Birth of an Interest?


Here’s an interesting bit from a weekend Washington Post article on the increased pace of investment in ethanol producing plants in Iowa (and elsewhere):

“Every time a plant is built,” said Bill Horan, “that’s 500 more ethanol supporters in a congressman’s district. And they really care. It’s not just Ma and Pa on the farm. It’s their dentist son from in Chicago who’s interested in his inheritance, and his sister in San Francisco.”

Now why would ethanol producers need the support of members of Congress?

… suppose the price of oil declines — if, for example, the economies in China and India slip, the global oil market grows calm and a booming ethanol supply outstrips demand. Suppose Congress supports President Bush’s recent call to eliminate the tariff of 54 cents a gallon on plentiful Brazilian ethanol.

“This is a cyclical business. There are going to be ups and downs,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association, the biofuel trade organization. “But demand for these fuels is going to grow. Of that I’m absolutely certain.”

Energy is indeed a brutal, cyclical business, the downside of which George W. Bush had more than a passing familiarity with in his private sector days. Having friendly members of Congress benignly ensuring that demand for one’s particular industry segment is going to grow–through mandating ethanol blended fuel and the like–seems to ensure that whichever way the wheel turns, the cash doesn’t stop flowing.