Analysis from PESA Vice President Government Affairs Tim Tarpley

With 98% of votes currently reporting, Democrats appear to have won both Senate seats in the Georgia runoff election. Rev. Raphael Warnock has been declared victorious over incumbent Kelly Loeffler. The race between Jon Ossoff and incumbent David Perdue, while slightly closer, has also been called in favor of Jon Ossoff.

What does it mean for energy policy and the OFS sector? First, it means Democrats will be able to use Vice President Kamala Harris as the tie-breaking vote in the Senate, which means they have the majority. The Senate hasn’t been evenly split since 2000, so it’s not yet clear how the power sharing will work. If 2000 is used as a guide, the parties will reach an agreement on how Senate rules will work with such tight margins. Committees will be chaired by Democrats, and Chuck Schumer is expected to serve as majority leader.

This outcome means that Sen. Joe Manchin (D-WV) gets a chance to lead the Energy and Natural Resources Committee, weeks after he helped push through a massive clean energy and climate package with outgoing Chair Lisa Murkowski (R-AK). Manchin is an advocate of carbon capture and was once a skeptic of climate policies like cap and trade. With control of the Senate’s energy agenda, he’s likely to dampen the severity of legislative challenges the OFS sector will face. Manchin could be overruled by Schumer, but we can expect him to play a strong role in determining what energy policies come to the Senate floor for a vote.

Sen. Tom Carper (D-DE), an ally of President-elect Joe Biden, will be lead the Environment and Public Works Committee.

A big question regarding this new breakdown of power is whether the filibuster will remain in Senate rules. The filibuster allows the minority to block or slow legislation unless the majority has 60 votes to bring it to the floor and proceed. Both Schumer and Biden have indicated openness to ending the filibuster to pass legislation that would otherwise be blocked.

The Democratic caucus will likely face pressure from progressives to make eliminate the filibuster. However, as recently as August, Manchin said he opposed the move. Democrats would need every member of their caucus to vote for such a maneuver. Even if the filibuster remains in place, a procedural measure known as budget reconciliation can be used to pass legislation.

A Democratic-controlled Senate (with or without the filibuster) is likely to have a major impact to the OFS sector and the entire energy industry. The industry will have to deal with administration regulation as well as legislation. The only legislative backstop is that the margins in both chambers are tight. Legislation will be able to pass only if the most moderate Democrats in the House and Senate support it. A few defections will kill any bill. Pro-energy Democrats such as Manchin and Rep. Lizzie Fletcher will be crucial.

PESA has been working the past few years to build relationships with these members in anticipation of this scenario.

Energy Industry Directory: PESA