Energy, the Election, and Permitting Reform

• The outcome of the election is not expected to have a material impact on midstream or the broader energy space. The status quo is likely to persist.
• Given the current geopolitical landscape, there should be little political interest in creating obstacles for the domestic energy industry.
• The energy industry would welcome permitting reform, but a bipartisan bill may struggle to gain traction in the lame duck session or in 2025 as the focus shifts to taxes.

Election Day is just one week away. Regardless of the outcome, the energy sector should be unscathed. Any downside risk from results seems modest. Energy could even benefit if permitting reform is able to progress during the lame duck session, though that may be a challenge. Today’s note explains why the election is not particularly worrisome for the energy sector and discusses the Energy Permitting Reform Act of 2024.

The outcome of the election is not expected to have a material impact on midstream or the broader energy space. The president and Congress generally have no bearing on short- to medium-term oil and gas production trends in the U.S. Additionally, the risk from executive orders seems limited as neither candidate plans to ban fracking. The downside risk for the energy sector related to the election seems minimal.

That said, LNG export projects are one area of the U.S. energy sector that has been impacted by election-year politics. The LNG export permit pause that was put into effect earlier this year is expected to be resolved after the election (read more). A federal judge blocked the pause in July, but the court decision cannot force permits to be issued. An export permit was granted to New Fortress Energy’s (NFE) Altamira LNG project offshore Mexico in September (required because the project sources natural gas from the U.S.). Other projects are still awaiting approvals. And the election outcome could determine how swiftly export authorizations are made going forward.

Given the current geopolitical climate, U.S. energy production and exports are all the more important. That’s particularly so with Iranian oil exports and nearby shipping lanes potentially at risk (read more). Admittedly, some of the geopolitical risk premium in oil was washed out yesterday after Israel’s retaliation over the weekend focused on military targets in Iran. A change in Washington could lead to stricter sanctions on Iran. But that would be supportive for oil prices and energy stocks, all else equal. There should be little political interest in creating obstacles for the domestic energy industry given ongoing geopolitical unrest. Indeed, perhaps Congress may even look to smooth the path for energy development with permitting reform.

In July, Senators Joe Manchin (I-WV) and John Barrasso (R-WY) released the Energy Permitting Reform Act of 2024. The bill includes measures that are supportive for both clean energy and traditional oil and gas.

Of note for energy infrastructure, the bill would accelerate the judicial review of permits granted or denied by federal agencies. Specifically, challenges to permits would have a 150-day statute of limitations. For LNG export projects, the Secretary of Energy would have 90 days to approve or deny export applications from the date the final environmental review is published. A failure to respond within the 90-day window would result in approval.

Additionally, the bill includes provisions related to federal energy lease sales. Those provisions specifically call for annual lease sales for offshore wind and offshore oil and gas for 2025-2029. Measures also streamline renewable energy permitting. With U.S. electricity demand poised for significant growth,. the act also includes a number of provisions to support and expand the electrical grid. Those include simplifying the permitting process for transmission lines.

The bill achieved a 15-4 bipartisan vote in the Senate Energy and Natural Resources Committee on July 31. However, the bill faces obstacles to becoming law and has seen opposition from environmental groups. According to law firm Arnold and Porter, the Energy Permitting Reform Act’s best chance of passing is during the post-election lame duck period if included in other “must pass” legislation.

As we enter 2025, taxes are likely to be a top focus for Congress. Several provisions of the Tax Cut and Jobs Act from 2017 are set to expire at the end of next year. With taxes likely topping political agendas, it may be difficult for other policy to gain traction. If the election results in a split congress, legislation could be all the more difficult. The energy industry would welcome permitting reform during the lame duck period or in 2025. But the focus on taxes could mean a continuation of the status quo for energy broadly.

While the election results are not expected to have a material impact on the energy sector, the industry will be hoping for progress with permitting reform, though that may prove to be a challenge.

Does the Election Have Potential Energy Implications?
Oil, Geopolitics, and Your Energy Allocation

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