November 10, 2008 -

With his historic win in the US presidential election the week ended November 7, Barack Obama is poised to enact sweeping new energy policies that could have major impacts for oil companies, electric utilities, automakers and other key sectors of the US economy, as well as tens of millions of working-class Americans.

Obama, a first-term Democratic senator from Illinois, has pledged to make energy a top priority for his administration and he has focused heavily on its role in the economy and in US foreign policy.

On the campaign trail this year he pledged "to act boldly to transform our entire economy - from our cars and our fuels to our factories and our buildings."

President-elect Obama did not talk about energy or other policy issues at his election-night victory speech in Chicago, where more than 100,000 people gathered to celebrate in Grant Park.

But Obama, the first African American to be elected president in US history, made it clear that big changes are on the way.

"It's been a long time coming, but tonight, because of what we did on this day, in this election, at this defining moment, change has come to America," he said.

Obama's victory over Republican Senator John McCain marks the end of a nearly two-year election cycle capped off by a frequently contentious, five-month general election campaign between the two candidates.

As of the week ended November 7, Obama had racked up least 364 electoral votes, comfortably surpassing the 270 he needed to win the White House. One state - Missouri - remained too close to call.

McCain won at least 163 electoral votes, losing several so-called "red" states that President Bush, the outgoing Republican president, carried in 2000 and 2004.

Obama, 47, will take the oath of office at noon on January 20.

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Throughout his campaign, Obama has promised that a central theme of his presidency would be to reduce US dependence on foreign oil.

Earlier this year, Obama announced a moon-shot-like goal of ending US reliance on oil from the Middle East and Venezuela within 10 years.

His campaign later qualified that by saying that Obama would seek to save the equivalent amount of oil that is imported from those countries, as opposed to not buying oil from those countries on the global market.

Obama says he would slash US oil use by getting the government, as well as the private sector, to invest heavily in revolutionary new energy technologies such as plug-in hybrid electric vehicles.

His focus on clean, domestic energy, coupled with the promise to aggressively confront climate change through a mandatory cap on industrial greenhouse gas emissions, will mark a huge departure from the Bush administration.

While Obama may not be able to enact all of his priorities, they collectively signal to heavy industry and all fossil fuel companies that eight years of having a staunch ally in the White House will end shortly.

According to exit polls, the overwhelming issue for voters was concern over the lagging US economy.

Obama focused on that issue throughout the campaign, saying his energy policies would over five million well-paying "green jobs" that could not be outsourced.

He also said that as president, he would put policies in place that would help US companies build low-emissions technologies that they could sell to China, India and other developing countries.

Obama has vowed to pursue several priorities in the short term, including his proposal for a $115-billion economic stimulus package that would help consumers amid high domestic fuel prices.

Originally, when oil prices were topping $130/barrel, the package would have raised $65 billion by imposing a "windfall profits tax" on oil companies making record profits.

But campaign officials have told Platts that Obama would suspend the controversial tax if oil prices remain below $80/b.

Instead, the Obama team will have to fund the entire package through government debt.

The officials have pledged, however, that Obama will still come through on the plan, which envisions a rebate of $1,000 per married couple and $500 per individual.

Obama has also vowed to crack down on speculative trading in the energy markets, and to swap out light, sweet crude in the Strategic Petroleum Reserve and replace it with heavy crude in an effort to reduce prices.

The big-ticket items will likely come after a broad energy package which could be rolled out in the first months of the administration.

Obama has said that he will consider an energy package which aims to aid renewable fuels like ethanol and wind and solar power, as well as fossil fuels like low-emissions coal-fired power and offshore drilling.

This goal would help get as many lawmakers on board but, as always, the details will make or break the proposal.

The large items he wants to enact down the road include a carbon cap and national mandates for renewable power.

Obama and McCain shared the goal of creating an economy-wide market for greenhouse gas emissions, in which oil refineries, power plants and other industries would have to pay to pollute.

But Obama's climate-change plan is more stringent than McCain's.

Obama has called for emissions cuts of 80% below 1990 levels by 2050, while McCain favored a 60% cut from 1990 levels by mid-century.

But more significantly for industry, Obama has called for all of the available emissions permits, or "allowances," in his climate plan to be auctioned to the highest bidder.

This would make compliance costs much higher than if some allowances were allocated free of cost to electric utilities, oil refineries and other industries.

Obama has said he would use the billions of dollars that the auction would raise to fund programs to advance renewable power, biofuels and carbon-capture and storage for coal-fired power plants.

Obama also favors a federal mandate for electric utilities to generate upwards of 25% of their power from renewable sources like wind, solar, and geothermal.

Democrats have tried to pass a renewable electricity standard several times in the last two years, but they were always thwarted in the Senate by Republican-led filibusters.

But Obama may have an easier time enacting his policies, since Democrats picked up seats in both the House and the Senate in the November 4 election. Democrats picked up at least six seats in the Senate, and 19 in the House.