I really don’t have anything to add, so here are some excerpts from Motley Fool telling it like it is:
My theory is that the political support for massive biofuel expansion comes down to securing constituents’ votes. Politicians know they can benefit politically from selling the benefits of biofuels … and they also know there’s too much at stake politically to back away from the issue. What states’ politicians stand to benefit the most from backing biofuel? For starters, we can look at the top 10 ethanol-producing states, [by millions of gallons]:
South Dakota 910
Now, do you notice anything politically significant in this list? What if I told you that the No. 11 ethanol producing state is Michigan? Still stumped?
Here’s the deal. In recent elections, the Republicans have established solid majorities in the South and the Mountain states, while the Democrats have secured strong footholds in the Northeast and the West Coast. But in 2004, Iowa, Minnesota, Wisconsin, Ohio, and Michigan were “swing states,” defined by a projected margin of victory for either major political party of 3% or less. These five states are at the core of a rapidly disappearing American center composed of 64 electoral votes, which neither party can afford to lose.
Frustrating, to say the least. Two more to finish:
I tend to agree with Charlie Munger when he recently said running cars on fuel derived from corn “is about the dumbest idea I’ve ever seen.”
But no matter how much the investing geniuses and I agree on the economics, I think the political tailwind behind ethanol is unstoppable.