Silicon Valley venture capital firms like Kleiner Perkins Caufield & Byers, and lone ranger investors like Vinod Khosla, continue to push for legislation that irks the oil industry.

denniston.bmpThe New York Times has the latest, citing Kleiner Perkins’ partner John Denniston (pictured here) arguing that renewable biofuel companies like Altra should get some of the subsidy for gas alternatives, and that it shouldn’t all go to the oil industry.

Mr. Denniston also wants to see a change to the so-called blender’s credit, a 51-cents-a-gallon subsidy that goes to the company that mixes gasoline with ethanol, typically one of the major gas companies. He would like that money to go to producers like Altra. And he wants the subsidy to rise when the price of oil falls, or drop when oil prices rise.

Not surprisingly, the oil companies are not ceding any turf. Edward Murphy, group director for refining and marketing for the American Petroleum Institute, an industry trade group, said the venture capitalists were “somewhat naïve”…