The Republican victory in last week's midterm elections is lifting hopes of a shift in U.S. energy policy to higher production of oil and gas -- a move that could provide a tailwind for the auto industry.
Republicans netted at least seven additional seats in the Senate, which will give the GOP control of the upper house with at least 52 seats when the new Congress takes office next year. They also increased their hold on the House of Representatives, where they gained 13 seats.
Almost immediately after the results were in, approval of the Keystone XL pipeline rose to the top of Republican priority lists. Both Kentucky's Mitch McConnell, the presumed new Senate majority leader, and House Speaker John Boehner of Ohio mentioned the pipeline as one of the first tasks the new Congress will tackle, cheering auto industry players.
"I feel the Republican Congress will insist on approving the Keystone pipeline. I expect it will be done early in this Congress," Mike Jackson, CEO of dealership group AutoNation Inc., said in a speech before the Detroit Economic Club.
The Keystone XL pipeline would accelerate movement of oil sand crude from Canada to American refineries on the Gulf Coast of Texas, but it has been opposed for more than six years by some Democrats and environmental groups who fear the pipeline poses environmental risks and that the lowering of oil and gasoline costs will undermine efforts to slow global warming.
In other energy matters, Republicans want to lift the ban on crude oil exports, streamline the process of gaining approval for natural gas exports and ease environmental requirements of coal producers -- all measures that could lower energy and gasoline prices.
An increase in energy production likely would add to the downward pressure on gasoline prices. As of last week, regular gasoline was selling for a national average of $2.95 per gallon, down from $3.22 a year ago, according to AAA.
Lower gasoline prices tend to boost auto sales because they leave consumers with more disposable income. Facing more moderate prices at the pump, many car-shoppers skew toward larger and more powerful vehicles, which boost revenue for dealers and automakers.
The Keystone XL project would add a new line in an existing network that moves heavy oil sand crude from Alberta to Oklahoma, Illinois and Texas. The XL line would be able to move 500,000 barrels of crude a day, boosting the Keystone network's total capacity to more than 1 million barrels a day.
The XL pipeline also has the support of some Senate Democrats, although a bill greenlighting the project still could be vetoed by President Barack Obama. Construction requires presidential approval because the pipeline would cross an international border.
A Keystone bill "will be one of the first pieces of legislation that will be brought up," said Don Canton, spokesman for Republican Sen. John Hoeven of North Dakota, a state that would be able to ship crude via the pipeline to Gulf Coast refineries.
But lower gasoline prices could complicate matters for automakers. Manufacturers continue to invest billions of dollars to boost fuel economy through more advanced engines, lighter materials and new transmissions as well as electric vehicles and hybrids.
If gasoline prices remain low, carmakers face a tougher time recouping those investment costs, said Jackson, the AutoNation CEO. He added he would support higher gasoline taxes to boost prices at the pump enough to keep consumers buying new, high-mileage cars and trucks.
Declining fuel prices already have caused a perceptible shift in new-vehicle purchasing toward SUVs and larger cars, he added.
"A gas tax gives an economic underpinning to the fuel-economy investments the industry is making," Jackson said.