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Summary of the Mid-term Elections

 

House
As many expected, Democrats regained the majority in the House, gaining at least 28 seats. Current Minority Leader Nancy Pelosi (D-CA) is expected to become Speaker of the House. However, her path to the Speaker's balcony might not be as smooth sailing as previous Congresses, as some House Democrats are likely to challenge her. Rep. Kevin McCarthy (R-CA) announced he would run for House minority leader. He is currently the majority leader and is next in line due to Speaker Ryan's retirement. It is expected that Rep. Jim Jordan (R-OH) will launch a longshot bid for that position. As for House committee leadership of particular importance to petroleum marketers, the House Energy and Commerce Committee will likely be chaired by Rep. Frank Pallone (D-NJ), the House Transportation and Infrastructure Committee will likely be chaired by Rep. Peter DeFazio (D-OR), the House Financial Services Committee will likely be led by Rep. Maxine Waters (D-CA) and the House Ways and Means Committee will likely be chaired by Rep. Richard Neal (D-MA). PMAA and the state associations have good relations with most of these members.

Senate
In the Senate, Republicans retained the majority (51 to 46 with seats in Florida, Mississippi, and Arizona too close to call). Some of the key wins for Republicans included Rep. Kevin Cramer (R-ND) defeating sitting Democratic Sen. Heidi Heitkamp, Indiana businessman Mike Braun defeating sitting Democratic Sen. Joe Donnelly and current Missouri Republican Attorney General Josh Hawley defeating sitting Democratic Sen. Claire McCaskill.

What to Expect the Next Two Years
The change of the gavel in the House is likely to lead to two years of partisan gridlock in Washington. However, it is possible that Trump will develop a triangulation strategy to allow him to succeed by working with the Democrats in the House similar to what Clinton did in the 90s and was reelected with that strategy. Now that Democrats have control of the House, they are determined to investigate the Trump administration, his 2016 Presidential campaign, and his family's business empire including his tax returns. There is even talk of possible impeachment proceedings. However, most Democrats realize impeachment would be meaningless as it would require over twenty Republican Senators to vote against the President. The bottom line is to expect investigation after investigation, particularly once Special Counsel Mueller releases his final report examining any potential connections between the 2016 Trump presidential campaign and Kremlin-sponsored hackers. While these investigations will not lead to anything final, they will occupy news cycles and distract the Administration.

There are some areas Republicans and Democrats may be able to find common ground as the two parties may work on trade and an infrastructure package. PMAA has been advocating against the commercialization of rest areas and will continue to do so as talks over an infrastructure package accelerate. Tax 2.0 may also still be on the table, and with incoming Chairman Neal (D-MA), movement is possible. Neal has a long history of working across the aisle, however, politics are likely to play out on both sides as the incoming Ways and Means Committee Chairman will likely focus the Committee's attention on obtaining Trump's tax returns and how the last tax bill affected the President.

Lame Duck Session 2018
Congress will return next week to begin a planned three-week lame duck session. While the fight over funding the border wall in a government spending package is likely imminent, PMAA is focused on getting Congress to approve the Senate-passed farm bill which includes a permanent extension of the National Oilheat Research Alliance (NORA). Congress may also address a tax extenders package before adjournment that could include a retroactive extension of the $1 per gallon biodiesel blender's tax credit for 2018 and possibly an extension through next year along with an extension of the Oil Spill Liability Tax (OSLT) that expires on December 31, 2018. Refiners are the only party liable for the OSLT because its imposed on crude oil at the refinery gate. Last year, the OSLT expired but some suppliers continued to charge the 9 cents per barrel OSLT on jobber bill of ladings during the first few months of 2018 believing that Congress would apply the tax retroactively when they passed an extenders package. Click here to view a PMAA issue brief on the OSLT issue. Congress may also fix the drafting error in Section 168 of the "Tax Cuts and Jobs Act" so businesses can receive the 100 percent bonus depreciation benefit that Congress intended to provide in the bill. Finally, given that Senator Dean Heller (R-NV) lost his reelection bid in Nevada, his bill to extend the $7,500 electric vehicle tax credit through 2022 in the tax extenders package is up in the air. Lame duck sessions are particularly unpredictable, but PMAA is hopeful on NORA and the extension of the biodiesel tax credit. 

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