Washington (Platts)--5Nov2008

Democrats strengthened their control of the US Congress in the general
election Tuesday, bolstering their chances of enacting policies on climate
change, oil company profits and other hot-button energy issues that
Republicans have been able to block for the last two years.

Democrats picked up at least five seats in the Senate, knocking off
Republican incumbents in New Hampshire and North Carolina. They also won open
seats in Colorado, New Mexico and Virginia, which had all been represented by
Republicans who chose not to run this year.

Four races remained too close to call Wednesday morning, including the
seat held Alaska Republican Ted Stevens, who was convicted of federal felony
charges last week of concealing hundreds of thousands of dollars of gifts from
an oil services company.

If Democrats win all four of the outstanding races, they would control 60
of the Senate's 100 seats. Under the arcane rules of the Senate, that would
allow Democrats to circumvent Republican efforts to filibuster, or block,
controversial legislation.

Senator Charles Schumer of New York, who heads the Democrats' senatorial
campaign committee, expressed jubilation at the prospect of that result.
"The days of [Republican] obstruction are over," Schumer said in a televised
interview Tuesday night. "And in a bipartisan way, we in the Senate and our
colleagues in the House will work together to turn America in the right
direction after eight long years."

But even if Democrats do not get the magic number of 60 seats in the
Senate, they are still likely to have an easier time enacting their
legislative agenda, given that Senator Barack Obama, an Illinois Democrat, won
the race for the White House over Republican Senator John McCain.

LEGISLATIVE ROADBLOCKS MAY DISAPPEAR

The gains that Democrats made in the Senate could help them pass a host
of major energy policies that Republicans had managed to block in the past,
sometimes with the narrowest of margins. These include rolling back billions
of dollars in tax breaks for major oil companies, and strengthening federal
oversight of so-called "speculative" trading in the oil and natural gas
markets.

Last year, for example, Senate Majority Leader Harry Reid had to jettison
two Democrat-backed provisions from a comprehensive energy bill when
Republicans blocked them. One of the provisions, which would have required
electric utilities to generate a certain percentage of their power from wind,
solar and other renewable sources, failed by seven votes.

Perhaps more telling for the oil industry, a measure that would have
stripped major integrated oil companies of billions of dollars in tax breaks
to fund clean sources of energy failed by a single vote.

The American Petroleum Institute, the oil industry's Washington-based
trade group, made no reference to that controversial proposal in a statement
it issued Tuesday morning.

"America's oil and natural gas industry looks forward to working with
President-elect Barack Obama and Congress to deliver a comprehensive and
realistic energy policy that encourages development of all domestic energy
sources, including oil and natural gas, for the benefit of consumers," said
Jack Gerard, API's president and CEO. "The American people have spoken loud
and clear that they want politicians to put aside partisan bickering and get
to work on meaningful energy policy that contributes to economic stability."

Democrats also strengthened their control of the House of
Representatives. As of Wednesday morning they had expanded their majority by
at least 17 seats, with some races still undecided.

'BLUE DOG' DEMOCRATS ARE KEY

Moderate Democrats, also known as "Blue Dogs," accounted for most of the
party's gains. The self-described Blue Dogs are unified by their desire to
reduce the federal budget deficit, but many also support more domestic oil and
gas drilling.

House Speaker Nancy Pelosi, a California Democrat, will have to keep Blue
Dogs happy, according to Reid Detchon of the United Nations Foundation. If
moderate Democrats broke ranks with their liberal brethren and voted with
Republicans, they would have more than enough heft to defeat Pelosi, Detchon
said.

"Historically, governing parties are much more fractious against
themselves," Detchon said in a recent interview. "It's easy to maintain unity
when you're in the minority and you just have to be against things."

In the days running up to the election, Republicans warned that giving
Democrats control of both Congress and the White House would allow them to
govern unchecked. Republican candidates argued that Democrats were likely to
use their new-found power to reinstate restrictions on offshore drilling,
which were allowed to lapse last month.

--Jean Chemnick, jean_chemnick@platts.com