projects online more quickly and reliably. Such a change to mine permitting would establish a stronger domestic pipeline of necessary metals and cut reliance on imports, an important consideration as supplies for metals such as lithium are expected to fall into a structural deficit in the coming years.

Democrats hold: Democrats acknowledge the importance of domestic mining for a clean energy future and support mine permitting reform, but with a stronger focus on environmental stewardship. Major mining projects have seen development blocked by the Biden administration in response to community opposition. Democrat influence could continue this trend, reducing domestic mined metal supplies. However, a Democrat majority is more likely to maintain Inflation Reduction Act budget allocations, such as funding for electric vehicle tax credits and renewable energy projects. Battery metal companies would benefit from this stability, as they have planned investments around expected federal support for these key end markets.

Petchems

Republican flip: A flip of one or both houses of Congress under a Democratic president could result in little legislation being passed over the next two years, limiting economic incentive programs that could heighten demand for discretionary purchases often largely composed of chemical-based plastics.

Democrat gains: If Democrats were to hold on to both the Senate and House, economic incentive programs that could encourage manufacturing or stimulate consumer spending would stand a much higher chance of being passed. The Inflation Reduction Act, for example, included new or expanded tax credits related to domestic manufacturing, much of which involves plastics. And Biden in June invoked the Defense Production Act to speed domestic manufacturing of clean energy, including solar panels and wind turbines composed of various chemicals.