Iowa’s Maize Craze

YOU might think that the opening of a new ethanol facility in Nevada, Iowa

California has helped to lead the way. When the state banned the use of methyl tertiary butyl ether (MTBE) as a fuel additive after 2003, everyone had to use ethanol instead to meet clean-air standards; and local refineries for the product began popping up to cash in on a state subsidy of 40 cents per gallon at the time.

Outside the Golden State, however, the states most eager to subsidise ethanol were those with golden fields of corn. Wallace Tyner, an agricultural economist at Purdue University, points out that states that had introduced subsidies early, such as Illinois, Iowa, Minnesota and Nebraska, were already building lots of ethanol factories before 2004, whereas corn-belt states without subsidies, such as Indiana and Ohio, did not do much until oil prices rose. Since then, rural areas across the region have been swept up in the ethanol craze, with new facilities sprouting all over corn country (see map).

The Economist