Why Buffett is Riding the Rails

This article makes alot of sense on why Warren Buffett is buying rail stocks. The thesis is that he is buying due to a possible boom in ethanol production.

Scenario 1: Ethanol could be even bigger than people currently think,
and if so, then it's a big win for Buffett on just ethanol transport and a
massive crowding out pricing effect.

Scenario 2: However, I think what happens is that ethanol transport
simply takes up a good bit of available space on the rails. Think of it like
airlines and how expensive tickets would get if every plane only had a third or
half the seats starting out because half of the others are now always booked.

As you know ethanol cannot be transported through pipelines because the stuff is terribly corrosive. So they can only move that stuff via rail, truck, or barge. So moving ethanol will have the effect of making each boxcar much more scarce (and thus more expensive) and will give the railroads pricing power they have never seen before. It might be a good idea to look into the railroads that link the grain belt to the east and west coasts. They could become the ethanol highway in a few years.