Michigan Exemplifies Energy and Trade Issues Post-Election

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

Swing-state Michigan was among those witnessing a shift to the left in U.S. midterm elections. That state played a pivotal role in controversial trade policies embraced by now lame-duck President Trump.

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Higher Energy and Trade-Related Costs Factor into Voter Concerns

Michigan played a central role in a trade dispute between U.S. President Donald Trump and Canada's government, but a win for the Democrats could lead to an economic pivot.

Democrats trounced the Republicans in midterm elections that will see control of Congress shift to the left, and decidedly away from President Donald Trump, come January.

"Last night, the American people overwhelmingly rejected the failed policies of President Trump and Congressional Republicans that prioritized billionaires and corporate interests over everyday people," Rep. Frank Pallone, D-N.J., the ranking member of the House Energy and Commerce Committee, said in a statement Wednesday.

Tariff policies embraced by Trump, along with the pressure on the global energy market from the conflict with Iran, created headaches for U.S. consumers. Nationally, the gasoline component of the Consumer Price Index was up 34.2% annually to September, while Michiganders were paying $4.40 for a gallon of regular unleaded. The national average on Wednesday, according to AAA, was $4.12 per gallon.

Much of that is a result of the conflict with Iran, which left crude oil prices lingering above $100 per barrel for much of the year. Michigan too can be vulnerable to regional issues at the refinery level, with the large Whiting facility, operated by BP, and the Joliet refinery, operated by Exxon Mobil, prone to issues impacting state gasoline prices.

Elsewhere, the state played a central role in trade barbs from President Trump.

Facing off against tariff threats, Ontario Premier Doug Ford earlier this year mulled suspending electricity supplies to the United States, adding oil could be on the table as well. Trump, for his part, tried to thwart the opening of the new Gordie Howe International Bridge to Canada.

"Michigan, it just shouldn't be this hard," Sen-elect Abdul El-Sayed, the first Muslim ever elected to the Senate said an address after beating Republican challenger Mike Rogers. "It shouldn't be this hard to buy a second bag of groceries or fill your tank."

Jocelyn Benson, a Democrat that will replace term-limited Gov. Gretchen Whitmer, has already said she would work to undo some of Trump's economic policies.

"I already began having conversations with folks in Canada about how we can carve out a subnational agreement to protect our jobs, protect our costs and, if this escalates further, protect our electricity," she said from the campaign trail in October.

Energy Among the Larger Economic Ties

Both economies are highly integrated. Ontario is a net exporter of electricity to Michigan, while Michigan serves as intermediary for oil pipelines carrying Canadian crude oil to Ontario.

Industrial Info Resources is monitoring four refineries in Ontario, with the bulk of those situated in the city of Sarnia on Lake Huron. Imperial Oil's refinery in Sarnia can process 120,000 barrels per day (bpd). The Industrial Info Resources Global Market Intelligence (GMI) Petroleum Refinery Database offers a detailed plant profile.

Elsewhere, the Associated Press on Wednesday found 81% of Michigan voters backed Proposal 2, which banned state utility companies such as Consumers Energy and DTE Energy from donating to state and local candidates.

Industrial Info is tracking three grassroots projects affiliated with Consumers Energy. Near the city of Flint, the Thetford Natural Gas Generation Station, with an investment value of $1.6 billion, will provide 919 megawatts of electricity once it's completed in 2031.

DTE Energy, for its part, is conducting preliminary design work for a 1.4 gigawatts natural gas plant in central Fowlerville. Data from Industrial Info show the plant could be completed by 2031.

Democrats widely ran on a get-money-out-of-politics agenda, but Proposal 2 is likely to face backlash in the courts. The Supreme Court in Citizens United v. Federal Election Commission determined that political campaign contributions are a representation of free speech, protected under the First Amendment of the U.S. Constitution.

Key Takeaways

• Michigan Democrats already looking to improve ties with Canada
• Mid-term elections were seen as a referendum on President Trump's track record

By the Numbers

• $4.40 gas in Michigan is above the national average
• 1.4 GW plant planned by state utility DTE Energy

About Industrial Info Resources

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news, and analysis on the industrial process, manufacturing, and energy-related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified, and verified plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).