She said, however, that the administration had not yet taken a position on the future of MTBE - short for methyltertiary butyl ether - a fuel additive that reduces toxic emissions by increasing oxygen content.

California Gov. Gray Davis, who is struggling with other energy problems related to his state's electricity crisis, signed an executive order in March 1999 to phase out MTBE after it was found in groundwater supplies in Santa Monica and other areas across the state.

For areas with the worst pollution, federal law requires reformulated gasoline to contain at least 2 percent oxygen by weight.

Farm groups have urged the Bush administration to deny California's request, saying the state should instead use ethanol as a substitute to help meet the oxygen requirement standard.

Ethanol is made from corn, sugarcane and other forms of biomass - organic matter that can be broken down into chemical building blocks and used as an energy source to produce heat, fuel or electricity.

Legislation, sponsored by farm state senators, is currently pending in Congress to phase out MTBE within the next three or four years.

Veneman said the Bush administration did not have a position yet on the future role of MTBE.

Speaking at a news conference on President George W. Bush's energy package released on Thursday, Veneman highlighted the administration's support for renewable biomass fuels like ethanol and biodiesel.

Separately, USDA chief economist Keith Collins said because of the energy crisis consumers would see a "very, very small" increase in food prices, mainly in vegetables.