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 households.

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. 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. 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.

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. 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.

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. 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.

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.

Yet simultaneously, high tanker rates (which reached record levels in October 2026) and extreme tightness in diesel markets continue to support crude oil prices. 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.

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.

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.

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? 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.

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.

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.

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.

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. McKinsey research suggests that global liquids demand could peak within the next five to ten years depending on policy and technology adoption.

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.

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.

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) and rapid renewable buildout.

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)

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 dominance

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

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