* Renewable fuels to get a boost as U.S. oil spill grows
* Agriculture remains biggest source of biofuels
By Christine Stebbins
KANSAS CITY, June 8 Renewable fuels like
corn-based ethanol will get a boost as the massive oil spill in
the Gulf of Mexico feeds worries by Americans about long-term
dependence on oil, a top U.S. private agricultural economist
said on Tuesday.
"The spill has heightened the concern about our dependence
on fossil fuels so that quite naturally is causing people to
want us to reduce our dependence on fossil fuels. That brings
us to renewables," JB Penn, chief economist at farm equipment
maker John Deere (D.N), said in an interview on the sidelines
at a Kansas City Federal Reserve ag banking meeting.
"Agriculture so far is the only big source of renewable
fuels. We talk a lot about next-generation renewables -- but
corn ethanol is about the only thing we've seen in the U.S. and
sugar ethanol in South America," said Penn, a former
undersecretary at the U.S. Agriculture Department.
The Obama administration is expected to push for energy
reform including grain-based biofuels. Obama is from Illinois,
a major corn and soybean producing state.
Roughly one-third of the annual U.S. corn crop, or more
than 4 billion bushels of corn is turned into fuel. The Bush
administration and Congress three years ago pushed to wean U.S.
Americans off petroleum fuel by increasing the ethanol usage.
Ethanol lost favor amid skyrocketing commodity prices in
the summer of 2008 when Chicago Board of Trade spot corn prices
rose to an all-time high of $7.65 a bushel, with many consumer
groups blaming ethanol as a major contributor of high grain
But BP's (BP.L) (BP.N) seven-week leaking oil spill is
turning the tide for fuels produced from foods.
A bill in the U.S. Senate retains a proposed one-year
revival of an expired $1 a gallon tax credit for biodiesel --
made mostly for soybean oil. A Senate vote was not expected
before next week.
Additionally, the U.S. biofuels industry is waiting word
from the Environmental Protection Agency this summer on whether
it will raise the U.S. fuel blend rate from 10 percent ethanol
to as much as 15 percent.
"I just think the overall environment around this
discussion is likely to be more positive toward renewable fuels
because of the spill," Penn said.
(Reporting by Christine Stebbins; Editing by Richard Chang)