President George W. Bush's energy policies are likely to be unchanged in his second term, and getting his energy blueprint into law will still depend on Congress, which stymied many of his proposals in the current session.

However, the election results appear to have given new life to a key component of the administration's energy initiative: opening the Arctic National Wildlife Refuge (ANWR) to oil and gas leasing.

A spokeswoman for the Senate Energy Committee said committee chairman Pete Domenici (Republican-New Mexico) will try to use the budget reconciliation process in the next Congress as a vehicle to open ANWR to leasing.

A similar effort last year was defeated 52-48. Had the measure passed, the Energy Committee would have been directed to decrease its total outlays by $2.6-bil. To meet this directive, in part, the Committee would have reported reconciliation language to open ANWR, which would have raised about $1.6-bil in revenues.

In the aftermath of the Nov 2 election, four Senate Democrats who opposed using the budget process to open ANWR will be replaced by four pro-leasing Republicans, who could provide the votes Domenici lacked last year.

A budget reconciliation bill cannot be filibustered (the extended debate that prevents the Senate from voting), and needs only a simple majority to pass, not the 60 votes required to halt a filibuster. An attempt to open ANWR in April 2002 on a straight up-or-down vote lost 46-54, well short of the 60 votes needed to end debate.

Domenici also is likely to seek enactment of other provisions included in stalled comprehensive energy legislation, though he has yet to decide whether to pursue them in another broad bill. "That will be the subject of future conversations," the energy panel spokeswoman said.

Senate Republicans are assured of 54 seats in the next Congress and could win an additional seat, which would give them a 55-45 majority over Democrats (one Independent votes with the Democratic caucus). The current margin is 51-49.

Republicans gained open Democratic seats in North and South Carolina, Georgia, Florida and Louisiana, and the Democratic seat in South Dakota, where Senate Democratic Leader Tom Daschle was defeated by John Thune. At press time, Senator Lisa Murkowski (Republican-Alaska) was projected to retain her seat. Republicans lost Senate seats in Illinois and Colorado.

House Republicans could hold as many as 233 seats in the House when the final results are tallied, compared to the current 227. A minimum of 218 seats is needed to control the 435-member House.

The House passed comprehensive energy legislation, including ANWR leasing, in 2003. But the threat of a filibuster thwarted passage in the Senate, as Democrats, and a handful of Republicans opposed to liability protection for makers of the gasoline additive MTBE, prevented a floor vote.

The election also could clear the way for Congress to pass several pieces of energy legislation, thanks in part to Daschle's defeat, National Association of Manufacturers (NAM) officials said at a press briefing.

John Engler, NAM's president, said he believed Bush's victory, Republican gains in the Senate, and Daschle's unseating were messages from the electorate to both parties that they should move forward on energy and other pieces of legislation without further delay.

NAM executive vice president Michael Baroody said the association would press the new Congress to address natural gas supply and electricity reliability concerns. "The biggest and most remediable change is with respect to natural gas," Baroody said.

Power plants should move away from using natural gas, because the commodity is too valuable to manufacturers for other purposes, he said.

Baroody said he expected legislation in the near term that would encourage siting of LNG facilities, and speed the extraction of oil and gas in the continental US and offshore.

'Clear Skies'

An industry source said the administration may renew its effort to pass "Clear Skies" legislation, which controls sulfur dioxide, nitrogen oxide and mercury emissions from power plants.

But another source cautioned: "It is still very tough" to pass environmental legislation in the Senate. The issues "don't break down cleanly on party lines. It's going to be very, very hard to move any environmental bill," the source added.

Washington-based analysts PFC Energy predicted crude prices could "revert to their upward path" because of Bush's re-election. A Kerry win would have lowered prices because he likely would have had a more activist approach to using the Strategic Petroleum Reserve to lower prices, according to PFC. Bush, in contrast, will likely continue to view the SPR from a security standpoint and will leave it untouched unless there is a dire supply emergency, the analysts said.

"A Bush win would see prices recover the ground given up over the last week and continue trending toward $60/bbl," PFC Energy said in a report released on Nov 1.

This story was first published in the Nov 4, 2004 issue of Platts Oilgram News.

Created: Sep 7, 2004
Updated: Nov 4, 2004