What a Democratic Senate can and can't do for US energy policy

Welcome to Insider Energy, a weekly energy newsletter brought to you by Business Insider.

Here's what you need to know:

• Want to get Insider Energy in your inbox every Friday? Sign up here.
• Do you have feedback or story tips? Reach out to me at bjones@businessinsider.com.

I thought we were done with horrible weeks for a while, but 2021 is already showing us that it, too, can surprise.

For Democrats and clean-energy advocates, there was, however, some good news: Democrats won both runoff elections in Georgia to regain control of the Senate. That's a big deal for pretty much every issue, from healthcare to voting rights to energy.

Though there's a hefty caveat: The Democratic majority is so slim that any major (and controversial) bills - including those related to climate change - are unlikely to find traction.

Let's start there.

What's on the table now that Democrats have control of the Senate

Who wants one stressful election when you can have two?

The news: Democrats won both runoff elections in Georgia, giving them 50 of the Senate's 100 seats. The tiebreaking vote will fall to incoming Vice President Kamala Harris - in other words, Dems regained control.

The significance: President-elect Joe Biden won't, as previously expected, operate within a divided government. That gives him a lot more latitude to achieve his ambitious climate agenda.

• Congress could likely pass legislation that allocates more funding and extends tax credits for clean energy. That may be especially good news for EV companies.
• His picks for key climate and energy roles will likely be confirmed.
• Biden's administration could even restrict oil producers as part of a broader tax reform, one analyst said.

Big buts: It may be obvious, but a 50-50 split in the Senate gives Democrats a very narrow majority. That will be a problem for any sweeping climate bills, especially if they appear to constrict fossil fuels.

• Not all Democrats may vote in favor of big climate bills.
• Plus, don't forget about the filibuster. It's unlikely to go away anytime soon, and it essentially means that climate-specific legislation could require 60 votes.
• Fun fact! Filibuster comes from the Dutch word for pirate. "It came to mean a legislator who was 'pirating' parliamentary proceedings," NPR reports.

All eyes on Joe: Not that Joe. I mean Democratic Senator Joe Manchin of West Virginia. He's "the most powerful person in US energy policy right now," said Ed Crooks, Vice-Chairman of Americas at Wood Mackenzie.

• Of all Democratic Senators, he appears most likely to oppose legislation that constricts the fossil-fuel industry, experts told me.
• Though it's dated, an ad published by Manchin famously shows him shooting a bullet through a climate bill.

Arctic drilling anyone? Anyone?

The high-profile fight to open up the Arctic National Wildlife Refuge to oil drilling appears set for a rather anticlimactic ending.

The news: After a three-year push by the Trump administration to allow oil companies to drill in ANWR - considered to be the largest remaining swath of wilderness, and likely home to a huge amount of oil - leases for acreage in the refuge finally went up for sale. But there were just three bidders ... one of which was the state of Alaska.

• Oh, and half of the available leases had no takers at all.
• You may remember that a big reason for opening up the refuge was the revenue these leases could raise. Now it appears they could net as little as $15 million.

No surprises: The unsuccessful lease sale wasn't exactly surprising. We reported on the lack of interest back in August.

• Wall Street analysts told us that while the prospect of drilling in ANWR might have been appealing several years ago, the calculus looks a lot different today.
• Companies are looking to cut costs, and drilling in ANWR would be expensive and risky. Plus, it's not a good look as pressure rises among investors to produce more sustainable energy.
• Here's the full story, where we lay out analysts' reasoning and statements from companies.

Clean-energy stocks surged last year, and they're soaring in 2021. Wall Street analysts offer up their top bets.

Amid a global pandemic and a historic oil market collapse, clean-energy stocks casually soared. The ECO index, a benchmark for clean energy, grew last year by a stunning 203%, according to Raymond James.

• For comparison, the S&P 500 grew by 16%, while the E&P Index (including companies that find and extract oil and gas) fell by 38%, per Raymond James.

This year: It's already looking up, thanks to a Democratic takeover of the Senate and a late-2020 relief bill that included all kinds of goodies for clean energy. This year it's already up about 20%. (The S&P is up 3%).

For investors: Analysts are predicting another good year for the sector and sharing their top picks.

• Joe Osha, an analyst at JMP Securities, shared 3 solar stocks to buy now that are set to surge under Biden
• Raymond James also shared a list - in this case, seven lesser-known energy firms to buy up.

Price check: Crude hits an 11-month high due to a 'perfect storm' of events

Brent today: The benchmark is at about $55 per barrel, as of Friday midday.

• The last time we saw prices that high was February - before the coronavirus scourge was declared a pandemic.

Why the rally? Analysts at Rystad Energy said it's due to a "perfect storm" of events:

1. Saudi Arabia, the de facto leader of OPEC, agreed to voluntarily cut crude production starting in February by 1 million barrels.
2. Storage tanks are finally starting to empty around the world, a signal that demand is ticking up.
3. Democrats regained control of the Senate, giving way to a potentially massive economic stimulus in the months ahead.
4. And, of course, the dispersal of COVID-19 vaccines.

But: A full recovery of oil demand is still a long way off. A bunch of industry experts shared what to expect in the year ahead for the oil market.

That's it! Have a great weekend.

- Benji

Ps. I went cross-country skiing on New Year's Day and discovered it's not as boring as skiing on a flat surface sounds. I also discovered that it's a great workout because I woke up cocooned by sore muscles.