Midterm Bloodbath: What a Democrat Congress Means for Shale & LNG

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The word we’re seeing most this morning is “bloodbath,” and it fits. Democrats flipped both the U.S. House and U.S. Senate in yesterday’s midterm elections, only the fifth time since World War II that a party has flipped both chambers in a midterm. President Trump keeps his veto pen for two more years, so the fossil-friendly policies coming out of his agencies aren’t going anywhere soon. But the shale and LNG industries just lost a lot of friends on Capitol Hill, and maybe their best shot at federal permitting reform in a generation. Here’s what happened, why, and what it means for drillers, pipeliners, LNG exporters, and the landowners who depend on them.

The Numbers

The Associated Press called the Senate for Democrats shortly before midnight and has since called the House. In the Senate, Democrats flipped seven GOP-held seats: Iowa, Kansas, Maine, North Carolina, Ohio, South Carolina, and Texas. As of Wednesday morning, AP’s tracker had Democrats at 54 seats and Republicans at 44, with two races, Alaska and Mississippi, still uncalled. Republicans had held a 53-47 majority. In the House, the AP had called 228 seats for Democrats as of Wednesday morning, with dozens of races still being counted. Estimates of the final Democrat count run from at least 245 seats (MS NOW) to about 258 (NBC News). That would be the biggest Democrat House majority since 1993.

Even Texas turned blue. Democrat Gina Hinojosa ousted three-term Gov. Greg Abbott, who has conceded. She’ll be the state’s first Democrat governor since Ann Richards left office in 1995. Hinojosa ran a populist campaign that included railing against AI data centers, one of the fastest-growing new markets for natural gas. Far-left Democrat James Talarico beat Ken Paxton for the Senate, and CNN projects Democrat Jon Rosenthal will win a seat on the Texas Railroad Commission, the agency that regulates the state’s oil and gas industry.

Why It Happened

Pocketbooks. On Election Day, gasoline averaged $4.12 a gallon and diesel $6.28, the highest of any Election Day on record, according to GasBuddy’s Patrick De Haan. The U.S. war with Iran, which began in late February, was at the center of it. In the network exit poll conducted by SSRS, 74% of voters called the war a crucial or major factor in their vote. NBC’s exit poll found 62% think starting the war was the wrong decision. Roughly 60% of voters blamed the President’s policies for higher prices. Tariffs added to the pain: a Chicago Council survey found 81% of Americans say the tariffs are bad for their cost of living.

What Doesn’t Change (For Now)

Trump keeps the veto, and Democrats are nowhere near the two-thirds needed to override it. Most federal energy policy runs through agencies, not Congress. LNG export approvals at DOE, oil and gas leasing at Interior, and EPA rollbacks like the Quad O “Part 2” methane proposal stay in the administration’s hands (see Quad O, the Sequel: EPA Proposes $45 Billion Methane Rule Rollback). Last year’s One Big Beautiful Bill stays on the books, too (see Trump Signs One Big Beautiful Bill – Impacts for O&G Industry). Standard Chartered’s Emily Ashford said a Democrat sweep wouldn’t automatically reverse the administration’s oil and gas policies or change production overnight.

What Does Change

1. Permitting reform is in deep trouble. The Senate’s first procedural vote on BAAJA, the bipartisan permitting bill, is set for Nov. 9 (see Permitting Reform Countdown: Who’s For, Who’s Against Before Nov 9). API and companies including Exxon, Chevron, EQT, and Williams have been begging Congress to pass it. Rep. Jared Huffman (D-CA), the likely next chairman of House Natural Resources, says the bill gives too much to oil and gas and wanted Democrats to wait until after the election, when they’d have a stronger hand. Now they have it. If the House changes so much as a comma, the bill goes back to the Senate, and the new Congress arrives in January.

2. LNG exports become target #1. The Democrats’ line: exports raise prices at home. Sen. Elizabeth “Pocahontas” Warren led nine senators asking Energy Secretary Chris Wright to drop his plan to double LNG exports. Sen. Jeff Merkley, who may chair the Senate Environment and Public Works Committee, has a bill that would bar DOE from approving new export terminals if they raise consumer prices. With prices where they are, expect that message everywhere.

3. Investigations and subpoenas. Expect probes of industry profits, energy prices, campaign donations, and administration-backed gas projects. Expect Democrats to block any federal ban on state and local gas bans, and to push to restore FERC’s independence from the White House.

4. Senate confirmations. Democrat FERC Commissioner David Rosner’s term expires in June 2027. Pro-pipeline FERC nominees, and the federal judges who hear pipeline appeals, now need a Democrat Senate to confirm them.

5. Lost tools. Republicans lose budget reconciliation and the Congressional Review Act for energy priorities. Democrats gain leverage over spending bills and the debt limit, which could be hit as early as February 2027.

Some Moderating Forces

Talarico ran on an all-of-the-above energy platform that protects oil and gas jobs. Sen. Martin Heinrich of New Mexico, an oil state, co-wrote BAAJA and is in line to chair the Senate Energy Committee. Building-trades unions like LNG jobs. And prices and geology, not Congress, decide how many rigs run.

The Real Threat: 2028

LNG terminals and long-haul pipelines are 20- to 30-year bets. Remember that the Biden administration paused new LNG export approvals in January 2024 (see White House Makes it Official – Biden Declares War on LNG Exports). If the White House flips in 2028, expect a pause like that again, and with BAAJA dead, there’s no permitting certainty to fall back on. Our guess is developers will rush to lock in DOE and FERC approvals and reach final investment decisions before January 2029.

MDN’s Take

We’ll say it plainly: President Trump owns this one. People vote their pocketbooks. Always have, always will. Two of the President’s own choices drove prices higher for ordinary Americans: (a) the war with Iran, which sent gasoline and diesel to record Election Day highs, and (b) his aggressive tariffs, which pushed up the price of just about everything else. He promised to bring prices down. Instead, they went up, and he lost sight of the one issue that put him back in the White House. Last night was the unfortunate result.

We take no pleasure in writing that. MDN has cheered the “energy dominance” agenda: unpaused LNG approvals, more leasing, rolled-back regulations that made no sense. But that agenda is supposed to mean cheap, abundant American energy. Four-dollar gas is the opposite of energy dominance, and voters noticed.

Now the industry pays part of the bill. The best permitting deal we’ve seen in years is on life support. LNG exporters are about to spend two years in front of hostile committees. And the 2028 race just got a lot more dangerous for everyone who profits from shale. Our advice to the industry: push hard for BAAJA in the lame duck, lock in every approval you can before January 2029, and start making the affordability case for American natural gas, loudly, to the people who just won.

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