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Reid saw chance to tick off wish list in U.S. budget oil deal

WASHINGTON (Reuters) – Locked in budget talks in the twilight of his Senate career, Harry Reid saw an unexpected opening to bargain for his legislative wish list.

It had become apparent to Senate Democratic Majority Leader Reid that lifting the longstanding ban on U.S. oil exports was the Republicans’ top priority as the two sides tried to find common ground. And while Reid knew scrapping the ban had little support among his own colleagues, he also saw trading it as a chance for Democrats to score some victories.

The Republicans saw freeing crude exports as “something they wanted to do for the oil industry … for me it was a way of trying to do some other things,” Reid told Reuters last week in his office in the Capitol.

Reid, 76, was elected to the Senate in 1987 and will not seek re-election in November. “I thought, well, maybe this is an opportunity to do something good about things I’ve never been able to accomplish.”

Both Republicans and Democrats claimed victories in the $1.8 trillion budget passed by Congress and signed by President Barack Obama on Friday. For Reid, that ranged from tax breaks for families to billions of dollars in new spending for medical research.

But in agreeing to vote for a deal that killed the oil export ban, the Democrats extracted unprecedented five-year extensions to renewable energy tax credits that expired last year for wind, and were due to expire in 2016 for solar.

The extensions provide Democrats and Obama ammunition in their strategy to reduce carbon emissions and temper climate change. Investors in renewables said they needed certainty about subsidies if the sector was to secure a greater share of the energy market.

At the start of weeks of secretive budget talks among congressional leaders, Senate Republican Leader Mitch McConnell told Reid that lifting the 40-year-old ban, a relic Congress passed after the Arab oil embargo led to panics over fuel supplies, was the prize he wanted most.

McConnell wanted to lift the ban in an earlier transportation bill but couldn’t get enough Democratic support. And Obama opposed freeing exports without winning a major concession that would offset criticism that sending U.S. crude abroad conflicted with its agenda to fight climate change.

But McConnell found a receptive, if unlikely, ally in Reid. The Nevada native was sympathetic to plight of drillers dealing with a glut of domestic crude choking the oil boom, and to the concerns of fellow Senate Democrats, Heidi Heitkamp, from North Dakota and Joe Manchin from West Virginia, who badly wanted the ban lifted.

That’s where Reid’s experience with renewable power entered the equation. Nevada has the country’s third-highest capacity of installed solar power per capita, and Reid sponsors an annual clean energy summit in Las Vegas. Last August, he toured a Tesla battery plant that gets power from the Nevada sun.

Reid and House Democratic Leader Nancy Pelosi explained to Republicans McConnell and House Speaker Paul Ryan what they would have to win for oil exports.

Ryan’s willingness to negotiate was a major element in the unusually cooperative tone that characterized this year’s budget talks, Reid said.

A tumult in global oil markets helped the political case for lifting the ban. The domestic shale oil boom helped lead to a collapse in global crude prices. Resulting low prices for gasoline evaporated a major worry many Democrats had about exports: that they could be blamed by voters one day if fuel prices at the pump spiked upward, for whatever reason.

Reid didn’t get everything he wanted. Many Democrats tried to insist on permanent or at least 10-year extensions of the clean power tax breaks.

But conservative oil magnates Charles and David Koch lobbied Republicans against accepting the tax breaks.

And there were other budget items Reid and his colleagues were forced to surrender. The compromise failed to get wide-ranging support for Puerto Rico, which is wrestling with $72 billion in debt.

But Reid did get a permanent extension for three major tax breaks for families: a stronger earned income credit for the poor, a childcare credit, and a college credit.

Democrats also got $2 billion for medical research at the National Institutes of Health and research money for oceans and climate.

Those wins and others were enough for Pelosi to gloat that Democrats walked away victorious. “Republicans wanted Big Oil so much that they gave away the store,” she told reporters last week.

For his part, Reid affected more subdued pleasure at what had been accomplished.

“The things in that omnibus … are really, really very important for our country,” he said, striking a consensual tone he hoped could lead to cooperation next year over legislation on issues such as parity in women’s wages and protections for the middle class.