The US Energy Information Administration, the Energy Department's analytical arm, said the current transition to ethanol caught some oil companies off guard who were planning to eliminate MTBE at a later date.

Current US ethanol production averages 275,000 barrels per day, but the EIA says another 130,000 barrels a day of ethanol may be needed to replace MTBE.

The East Coast, particularly Maryland, Delaware, Washington D.C. and Virginia, and the Texas cities of Houston and Dallas, may face tight gasoline supplies and higher fuel prices this summer for reformulated gasoline (RFG) blended with ethanol, according to the EIA.

Brazil is the world's other main producer of ethanol -- made from sugarcane, unlike the US corn-based product -- but its exports to the US are slapped with a 2.5 percent ad valorem tariff and a second duty of 54 cents per gallon.

This offsets the 51 cents per gallon tax credit the United States provides for blending 10 percent ethanol into gasoline.

Senator Saxby Chambliss, head of the Senate Agriculture Committee, told Reuters on Tuesday that Congress has no plans to consider tariff cuts this year, but he said such a move was not out of the question.

"We'd be foolish not to consider it ... if it benefits the energy community, particularly if at the same time it benefits our farmers," Chambliss said.

US Agriculture Secretary Mike Johanns said this week he had not discussed lifting the tariffs on Brazilian ethanol.

"The industry is aggressively ramping up. We are going to do everything we can to be helpful on that effort ... it seems to me the US industry is doing everything it can to respond" to rising demand, he told Reuters.

Few US farmers or ethanol producers want the tariffs lifted on the competing Brazilians and are likely to be vocal in their opposition, analysts say.

"The US oil companies have a lot of clout but they are up against a formidable set of farm senators. A pretty strong lobby in the farm sector says we should hold off (lifting the duties)," said Gary Hufbauer, senior fellow at the Institute for International Economics.

He added: "The producers are afraid that if the tariff is lifted on a temporary basis it will then become permanent. The likes of Archer Daniels Midland do not want to build big plants if their protection is going to go away."

The United States will allow 24 Caribbean Basin countries to ship up to 269 million gallons to the US market this year duty free, but ethanol exports from the region are expected to fall way short at only 80 million gallons.

As result, US refineries will rely on more ethanol shipments from Brazil, which are expected to range from 60 million to 70 million gallons this year.

The main trade group for US ethanol producers, the Renewable Fuels Association, is against easing duties on Brazilian ethanol, though it admits its members can't make enough of the fuel additive to meet total demand this year.

"The oil companies have accelerated their removal of MTBE and that's putting quite a strain on domestic (ethanol) producers," said RFA President Bob Dinneen.

"We're adding as much (production capacity) as we can, as fast as we can. But I don't think anybody anticipated refiners would be hemorrhaging MTBE as quickly as they are," he said.

Dinneen said supply problems that may result are no reason to lift duties on Brazilian ethanol imports, as the Brazilian government already subsidizes its domestic ethanol producers.

"The Brazilians would love to have us subsidize their product (by easing our duties). But I don't see a serious effort to do that in the Congress," he said.

A congressional official who deals with trade matters said US farmers wanted to reap the benefit of increased ethanol demand exclusively.

"The more supply comes in from overseas the lower the price is going to be and that's what we're going to be asked to defend," he told Reuters, speaking on condition of anonymity.