It’s Big Oil versus Big Ag in the fight for the heart and soul … but mostly the pocketbooks … of transportation fuels users in this country, and biodiesel and ethanol are playing a key role in the battle.

This interesting post on the Cleantech Blog says that Exxon, Chevron, and Shell … aka “Big Oil” … are having their petro-dollars cut into as we use more fuel-efficient cars and run on renewable fuels produced by “Big Ag” … ADM, Bunge, and Cargill. And the EPA’s new Renewable Fuels Standard … RFS2 … this year will cut into Big Oil’s gas and diesel sales by 8 percent … billions of dollars Big Oil doesn’t want to let slip away:

Exxon Mobil’s CEO Rex Tillerson famously referred to ethanol as “moonshine.” Now Exxon is investing $300 million in Craig Ventor’s Synthetic Genomics with plans to produce fuel from algae. BP Biofuels was voted 2009 Biofuels Corporation of the Year by the World Refining Association at its 4th annual Biofuels Conference. BP has poured hundreds of millions into basic biofuel research and into a variety of partnerships including biobutanol with DuPont and Virgin Fuels, and energy cane in the U.S. with Verenium. Shell has established a $12 billion sugarcane ethanol joint venture with Brazil’s Cosan (CZZ).

In the future, if biotech can deliver low-cost liquid hydrocarbons from biomass that can be profitably blended at the refinery, then Big Oil may partner with industrial agriculture. Valero (VLO), the largest refiner in the U.S. bought a number of ethanol plants at deep discounts from bankrupt VeraSun.

The post goes on to talk derisively about how Big Oil and Big Ag are battling for control of the EPA, federal tax breaks, and billions of federal funds.

You might not agree with everything the author had to say in the post, especially the parts where he puts down the use of corn and soybeans for ethanol and biodiesel, but it’s an interesting take on the new biofuels battles.