A guy walks into a bar. The bartender says, "Hey, you can't bring 7,750 gallons of ethanol in here!" The guy says, "Why not? I'm going to deliver them against my short June futures position on ethanol at the New York Board of Trade."

Ethanol always has played a prominent role in society and commerce -- primarily as a libation and source of tax revenue for governments at all levels, but also as an industrial commodity and a solvent. The first oil shock more than 30 years ago prompted oil-poor and sugar-rich Brazil to start using ethanol as a motor fuel.

The wisdom of this is debatable, as I noted here nearly a year ago . The energy content of ethanol is lower than that of gasoline's hydrocarbon components, and its environmental life-cycle costs are surprisingly high.

But the first rule of political discourse is to know when you have lost, in this case to a potent mix of agribusiness interests, energy nationalists, seekers of farm-state votes and other assorted troglodytes. Not that I would ever harbor a grudge.

The Future Is Now

If you cannot beat them, you can try to make a buck or two from them. The new NYBOT contract, set to make its debut on May 7, is as good a place as any to start. As noted above, the contract will be for 7,750 gallons of biomass-derived anhydrous ethanol at 60 degrees Fahrenheit delivered FOB a vessel in one of nine countries of origin, including Brazil and the U.S. (FOB, or free on board, means the exporter is responsible for all costs up to the point where the goods actually cross the ship's rail.)

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