Monday Mailbag: Election Edition

How will a GOP-controlled Senate affect the approval of Keystone XL?

Yesterday, the Senate narrowly voted down a bill to approve Keystone XL, coming up one vote short of the 60 necessary to put it before the President. If we assume that all senators vote on Keystone XL in the same manner in 2015 as they did yesterday, and the eight new senators—all of whom are Republican—vote in favor of Keystone XL, the bill will have 64 supporters, enough to pass but not the 67 necessary to override a presidential vetoThe White House has previously indicated that it would not approve legislation expediting the process; however, no comments were made on the merits of the project itself.

Further information on Keystone XL is available in Alerian’s MLP University: MLP 301, under Current Energy Issues.

How will the 114th Congress treat the coal industry?

Among the legislative issues of greatest consequence for the coal industry is the regulation of carbon pollution, which is in the hands of the Environmental Protection Agency (EPA) under authority granted by the Clean Air Act. In March of this year, the Republican-controlled House of Representatives voted to block the EPA’s ability to limit carbon emissions, but a similar measure never made it out of committee in the Senate. Given Obama’s All-of-the-Above Energy Strategy, a presidential veto is likely if a bill stripping the EPA of its regulatory authority over carbon pollution were to pass both houses of the 114th Congress. As with Keystone XL, the Senate would not have the votes necessary to override the veto.

However, there’s more to the story than a simple stalemate. With a new GOP majority in the Senate, committees and subcommittees will now be in Republican hands. As it relates to the coal industry and emissions regulation, these include, in part: the Appropriations Committee, the Budget Committee, the Environment and Public Works Committee, the Energy and Natural Resources Committee, the Finance Committee, the Homeland Security and Governmental Affairs Committee, and the Subcommittee on Science and Space. Many of these committees could employ non-legislative methods to delay the EPA’s implementation of Obama’s energy strategy.

Interestingly, even without EPA regulations, recent reductions in greenhouse gas emissions have been higher than anticipated due to low natural gas prices and utilities switching from coal to gas for electricity generation. Market forces are having a greater impact than which party controls the legislative branch.

Will the US begin exporting natural gas during the 114th Congress?

Yes, but this question has really very little to do with Congress. As of September 10th, nine non-free trade agreement LNG export licenses have been approved by the US government. This process is governed by the Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC), not Congress. The reason that the US is not currently exporting LNG is not due to bureaucratic red tape but simply due to the time necessary to construct natural gas liquefaction facilities. The first facility is expected to be in service in late 2015 or early 2016.

Perhaps this question was meant to address the exporting of crude oil, which is currently banned. While Republican Senator Lisa Murkowski from oil-rich Alaska will be taking control of the Senate Energy and Natural Resources Committee in the new year, it is still unlikely that the four-decade-long ban will be lifted immediately. Many members of Congress worry about the effect that allowing exports would have on prices at the pump, as well as the possible impact on domestic refiners.

For those interested, the export of condensate, a minimally refined form of crude, is regulated by the Department of Commerce (DOC). Sometimes, there’s just no understanding the government, no matter how you vote.

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