Ballots to Barrels: Can Washington determine America’s oil, gas, and energy future?

The energy affordability crisis heading into the 2026 US midterms

Energy prices have emerged as one of the defining economic issues of the 2026 midterm election cycle, rivalling growing healthcare costs as top concerns for American voters. According to a Kaiser Family Foundation poll, rising gas prices now rank alongside healthcare affordability as the biggest ‘worry’ for US households¹.

At the pump, Americans are already feeling this acutely. The national average gasoline price has reached US$4.56 per gallon, with prices spiking to approximately US$6.00 in certain Western states and Washington.² For context, average diesel prices have risen nearly 70% since February 2026, hitting a record average levels of US$6.28 per gallon on 8 October 2026.³ Such price spikes could have direct consequences at the voting booths: households in the lowest-earning income quintile are now spending an additional 5% of their post-tax income on gasoline alone.⁴

Meanwhile, Brent crude oil has climbed to approximately US$105 per barrel in the fourth quarter of 2026, according to the US Energy Information Administration (EIA), a dramatic departure from the roughly US$60-per-barrel prices seen at the start of the year.⁵ This surge has been driven largely by geopolitical disruptions, particularly the closure of the Strait of Hormuz and ongoing Middle Eastern supply constraints, which have eliminated over 11 million barrels per day from global production.⁶

According to research from the Brookings Institution, the geographic distribution of these costs also has important electoral implications. Republican (GOP) House members represent districts where constituents drive approximately 26% more road miles annually than those represented by Democratic members, potentially putting some GOP incumbents at political risk.⁷ Combined with inflationary pressures across other sectors, elevated energy costs could play a significant role in numerous midterm races. 

Why oil and gas markets are turned towards November's election results

For traders and investors, the 2026 midterms come at a critical juncture in energy market dynamics. The election outcome could substantially reshape regulatory frameworks, tax policies, permitting timelines, and subsidies that directly impact oil producers, natural gas suppliers, refiners, renewable energy companies, and electrical utilities.

According to TD Securities' Washington Research Group, the base case scenario heading into the midterms anticipates a divided government, with a Democratic House and Republican Senate. This configuration would likely result in heightened congressional scrutiny of Trump-era energy initiatives, including increased scrutiny of trade policy, permitting decisions, and fossil fuel expansion plans.⁸ 

Moreover, as the International Energy Agency (IEA) noted in its August 2026 Oil Market Report, global oil demand is forecast to decline by 1.6 million barrels per day in 2026, as elevated fuel prices and supply disruptions continue to weigh on consumption.⁹ 

Yet simultaneously, high tanker rates (which reached record levels in October 2026)¹⁰ and extreme tightness in diesel markets continue to support crude oil prices.¹¹ It remains to be seen whether the midterm elections will influence the US government’s energy-related policies and strategies. 

Ultimately, TD Securities analysts posit that the 2026 midterms will arguably be more about oversight and managing volatility, and less about sweeping legislative change. They believe that a divided Congress could sharpen scrutiny of Trump-era initiatives, with the White House in control of trade, tariffs, and energy policy.¹²

Key US energy policies and issues worth tracking

As voters head to the polls in November, several energy-related policy areas are emerging as flashpoints in the midterm debate. Understanding these could be useful for traders and investors seeking to anticipate post-election market movements.

Oil and natural gas production policy

The Trump administration has championed a ‘drill baby drill’ agenda emphasising increased domestic oil and gas production through deregulation and faster permitting.¹³ 

However, energy market realities have tempered expectations. According to Kpler analysis, US crude oil production peaked near 13.8 million barrels per day in late 2025 and is expected to decline toward 13.6 million barrels per day by year-end 2026, as drilling activity slows and mature basins like the Bakken contract.¹⁴

One potential question on the minds of both voters and policymakers is this: could an aggressive pro-drilling stance actually deliver the lower energy prices that the administration had promised?¹⁵ Some Republican candidates have found themselves scrambling to distance themselves from data centre expansion and associated power demand, even as Trump continues championing the AI industry and fossil fuel production.¹⁶ 

Natural gas as a transition fuel

Natural gas has become the centrepiece of America's energy debate, with competing visions for its role going forward. The US Energy Information Administration reports that natural gas accounted for approximately 40% of US utility-scale electricity generation in 2025.¹⁷ 

Yet, new research seems to suggest a possible deeper disagreement about whether natural gas actually represents a bridge fuel supporting the AI boom and renewable transition, or a distraction from accelerated clean energy deployment.

Research from RBC Capital Markets showed that natural gas has been positioned as ‘a backbone fuel supporting the AI infrastructure buildout’ through the current decade.¹⁸ 

However, Pew Research Center data reveals a sharp partisan split on energy priorities. While just 28% of Republicans now favour prioritising wind and solar (down from 65% in 2020), 71% now prefer fossil fuels as the national priority — a dramatic reversal in just six years. Democrats continue backing renewables, but enthusiasm has eased off too.¹⁹ 

The refining sector and fuel transition

The refining sector is also facing an existential challenge: adapt or fade. Global refining capacity is estimated to face pressure over the next twenty years from declining oil demand growth and the accelerating energy transition.²⁰ McKinsey research suggests that global liquids demand could peak within the next five to ten years depending on policy and technology adoption.²¹

The upcoming midterm elections could shed more light on whether the US government will back the ‘all-of-the-above’ approach favoured by the Trump Administration, as Bank of America researchers noted.²²

Utilities, inflation, and infrastructure investment

Rising electricity demand from data centres, AI computing, and industrial electrification is placing unprecedented stress on America's electrical grid. Goldman Sachs analysts project that data centre power demand could increase by 160% by 2030.²³ 

Needless to say, more data centres means more investments in transmission infrastructure, generation capacity, and grid modernisation. The 2026 US Midterm Elections could reveal more of where Congress’ head is at in terms of accelerated infrastructure permits (which industry groups argue could slash project timelines)²⁴ and rapid renewable buildout.²⁵

How the US midterms could reshape the oil, gas, refining, and utilities sectors

The 2026 midterm election results will reverberate across energy markets for years. Here's how different outcomes could reshape key sectors, as based on research by TD Securities’ Washington Research Group and Morningstar:

Scenario A: Divided government (Democratic House, Republican Senate)²⁶

This base case scenario would likely produce:

• Congressional oversight of Trump energy policies, but limited ability to pass sweeping legislation reversing them

• Continued permitting delays for both fossil fuel and renewable projects due to legislative gridlock

• Trump’s White House will also maintain control of the Executive Branch, driving trade policies, tariffs, permitting, energy policy, and so on would be driven by the White House. 

Scenario B: Republican dominance²⁷

Should the Republicans retain or expand control:

• Acceleration of oil and gas production and pipeline expansion

• Rollback of additional renewable energy incentives beyond those already repealed

• Mid-stream infrastructure development 

Scenario C: Democratic control^{28 29}

Conversely, if the Democrats gain significant ground:

• Renewable and alternative energy investments potentially boosted

• Industrial and financial stocks could come under pressure

• Support for the production of wind and solar power

Sources and citations

1. Source: https://www.kff.org/report/2026-health-care-and-affordability-poll

Citation: "Rising gas and electricity prices are top of mind for many voters—second only to the affordability of health care, according to a Kaiser Family Foundation poll published in 2026." - Kaiser Family Foundation

2. Source: https://themesetfs.com/insights/high-oil-prices-could-cost-republicans-congress-in-2026

Citation: "The national average for a gallon of gasoline rose from roughly $3 before 'Operation Epic Fury' to $4.56, while in Washington and a few Western states prices rose to around $6.00." - THEMSE ETFs

3. Source: https://www.kompas.id/artikel/russian-solar-soon-to-flow-to-us?open_from=English_Page

Citation: "One of Trump's efforts to address that pressure is to secure domestic supplies. Diesel prices have often been a primary driver of inflation in the U.S. Since the U.S. and Israel launched a war with Iran on February 28, diesel prices have risen by 70 percent.

On Thursday, referring to data from the American Automobile Association (AAA), the average price of diesel reached 6.28 USD per gallon. Meanwhile, before the Iran war, the price of diesel was around 3.76 USD per gallon." - Kompas

4. Source: https://www.brookings.edu/articles/another-oil-crisis-is-here-how-will-american-drivers-respond/

Citation: "Over 18 million U.S. households in the lowest-earning income quintile will be even more impacted, spending an extra 5% of their post-tax income on gasoline." - Brookings Institution, May 2026

5. Source: https://www.eia.gov/outlooks/steo/report/

Citation: "We now forecast the Brent crude oil spot price will average $105 per barrel (b) in 4Q26, $14/b higher than in last month's STEO." - U.S. Energy Information Administration, Short-Term Energy Outlook, October 2026

6. Source: https://www.eia.gov/pressroom/releases/press589.php

Citation: "With the Strait of Hormuz remaining effectively closed in the near term, disruptions to global oil production and shipments continue. Middle Eastern oil producers have cut output by over 11 million barrels per day (b/d), leading to large global inventory draws." - U.S. Energy Information Administration, June 2026

7. Source: https://www.brookings.edu/articles/another-oil-crisis-is-here-how-will-american-drivers-respond/

Citation: "The average constituent of a current Republican House member drives 26% more miles than the average constituent of a Democratic member." - Brookings Institution, May 2026

8. Source: https://mining.com.au/us-midterms-set-the-stage-for-energy-policy-tariffs-and-trade/

Citation: "TD Cowen's Washington Research Group argues for a base case scenario of a divided government, with a Democratic House and a Republican Senate. It suggests that this scenario would amplify oversight, investigations, and debt-ceiling brinkmanship, but leave little room for major policy changes." - TD Cowen, September 2026

9. Source: https://www.iea.org/reports/oil-market-report-august-2026

Citation: "World oil demand is forecast to decline by 1.6 mb/d in 2026, 510 kb/d more than our estimate in last month's Report, as the ongoing closure of the Strait of Hormuz and elevated fuel prices continue to weigh on oil consumption." - International Energy Agency, August 2026 Oil Market Report

10. Source: https://oilprice.com/Energy/Energy-General/Tanker-Rates-Soar-to-Record-as-Oil-Crisis-Becomes-Shipping-Crisis.html

Citation: "Supertanker rates hit a record $1.4 million per day on Persian Gulf–Asia routes, surging 40% in the first week of October amid the Iran war." - OilPrice.com, 10 October 2026

11. Source: https://www.eia.gov/outlooks/steo/report/

Citation: "Additional upward pressure on crude oil prices stems from extreme tightness in diesel markets that raises demand for crude oil in order for refiners to meet diesel demand." - U.S. Energy Information Administration, October 2026

12. Source: https://mining.com.au/us-midterms-set-the-stage-for-energy-policy-tariffs-and-trade/

Citation: "TD Cowen's analysts argue that the 2026 midterms are less about sweeping legislative change, and more about oversight and managing volatility." - TD Cowen Washington Research Group, September 2026

13. Source: https://www.theguardian.com/us-news/2026/feb/25/state-of-the-union-climate-change-trump

Citation: "Trump didn't say the words "climate change" during the State of the Union, but it loomed large over his 108-minute speech as he touted his "drill, baby, drill" agenda and derided Joe Biden's "green new scam"." - The Guardian, 25 February 2026

14. Source: https://www.kpler.com/blog/crude-oil-top-5-market-drivers-in-2026

Citation: "We expect output to have peaked near 13.8 mbd in late 2025 before falling back toward 13.6 mbd by end-2026…Lower drilling activity, shrinking DUC inventories and rising decline rates are beginning to outweigh productivity gains." - Kpler, October 2026

15. Source: https://www.latimes.com/environment/story/2026-02-24/trumps-plan-for-rising-energy-costs-pump-oil-make-data-centers-pay

Citation: "Energy affordability was in the spotlight during President Trump's lengthy and at times rambling State of the Union address Tuesday evening as the president promised to bring down electricity prices in an effort to assuage voter concerns about rising costs." - LA Times, 24 February 2026

16. Source: https://www.bloomberg.com/news/articles/2026-07-09/republican-midterm-candidates-break-with-trump-on-data-centers?srnd=homepage-americas&embedded-checkout=true

Citation: "Analysis from Bloomberg News found that at least 12 Republican federal and gubernatorial candidates have run ads opposing energy-intensive data centers amid the AI boom ahead of November's elections." - Bloomberg, 10 July 2026

17. Source: https://www.eia.gov/energyexplained/electricity/electricity-in-the-us-generation-capacity-and-sales.php

Citation: "The share of natural gas-fired electricity-generation capacity increased from 17% in 1990 to 40% in 2025, and its share of electricity generation more than tripled from 12% in 1990 to 40% in 2025." - U.S. Energy Information Administration

18. Source: https://www.rbccm.com/en/insights/2026/05/natural-gas-powers-the-data-center-boom

Citation: "Through the current decade, natural gas is positioned as a backbone fuel supporting the AI infrastructure buildout". - RBC Capital Markets, May 2026

19. Source: https://www.pewresearch.org/science/2026/04/03/americans-shifting-views-on-energy-issues/

Citation: "In 2020, a majority of Republicans and those who lean to the Republican Party said the focus should be on renewables (65%). Now, just 28% of Republicans say this, while 71% say the priority should be on fossil fuels. About eight-in-ten Democrats and Democratic leaners (83%) say the country should give priority to developing wind and solar production, but this share has also ticked downward in the last few years." - Pew Research Center, April 2026

20. Source: https://www.mckinsey.com/industries/oil-and-gas/our-insights/refining-in-the-energy-transition-through-2040#/

Citation: "While the COVID-19 pandemic and the conflict in Ukraine have triggered extreme volatility and uncertainty in the refining product and fuel markets, the transition to a low-carbon economy continues to bring significant challenges and opportunities to the refining sector. Increasing national and industry climate commitments and technological improvements, as well as changing consumer preferences, will shape the outlook for refining in the next two decades." - McKinsey, November 2022

21. Source: https://www.mckinsey.com/industries/oil-and-gas/our-insights/refining-in-the-energy-transition-through-2040

Citation: "Global liquids demand is expected to peak in the next five to ten years, depending on the pace of technological innovation and the net-zero ambition levels of governments." - McKinsey, 2022

22. Source: https://institute.bankofamerica.com/content/dam/transformation/us-electrical-grid.pdf?_sp=bab4929b-6c13-43fb-ba44-51d736abcef1

Citation: "The Trump Administration is pursuing an "all of the above" strategy for power generation, with a particular focus on cost efficiency and reliability." - Bank of America Global Research

23. Source: https://www.goldmansachs.com/insights/articles/AI-poised-to-drive-160-increase-in-power-demand

Citation: "Data centre power demand is expected to increase 160% by 2030." - Goldman Sachs Research, May 2024

24. Source: https://www.aga.org/permitting-reform-can-help-build-the-energy-infrastructure-america-needs/

Citation: "Lengthy and uncertain permitting processes can create unnecessary delays and add costs to projects that communities depend on." - American Gas Association, 9 October 2026

25. Source: https://www.canarymedia.com/articles/transmission/senate-permitting-bill-power-lines

Citation: "The U.S. Senate energy permitting bill unveiled Wednesday could streamline the buildout of high-voltage power lines across the country, potentially delivering billions of dollars in electricity cost savings and dramatically improving the power system's reliability over the coming decade — if Congress manages to pass it into law.

It would give state and federal regulators tighter oversight over less efficient local transmission planning. And it would require grid operators and utilities to coordinate grid buildouts to enable more new power plants, solar and wind farms, batteries, and other resources to serve growing demand for electricity." - Canary Media, 30 September 2026

26. Source: https://mining.com.au/us-midterms-set-the-stage-for-energy-policy-tariffs-and-trade/

Citation: "In its Ahead Of The Curve series, TD Cowen's Washington Research Group argues for a base case scenario of a divided government, with a Democratic House and a Republican Senate. It suggests that this scenario would amplify oversight, investigations, and debt-ceiling brinkmanship, but leave little room for major policy changes.

The November Rain: US Midterm Elections report's authors, driven by Chris Krueger of TD Securities, note that the base case would see a Democratic House investigating tariffs, federal spending, the Iran war, critical minerals investments, and more, with reputational risk for any Trump-branded initiatives.

The base case also sees President Trump maintaining control of the Executive Branch, however, meaning that trade policies, tariffs, permitting, energy policy, and so on would be driven by the White House." - Mining.com.au, 18 September 2026

27. Source: https://mining.com.au/us-midterms-set-the-stage-for-energy-policy-tariffs-and-trade/

Citation: "In the event of a Republican House, Miller predicts enhanced interest in oil and gas production, fossil fuel-fired power generation, and midstream infrastructure development." - Mining.com.au, 18 September 2026

28. Source: https://www.morningstar.com/markets/what-midterm-elections-will-mean-markets

Citation: "Financial and industrial stocks could come under pressure if Democrats win both chambers of Congress, while consumer staples and alternative energy stocks could benefit, according to analysts.

"Alternative energy stocks could also get a boost under Democratic leadership, along with some healthcare stocks if they can walk back some of Trump's healthcare spending cuts." - Morningstar, 8 October 2026

29. Source: https://www.pewresearch.org/science/2026/04/03/americans-shifting-views-on-energy-issues/

Citation: "An overwhelming majority of Democrats (85%) continue to say the federal government should encourage the production of wind and solar power." - Pew Research, April 2026