An Energy Policy Preview for the Next Congress

On Tuesday, the American people rejected not only President Obama’s energy policies, but also the energy policies of Senate Democrats. While this bodes well for America, expectations should be tempered by two realities. The first is that it remains to be seen how hard a Republican-controlled Senate will fight for free market energy policies. Energy issues are contentious and the Republican Senate leadership has not indicated they will fight hard for free market energy policies. Of course, there will be some low-hanging fruit, like the Keystone pipeline, but the more difficult challenges, like the President’s climate agenda and upcoming ozone regulations, will be much harder to upend. President Obama will not back from his goal of making electricity prices “necessarily skyrocket” and will veto any bill that seeks to roll back his agenda.

The upcoming Congress must and will hold many hearings and conduct oversight to shine a light on President Obama’s policies. This will show clear contrasts between the President and Congress on energy issues. Furthermore, Republicans will pass some bills to make marginal improvements. But until the Senate Republican leadership proves they are committed to rolling back President Obama’s energy policies, and with a much less than 60 vote majority, only marginal improvements will likely be made.

Winners and Losers

Even with the outcome of the Virginia, Alaska, and Louisiana contests still not official, the Republicans have already gained enough seats to control the Senate next year. The most impressive Senate wins on Tuesday were Cory Gardner’s win in Colorado and Jodi Ernst’s win in Iowa. Both results were a surprise given how these races looked months ago. Sen. Mark Udall should have cruised to an easy re-election and Rep. Bruce Braley was widely thought to win the senate seat of the retiring Democrat Tom Harkin.

Sen. Udall hurt his reelection chances by admitting late in the campaign that he favored a “price on carbon.”

Another impressive result, though not official yet, is the expected victory of Dan Sullivan over Sen. Mark Begich for the senate seat in Alaska. Begich, like Udall, also expressed support for “pricing carbon” even though Alaska is a major energy producing state. The American Energy Alliance also ran ads early in the contest to explain to Alaskans that Begich supported increasing the cost of producing oil and natural gas.

The House will remain in Republican hands, which is a good thing because they have actually racked up an impressive number of bills that would begin to unravel the Obama energy agenda. When all the outstanding races are certified, the GOP majority will land somewhere between 248 and 250 seats, making it the largest Republican governing margin since the 1928 election.

The biggest loser in last night’s results was San Francisco hedge fund billionaire Tom Steyer. He spent $74 million to raise “climate change” as an election issue and support candidates like Udall, Braley, and Begich. But in the end, the money was wasted. Not only did his biggest targets lose, but many of the ads that Steyer and his allies ended up running had nothing to do with climate, but were instead about abortion, taxes, and the Koch brothers. The American people are far more concerned about growing the economy and jobs than the job-killing carbon regulations that people like Steyer support.

Energy did play an important role in many of the races. Besides playing a role in Udall and Begich’s loss, Sen. McConnell used President Obama’s war on affordable energy as an important theme of his reelection campaign as did a number of other candidates, including Senator-elect Shelly Moore Capito in West Virginia. President Obama avoided campaigning for Senators in key battleground states—showing that even members of his own party do not wish to be associated with his policies.

What does this mean for the Obama administration’s policies?

While the American people roundly rejected President Obama’s policies, this rejection will do little to slow down President Obama’s harmful energy policies. Four years ago President Obama faced a similar rejection. In 2010, cap-and-trade was a major election theme after the House passed a terrible bill (Waxman-Markey’s “cap and tax bill” that died in an overwhelmingly Democratic Senate). The day after the election a reporter asked President Obama about the failure of cap-and-trade. President Obama  responded saying, “Cap and trade was just one way of skinning the cat.  It was a means, not an end.  I’m going to be looking for other means to address this problem.” Instead of listening to the desires of the American people, he rejected them and doubled down on this plan to increase the regulation of energy.

President Obama found his “other means” and instructed EPA to stretch environmental laws to the breaking point to regulate carbon dioxide emissions from power plants. These regulations are currently making their way through the regulatory process, and while they are not final, they constitute a clear threat to affordable, reliable coal and natural gas fired electricity generation. As a result, 72 gigawatts of electricity generating capacity will close in the coming years. To put 72 GW in perspective, that is enough electrical generation capacity to reliably power 44.7 million homes—or every home in every state west of the Mississippi River, excluding Texas.

Besides the attack on power plants, President Obama will continue to make it difficult to produce natural gas and oil on federal lands, and he will continue squeeze the life out of the American economy through ever-more-stringent regulations. For example, at the end of November he will announce new regulations on ozone, which will likely be the most expensive regulation in the history of the United States.  It is an old saying that “he who controls the fire controls the cooking” and President Obama wants everyone dependent upon the government for their supper.  His choice of Washington insider and progressive policy guru, John Podesta, as his lead for his energy and climate policies further affirmed that Obama means business in his anti-energy agenda.

There is some talk that President Obama might finally approve the Keystone XL pipeline.  Seventy percent of the American people think that TransCanada should be able to build the pipeline to bring more Canadian oil to the U.S. If he does, it will be a political calculation he decides will help make him look reasonable and willing to compromise so he need not compromise on the real things he cares about, such as grasping control of the U.S. economy through regulation of carbon dioxide, all the while using climate change as his justification. Major Democratic donor and hedge fund billionaire, Tom Steyer, has made it known that he believes the Keystone XL should not be allowed to be built. As indicated in his post-election press conference, there is no sign that President Obama is listening to the American people, but there is a track record of him listening to the desires of Wall Street progressives like Steyer.

What will a Republican Congress do?  

Energy issues will be important for the new Republican Congress, but the question is what will the Republican Senate leadership fight for? The House of Representatives has passed a number of good energy bills the last couple of years, but Majority Leader Harry Reid sent them to the legislative graveyard. This will change with Republican leadership. But given the fact that it will take 60 votes for most Senate actions, it will be difficult to move legislation that actually matters in this upcoming Congress. And if they do move forward with a comprehensive energy bill, it will likely include several measures being pushed by Obama’s progressive Senate allies, like newly reelected Senator Jean Shaheen. The House will continue to pass good bills that open up more federal lands for energy production, that permit the Keystone XL pipeline, and that move toward more free market energy policies, but many of these bills will be difficult to garner 60 votes in the Senate.  Many will argue that they should not even try to push difficult to do, but important measures, because the Senate cannot pass them or Obama would not sign them.

One of the opportunities for better energy policies is that both the Senate and the House will hold a large number of oversight hearings.  Done correctly, these can show the clear shortcomings of Obama’s positions on energy. They will also demonstrate how out-of-touch with Americans President Obama’s energy policies are.

One area where the Republican can have some success reining in the President’s agenda is in the budget and appropriations processes.  Congress controls spending and has the ability to limit the administration’s actions, but it is questionable that Republican leadership in the Senate will stomach a fight serious enough to stop spending by the administration on the regulations of power plants.  We will urge actions that curtail the expenditure of funds on those things not authorized by Congress that are harmful to the nation and destructive of free markets.

Congress will attack the President’s carbon dioxide regulations of power plants through the use of the Congressional Review Act (CRA). Because the CRA only requires a majority vote, both the House and the Senate will likely pass a resolution of disapproval to disapprove the administration’s regulation on carbon dioxide emissions from power plants. But in order for the CRA to go into effect, President Obama would need to sign the bill. President Obama has shown time and time again that he does not care about the will of the American people and will certainly veto a CRA resolution. This means that Congress would have to override the veto and it does not appear there are sufficient votes in the Senate for that.

Conclusion

The new Republican-controlled Senate and larger majorities in the House means that Republicans can show a clear distinction between their policies and President Obama’s policies. But hope of major changes should be tempered. It will be difficult for Senate Republican leadership to get the necessary 60 votes for major changes and it appears they do not have the stomach for the tough battles necessary for real changes. Furthermore, the American people have rejected President Obama’s policies, but the President has demonstrated time and time again that he cares little for what the American people would like when it comes to energy policies. President Obama is not going to change course now. He will continue to work even harder to make energy prices “necessarily skyrocket.”