The Republican takeover of the U.S. Senate on Tuesday lays the groundwork for a more favourable attitude toward pipelines, with North Dakota Senator John Hoeven pledging legislation in the first quarter to push ahead the TransCanada Corp. project.
It also could set the stage for more measures to tackle the U.S. deficit, cutbacks in the Affordable Care Act and policies that weaken labour laws.
- Victorious Republicans now focus their ambitions on White House
- Barack Obama doesn't have to be a 'lame-duck' president
Hoeven, a former governor of North Dakota, said he sees a “good chance” of working with the president toward Keystone approval, but is willing to attach approval to other “must-pass” energy legislation to get it through the White House.
'It is time to break the gridlock on Keystone and move forward.' - TransCanada CEO Russ Girling
The Keystone XL pipeline, which would take oil from Alberta’s oilsands to the Gulf Coast for refining, has been stalled for six years awaiting U.S. approval. That could be good for TransCanada, which yesterday said the cost of the pipeline keeps rising and now stands at $8 billion.
TransCanada CEO Russ Girling signalled his approval of Hoeven's remarks in a statement released Tuesday morning. "After six years, it is time to break the gridlock on Keystone and move forward," he said.
Girling said there is cross-partisan support for the project, which he said would employ 42,000 Americans, invest $2 billion in wages across the United States and injects $3.4 billion into the U.S. economy.
But Keystone isn’t the only pipeline at stake – Encana and Enbridge and several U.S. companies also are working on U.S. pipeline projects that could help both Bakken shale oil and oilsands oil get to market.
Chris Sands, a senior fellow at the Hudson Institute in Washington, said pipelines have been waiting on a political shift that seems to have happened.
None of those headed for the presidency in two years are likely to block it, he told CBC News.
“Most of the leading Democratic contenders are comfortable with the Keystone pipeline, I think all of the Republican potential contenders are,” he said,
Even in Nebraska, where a legal case against Keystone has slowed its approval, a legislator who was working to stop the pipeline lost to a supporter of the pipeline.
“Even in Nebraska, the signals are good for the pipeline to move forward,” Sands said.
Greg Stringham, vice president with the Canadian Association of Petroleum Producers, points out that Keystone still needs a presidential permit. The Republicans need more than 66 votes to override Obama’s veto, and they don’t have that many seats.
"It still remains his decision. Control of the Senate does not make it veto proof. You need to have 67 votes for that. And perhaps there are some Democrats on that side that would get it close to that, but really control just means it will be on the agenda more often," Stringham said.
Good for stocks
Midterm elections have historically been good for the stock market, no matter who gets elected. A recent study found markets usually record a low just before the vote and move upwards in the six months after the midterm.
Stocks already are higher today, partly on the euphoria of the Republican win. The Dow closed up 100 points at 17, 483.83, the S&P 500 up 11 points to 2,023 and Canada’s TSX closing up 157.87 or 1.1 per cent at 14,548.26 in afternoon trading.
The generally pro-business stance of the party is expected to play out in a good climate for energy production and transportation. The party would support efforts to move toward North American energy self-sufficiency, if only to break the Middle East’s stranglehold on U.S. energy prices.
Republicans also aren't as worried about climate change or the support of environmentalists as Obama.
The U.S. energy industry hopes for a reform of export laws in place for 30 years to allow unrefined crude to be exported outside of North America. That’s a stickier file and there is no guarantee the Republicans would support it.
But it would be well-regarded by the business community if Republicans could advance a reform of the tax code, with high corporate taxes driving tax inversions that see American corporations move offshore.
The opposition to Obamacare may play out in a lift of the tax on medical devices, which could help the healthcare sector.
Deadlock over budgets a risk
Tea Party Texas Senator Ted Cruz said this week that Republicans should “pursue every means possible to repeal Obamacare,” a move that could mean huge disruptions for health insurers in the program.
It is also possible that an emboldened Republican Party will attempt to force more budget cuts in attempt to slay the U.S. deficit.
If the 2011 tactic of blocking necessary government and spending in a battle over the debt ceiling is repeated, it could hurt equity markets and cut into U.S. growth.
"Republicans who want to make a run for control of the executive branch in 2016 will likely strike a tone of compromise," said analyst Brian Jacobsen, but there is a risk "those on the fringe will likely look to turn the showdown into a shutdown."