Budget deal could lift oil export ban

An oil pump is pictured. | AP Photo

Democrats are driving a hard bargain in year-end negotiations to keep the government funded, but a key GOP priority remains on the negotiating table: lifting the decades-old ban on U.S. oil exports.

At a special caucus meeting on Thursday, Senate Democrats solidified a list of asks that Republicans may find overwhelming. But the bright side for the GOP is that Democrats seem serious about striking a bargain on lifting oil exports, despite pressure from greens and resistance from the White House. The challenge for the GOP and its industry allies remains how to craft a deal that lures liberals into backing a pro-oil position without giving away too much for conservatives to swallow.

Repealing the oil export ban is “a very important priority for” Senate Majority Leader Mitch McConnell (R-Ky.), “and we’re hoping he’ll be respectful of our priorities,” Senate Minority Whip Dick Durbin (D-Ill.) said Thursday. House Speaker Paul Ryan (R-Wis.) is also throwing his weight around, hoping his young speakership’s momentum can produce a win in a long-running fight over energy policy that seemed impossible just months ago.

What Durbin called “a long list” of Democratic demands in exchange for any oil exports deal starts with extending clean-energy tax benefits that are anathema to many on the right. But those tax credits are already in line to stay alive this year as part of a separate tax package that’s close to completion, and Koch Industries is already pressing lawmakers to reject any deal that would end the ban on oil exports in exchange for helping wind and solar power.

Democratic leader Sen. Patty Murray (D-Wash.) said an end to the export ban is “obviously being pushed very hard by McConnell, and there are a couple in our caucus that agree, but the price is very high.” The American Petroleum Institute and other top oil players have lent their lobbying might to the effort, scrambling to combat a swoon in oil prices that have forced job cuts and belt-tightening in the once-booming U.S. oil patch.

“We hope Congress will still consider lifting the crude export ban on its own merits, but not by burdening society with continuing subsides and corporate welfare,” Koch lobbyist Phillip Ellender wrote to lawmakers last week. The letter is viewed with major skepticism among liberal Democrats, who privately wonder whether Republicans are willing to break with the companies run by the billionaire conservative brothers David and Charles Koch.

However, top Democratic Senate aides said that the party’s leaders and even a number of liberal lawmakers are open to a deal with Republicans, but only if they get a lot out of GOP leadership.

Democrats also want to see a restoration of the now-expired federal Land and Water Conservation Fund that House Republicans are pushing to reform.

“I don’t know if they’ll be able to get a deal on it,” said Sen. Jon Tester (Mont.), chief of the Democratic Senatorial Campaign Committee, who’s been open to a deal on oil exports for months. Tester said “there needs to be things like” full funding of the conservation fund to win him over.

The conservation fund’s top Senate Republican backer, Richard Burr (N.C.), said reviving it in exchange for oil exports “makes a lot of sense.”

“There are a lot of moving pieces, but the closer we get to finalizing” a year-end deal, Burr added, “the more people narrow down their wish list.”

Democrats also want assurances from Republicans that child tax credits are preserved and possibly expanded in the tax extenders bill. And they maintain that if they are going to agree to lifting the oil export ban, Republicans should expect little else in the year-end deal.

Senate Majority Whip John Cornyn (R-Texas) was not impressed by the high price the minority party hopes to extract. “It sounds to me like the Democratic demands are greedy,” he said.

Cornyn’s not the only Republican asking why the party should play ball with Minority Leader Harry Reid (Nev.) as Democrats prepare to score victories in the prospective year-end tax package.

Adding oil exports to the mix as part of a massive government funding and tax deal “strikes me as more theater than reality,” GOP energy lobbyist Michael McKenna said. “I’m not exactly sure what else Democrats want. Harry Reid is in the process of a getaway from a fairly successful armed robbery.”

Still, Democrats have more leverage than Republicans like to admit: They are likely to carry the voting load on the spending bill due by Dec. 11, so they believe they have a strong hand that could trump tough talk from the GOP.

And the Democrats’ biggest environmental stalwarts sounded just as wary of an oil exports deal that they acknowledged is in the mix.

“It’s out there,” Sen. Ed Markey (D-Mass.) said seconds after complaining the deal would amount for a $500 billion windfall for the oil industry.

Sen. Tom Carper (D-Del.), a centrist dealmaker, raised concerns about northeastern refineries that currently get U.S. crude oil at a discounted price. “The arguments that we should treat oil much the same as we treat natural gas,” which the U.S. is gearing up to begin exporting, “I think flunk,” he said.

Given that a spending bill is due within days, the fact that Democrats are keeping the oil concession on the table is being viewed on Capitol Hill as a major development among senators, one of whom said a major, “substantive” deal hinges on the provision.

Yet there’s also skepticism about what, exactly, Republicans are asking for. Is the GOP willing to shut the government down if Democrats don’t bend to McConnell and Ryan?

“People are wanting to hold the whole budget process hostage on oil exports,” lamented Sen. Maria Cantwell (Wash.), the Senate Energy Committee’s top Democrat.

Separately on Thursday, the House passed energy reform legislation that would lift the oil export ban, but it faces a certain presidential veto as a standalone measure.