(fixes typographical error in headline)
* Amendment would not allow US funding of blender's pumps
* Ethanol groups say move would give oil greater market
WASHINGTON, Oct 18 (Reuters) - U.S. Senator John McCain offered an amendment on Tuesday to an agriculture bill that would prevent the government from subsidizing new service station pumps that would boost the sale of ethanol for motor vehicles.
McCain's amendment would prevent the federal government from funding so-called "blenders' pumps" in the 2012 agriculture appropriations bill, which could be voted on as soon as later on Tuesday.
"In these tight economic times when we are asking families to do more with less, we should not be subsidizing gas pumps at retail gas stations," Brian Rogers, a spokesman for the Arizona Republican, said. "The ethanol industry needs to prove it can prosper on its own and quit asking for taxpayer handouts."
The corn ethanol industry and oil companies that mix the fuel into gasoline will likely lose $6 billion a year in subsidies when a blenders' tax credit expires at the end of the year.
Ethanol producers say the pumps, which allow consumers to choose their own blends of ethanol in gasoline, would increase sales to drivers of cars that are specially built to accept higher levels of the fuel. Car makers are expected to make far more of the so-called "flex fuel" cars in coming years.
The producers slammed the amendment. "The McCain amendment would smother the only initiative we have to provide consumers the power to choose their fuel, and it gives OPEC the green light to tighten its grip on our economy at the worst possible time," said Growth Energy CEO Tom Buis.
But a watchdog group said the ethanol industry has gotten enough government incentives.
The Taxpayers for Common Sense urged senators to support the amendment, saying Congress has been subsidizing the corn-based ethanol industry since the late 1970s. "After 33 years, it's time to let the ethanol industry stand on its own." (Reporting by Timothy Gardner; Editing by Andrea Evans)