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US senators near deal on oil exports
Senate negotiators are nearing a deal to allow unfettered US crude oil exports for the first time in 40 years, though differences remain on renewable-energy tax credits that Democrats are demanding in return, according to people close to the discussions.
While any agreement could still collapse in the coming days - the deal faces opposition in the House - lawmakers are weighing the extension of solar and wind tax credits for as long as five years in exchange for lifting the crude-export restrictions, which were established to counter the energy shortages of the 1970s.
Tax breaks are part of the discussion, though lawmakers are still negotiating the length of wind- and solar-energy tax extensions and whether they should be phased out, said a Senate Democratic leadership aide, who wasn't authorised to speak on the record.
If agreed to and approved by Congress, repeal of the nation's ban on most crude oil exports would mark the most significant shift in US oil policy in more than a generation. Repeal, benefiting oil producers including ConocoPhillips, Hess Corp. and Continental Resources Inc, would come at a time when the industry is cutting jobs to deal with a global glut in crude oil and the lowest prices in seven years. Talks for a deal are under way as envoys from 195 nations reached an agreement to limit fossil-fuel pollution and curb the effects of climate change.
Congress is considering lifting the export ban as part of either a package to extend expiring tax provisions or to finance the government through Sept 30 before current funding authority expires on Dec 16. Among the items being discussed are a 9 per cent manufacturing tax credit for refiners and an extension of the US Land Water Conservation Fund, according to at least three lobbyists close to the negotiations.
Even if such a deal is struck by Republicans and Democrats in the Senate, House Democrats, who are vital to reaching an agreement, have suggested they won't go along unless a provision for indexing the Child Tax Credit, which allows taxpayers to reduce federal income taxes for each qualifying child, is added to the mix. And it's unclear whether House Republicans will support a deal if they assess that the price Democrats are seeking is too high.
On Friday, House Minority Leader Nancy Pelosi told reporters that Republicans were refusing to include the indexing in the deal they are seeking.
"They're not going to index it. Instead, they put 'Big Oil' in there," she told reporters. "We do not want to give our imprimatur to it. We will not be an accomplice," she said.
"Imagine that they would give over US$100 billion in tax credits for people who want to do business overseas, and they won't give us the money for indexation for young people - money that is spent immediately because people need it," Ms Pelosi said.
The California Democrat added that the "maybe US$700 billion or more" in "permanent tax extenders" being pushed by Republicans would hurt the ability to invest in social welfare and educational programmes.
The prospects for lifting the export ban are highest if there's a separate tax-extender bill that includes medium- to long-term tax credits benefiting wind and solar producers, said Kevin Book, managing director of ClearView Energy Partners LLC, in a research note to clients.
"We think the prospects for an end of the crude oil export ban probably depend most on the architecture of the final deal," he said.