What Happens To Oil Prices If Democrats Take The House
What happens to oil if Democrats win control over the House of Representatives in the midterm elections? The short answer is – nothing. There is very little that a Democrat controlled House – or Senate for that matter – can do that would impact oil prices or U.S. energy policy right now.
The price of of oil has been falling steadily since the beginning of October, and gasoline prices in the United States have been falling as well. Republicans dodged the bullet with oil prices, because if they had continued to climb, U.S. consumers would have made gas prices an issue for the Trump administration.
For a little while, it looked like the Trump administration’s harsh stance towards the new sanctions on Iran’s oil industry would come under fire, but the administration backed away slightly and issued temporary exemptions to some of the largest importers of Iranian oil. This helped temper oil prices and contributed to the recent decline in prices. In addition, U.S. gasoline stores are above average for this time of year and have helped push down prices at the pump.
When it comes to the larger picture for the U.S. oil industry, there isn’t much Democrats in the House of Representatives could do to stymie Trump’s energy agenda . Most of the decisions regarding permitting for offshore drilling and pipelines are made by the executive branch in the Department of the Interior. The President can direct this agency to do as he sees fit with regards to regulations and the implementation of statutes. Even if the Democrats win the House of Representatives, Congress probably won’t have a say at this point in oil drilling in sensitive regions like, ANWR, in Alaska or offshore drilling on the Atlantic coast.
It is possible that equity markets may drop if Democrats take control of the House. In that case, it is not unlikely that oil will see a corresponding drop. If it is believed that the economy will slow, then traders except lower oil demand, which leads to lower oil prices.
Oil markets are much more likely to be impacted in coming months by OPEC’s December meeting, hedge funds cutting their long position on oil, whether the U.S. ends all sanctions exemptions on Iranian oil after 180 days and expectations for global economic outlook in 2019.