By Timothy Gardner
WASHINGTON (Reuters) - Congressional leaders inched closer on Monday to agreeing to repeal the U.S. oil export ban with debate focused on whether small crude refiners and renewable energy would benefit from any deal, Senate aides said.
Lifting the 40-year ban on oil exports is the top priority in a $1.15 trillion spending bill for many Republicans, including Senate Majority Leader Mitch McConnell of Kentucky, because it would offer new markets to drillers suffering from a glut of crude that has helped reduce oil prices to below $40 a barrel.
Democrats have expressed willingness to compromise - as long as they get what they want.
Congressional leaders also are negotiating a major tax bill, with a two-year extension of several tax breaks as a fall-back.
Senate Finance Committee Chairman Orrin Hatch told reporters negotiators were shooting higher. "We haven't had permanency in any of the tax package, so we're trying to get some there and that's not easy."
Hatch was unable to guarantee that Congress will be able to wrap up its work this week.
Leading Republicans held out hope that legislation could be produced on Tuesday, clearing the way for votes later this week.
The White House reiterated on Monday it opposes lifting the oil export ban, but said it would like to see Congress make investments in renewable energy. For the first time, it said it does not condone or oppose a potential trade in Congress of lifting the export ban for extended wind and solar tax breaks.
Many Democrats want tax breaks for green power to be extended for 10 years or more. Oil interests, including Koch Industries, have pushed lawmakers against making any such deal.
Some energy companies feel the export ban will eventually be overturned, so there is little incentive to give green power a tax break amounting to billions of dollars.
"What is the rush to give gargantuan subsidies to wind and solar? You have other fish to fry with the price of oil being so low," said one industry source, who did not want to be identified.
Senator Edward Markey, a Massachusetts Democrat who has been an ardent voice against oil exports, has teamed with Senator Tom Carper, a Delaware Democrat, on a plan to carve out protections for independent refiners.
Small refiners have argued that lifting the ban would harm them by easing the oil glut and raising the price of U.S. produced crude, their main feedstock cost.
(Additional reporting by Richard Cowan; Editing by Grant McCool and Leslie Adler)