A little logrolling is better than brinksmanship and legislative gridlock we suppose and thanks to GOP concessions on tax credits for wind and solar as well as a three year reauthorization of a conservation fund, Republicans were able to include a measure that lifts the 40-year old ban on crude exports in a package of spending and tax legislation that funds the government until September of 2016. 

As Bloomberg reports, “House Speaker Paul Ryan told fellow Republicans in a closed-door meeting Tuesday night in Washington that leaders had reached a deal pairing a $1.1 trillion spending bill with a separate measure to revive a series of expired tax breaks.” 

“I think we’ve been pretty clear we’re not going to have a shutdown,” Ryan said on Tuesday, tacitly acknowledging the reputational damage the party suffered in 2013 when bickering over Obamacare brought the government to a virtual standstill. “That’s the way I think Congress ought to run,” he added. “Let’s get back to legislators legislating. Let’s get back to actually doing things methodically, deliberating. We call this regular order around here — I call it democracy.”

(Yes. Paul wants more of that.)

Foreign sales of refined products (like gasoline) were allowed under the ban - in place since 1975 after the Arab oil embargo - and as WSJ notes, “a certain type of light oil is also already starting to flow overseas thanks to permission granted in 2014 by the Commerce Department, which allows producers to reclassify a certain type of oil as a refined fuel, similar to gasoline, which is legal to ship abroad.” Exports to Canada (which is exempt from the ban) have increased ninefold to 400,000 b/d since 2008.

The inexorable decline in crude prices served as the impetus for reviving the debate around the export ban. As The Journal goes on to recount, “a dramatic drop in oil prices, hovering below $40 a barrel, helped prompt lawmakers of both parties to consider pairing renewable energy support with oil exports, a type of grand Washington deal-making that hasn't been seen for years on the highly divisive issues of energy and environment.”

“We have the best technology, the best oil and over time we will drive out Russian oil, we will drive out Saudi, Iranian. It puts the United States in the driver’s seat of energy policy worldwide. It is a huge victory.” Texas Republican Joe Barton declared. 

President Obama has said he would veto separate legislation lifting the ban, but isn’t likely to oppose it as part of a larger spending and tax deal. 

“We oppose legislation that would lift the ban on the exporting of American crude oil. But we certainly do want to see Congress — and hopefully they will in the context of this budget agreement — make the kinds of investments in renewable and clean energy that are good for our economy and have the potential to create good American middle-class jobs down the line,” White House press secretary Josh Earnest said earlier this week.

The timing leaves something to be desired. “By design or not, the agreement hands the oil industry a long-sought victory within days of a major international climate deal that is aimed at sharply reducing emissions from oil,” WSJ points out. “Doing it the week after the solemn and pious talk about saving the planet is not like some parent who smoked dope in the ‘70's warning their daughter about drugs — it’s like a parent who is currently high warning their daughter about drugs. You might as well hold the launch party for your vegetarian cookbook at a steakhouse,”  Bill McKibben, the co-founder of the climate change group 350.org wrote in an op-ed for The Hill. 

As for the impact on global markets, OPEC’s Secretary-General Abdalla El-Badri said Tuesday that "any change in U.S. oil policy will have 'zero' impact on global markets because the country remains an importer." 

In the grand scheme of things, you're really just shifting inventory around, Virendra Chauhan at Energy Aspects in Singapore says: “The deal to lift the crude ban is a significant change in U.S. policy, but in terms of the near-term impact on prices, we expect that to be blotchy and sentiment driven. All that you’re doing is transferring the glut from the U.S., where most of the storage capacity is, to elsewhere in the world.”

"Large volumes of crude are unlikely to flow out of the US as soon as the restrictions are lifted," FT writes. "The spread between the price of West Texas Intermediate crude, for delivery in Oklahoma, and internationally traded Brent is only about $1.25 per barrel, meaning that any benefit for US producers from selling in world markets would be swallowed up in transport costs."

"WTI would have to be at least $4 below Brent for exports to work, depending on the cost of shipping,"Bloomberg wrote earlier this week, citing Energy Aspects analysts. That means spreads would have to widen to make exports economical. "This is going to end up ultimately being bearish everything," Citi's Seth Kleinman says. "You’re losing on the Brent side, and it’s not clear to me what you’re gaining on the WTI side. In oversupplied market, opening up the export arb changes not exactly nothing, but not far off from nothing." 

In any case, “it’s definitely a negative for Brent," Kleinman concludes, "as U.S. crude enters [and already] oversupplied global market."

As far as where we go from here, the government is funded through the end of today. The House will likely pass a stopgap bill to fund the government through next week in order to give Congress time to consider the deal. 

We'll close with a quote from Missouri Republican Ann Wagner who says "lifting the oil export ban is huge [and will] have a much bigger effect than building the Keystone XL pipeline."