Crude-Oil Exports Emerge as Wild Card in End-of-Year Frenzy

Negotiations over major spending and tax bills include lifting a decades-old ban, but the hurdles are very high.

AP Photo/Eric Gay
Ben Geman
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Ben Geman
Dec. 3, 2015, 7:55 p.m.

An oil-in­dustry pri­or­ity that has been sty­mied by Demo­crats could be re­vived in Cap­it­ol Hill ne­go­ti­ations over tax policy and le­gis­la­tion to fund the fed­er­al gov­ern­ment bey­ond mid-Decem­ber.

Re­pub­lic­ans are seek­ing a way to end ma­jor, dec­ades-old re­stric­tions on the ex­port of crude oil pro­duced in the U.S. The na­tion’s oil-pro­duc­tion surge has led oil com­pan­ies, eager to take ad­vant­age of high­er prices on world mar­kets, to ar­gue that the ban is a rel­ic that’s no longer needed.

Sen. Dick Durbin, the cham­ber’s No. 2 Demo­crat, said it’s a “pri­or­ity” for Ma­jor­ity Lead­er Mitch Mc­Con­nell. But it’s un­clear if there’s any polit­ic­al space for a deal that would end the de-facto ex­port ban while do­ing enough to ad­vance Demo­crat­ic pri­or­it­ies on low-car­bon en­ergy and oth­er is­sues.

“There is a wide range of opin­ion [in the Demo­crat­ic caucus], some pro, some con,” Sen. Tim Kaine, a Vir­gin­ia Demo­crat, told Na­tion­al Journ­al. “The ma­jor­ity opin­ion is prob­ably [that] we’d be will­ing to con­sider it if we got some very strong en­ergy-ef­fi­ciency and green­house-gas-re­du­cing pro­vi­sions along with it.”

A Sen­ate Demo­crat­ic lead­er­ship aide signaled that Demo­crats would need a lot in re­turn for agree­ing to a lift­ing of the ban. Demo­crats dis­cussed their de­mands at a closed-door meet­ing of their mem­bers Thursday.

“There is a gen­er­al feel­ing that this is a huge, huge wind­fall for oil com­pan­ies and something Re­pub­lic­ans really want, and for us to ex­change that, it would have to be for something big,” the aide said.

The price tag would in­clude jet­tis­on­ing vari­ous GOP-backed policy “riders” on the om­ni­bus that Demo­crats op­pose, such as meas­ures to cur­tail en­vir­on­ment­al reg­u­la­tions and fur­ther ease cam­paign-fin­ance re­stric­tions.

Key en­ergy-re­lated pri­or­it­ies for Demo­crats in­clude long-term ex­ten­sions of cred­its for de­vel­op­ing sol­ar-en­ergy pro­jects, which ex­pire (or in some cases drop sharply) late next year, and wind-en­ergy-pro­ject tax cred­its that lapsed at the end of 2014. They also want re­new­al of a lapsed pro­gram called the Land and Wa­ter Con­ser­va­tion Fund.

There’s at least some sup­port among Demo­crats to re­lax­ing the ex­port ban, which dates back to the oil shocks of the 1970s. In Oc­to­ber, 26 House Demo­crats joined Re­pub­lic­ans to ap­prove a bill end­ing the ban. Demo­crat­ic Sen. Heidi Heitkamp of North Dakota, whose state is a ma­jor oil pro­du­cer, has been push­ing col­leagues to sup­port lift­ing the ban.

Sen. Mar­tin Hein­rich, a New Mex­ico Demo­crat, said the dis­cus­sions have fo­cused largely on the an­nu­al year-end bill to ex­tend a suite of busi­ness and per­son­al tax breaks. He told re­port­ers in the Cap­it­ol Thursday that there are “very act­ive con­ver­sa­tions go­ing on.”

Hein­rich pre­vi­ously voted against a pro-ex­ports bill that cleared the En­ergy and Nat­ur­al Re­sources Com­mit­tee on a party-line vote, but signaled that he could sup­port ex­ports if they’re coupled with strong re­new­able-en­ergy in­cent­ives.

“We are look­ing for things that bring people to the table from both sides,” he said. “I think there is a real op­por­tun­ity here. I hope we real­ize it.”

But the sides could well be too far apart. One oil-in­dustry lob­by­ist called it a “long shot.” Sen. John Cornyn, the cham­ber’s No. 2 Re­pub­lic­an, told En­vir­on­ment and En­ergy Pub­lish­ing that Demo­crat­ic de­mands are “pretty greedy” and in­clude re­new­able-en­ergy tax cred­its “in per­petu­ity.” The Demo­crat­ic lead­er­ship aide said a five-year ex­ten­sion of the cred­its would be a “floor, not a ceil­ing.”

Still, en­vir­on­ment­al­ists who op­pose crude-oil ex­ports are con­cerned enough to ramp up ef­forts to pre­vent a deal. The Si­erra Club, Pub­lic Cit­izen, and the United Steel­work­ers pressed Sen­ate lead­ers to op­pose pro­vi­sions on the ex­tenders pack­age or om­ni­bus.

The White House de­clined com­ment. The ad­min­is­tra­tion has pre­vi­ously said it would veto le­gis­la­tion that lifts the ex­port ban, and ar­gued that such de­cisions should be left up to the White House.

But back­ers are not giv­ing up.

Re­pub­lic­an Sen. Dan Sul­li­van of Alaska said that while he’s un­sure of the status of the talks, he’s hope­ful about find­ing space in the pack­age to con­tin­ue fed­er­al spend­ing after Dec. 11, when cur­rent ap­pro­pri­ations lapse.

“If you look at the tra­ject­ory of where this has been, at least for my 10 months in the Sen­ate, it has gone from kind of ‘no way’ to a lot of in­terest in it,” the fresh­man sen­at­or said in a short in­ter­view. “I think there’s a de­cent shot in terms of the om­ni­bus. I am hope­ful.”

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