Congress nearing deal to allow US crude exports

OREANDA-NEWS. December 17, 2015.  Top lawmakers in the US Congress from both parties appear close to reaching a deal that would repeal the 40-year-old restrictions on crude exports in exchange for extending renewable energy tax credits.

House Republican leaders are planning to release a spending bill today that includes the exports-for-renewables deal, so long as last-minute negotiations are successful. Senate minority leader Harry Reid (D-Nevada) this morning said lawmakers had two choices: pair crude exports with policies that reduce CO2 emissions, or pass a clean government spending bill.

Democratic lawmakers have said they will not support allowing crude exports unless Republicans extend expiring wind and solar tax credits, reauthorize funding for conservation program and withdraw riders blocking environmental regulations. The exports deal could include some mix of those provisions, sources say, although congressional leaders are still negotiating details.

House speaker Paul Ryan (R-Wisconsin) this morning said he would honor an earlier promise to give lawmakers at least three days to review legislation before holding a vote. This will mean the House will vote on the bill on 17 December. The government is scheduled to run out of funding on 16 December, meaning Congress will have to pass another short-term spending bill to provide time for voting.

US independents such as Marathon, Anadarko, Encana and Hess last year began their push to lift the export restrictions so they could sell crude at higher global prices. They built support for crude exports among Republicans at an unusually fast pace, aided by projections that gasoline prices will remain low in 2016. This reduces the risk that voters will blame Congress' export policies on rising gasoline prices.

US refiners, particularly those on the east coast, have fought to retain export restrictions because of concerns it will make them less competitive. Senator Tom Carper (D-Delaware) last week proposed a short-term \\$3/bl tax credit for those refiners. But the idea struggled to gain traction among other lawmakers, who balked over its projected \\$7bn price tag and its effort to subsidize a small group of refiners. The refinery trade group American Fuel and Petrochemical Manufacturers last week said it opposed the refinery tax credit.

The Republican majorities in Congress will likely need to lean on Democratic votes to build enough support to pass the spending bill, potentially making the crude exports deal vulnerable.

Republican strategist Mike McKenna, who lobbies for Koch Industries, said he expects the deal is "ultimately going to crater," partly based on the growing list of demands from Democrats. He also said Ryan, who became House speaker in late October, should be cautious about passing his first tax bill without broad support from Republicans.

Republicans might have avoided the current choice of extending renewable energy tax credits if they had included crude exports in the six-year highway funding bill that passed earlier this month, said George David Banks, a former Senate staff director who now works at the think tank American Council for Capital Formation.