As the Senate backed off the windfall profits tax on oil companies, Rep. John Shadegg has introduced one of the few sensible proposals for dealing with high gasoline prices – a lifting, albeit temporary, of protectionist tariffs on foreign ethanol. The tariff currently comes to 2.5%, with an additional duty of 54 cents a gallon, on foreign imports of an additive that Congress now essentially requires in gasoline. If the solons are looking for a windfall profits tax, this, a tax that increases “windfalls,” is it. By impeding foreign competition to a domestic industry that is not yet large enough to meet the enormous demand for the product, the tariff effectively forces up domestic prices for ethanol and, by extension, for gasoline.

As a result, the tariff helps to create windfalls for domestic producers. Archer-Daniels-Midland is the big case in point. Yesterday, the agribusiness reported third-quarter profits of $347.8 million, up 29% from the same quarter a year ago, fueled – pardon the pun – in large part by its corn processing division, which includes its ethanol business. Profits in the division increased to $218.69 million from $177.87 million in the year earlier quarter.

Nor is ADM the only company enjoying a windfall of sorts. A relatively new company, Pacific Ethanol, although not yet profitable, is now looking healthy enough that it recently attracted an $84 million investment from Bill Gates. Another ethanol up-and-comer, The Andersons Inc., announces earnings tomorrow, but Wall Street evidently expects the news to be good – the stock was up more than 4% yesterday, reaching $117.55, from less than $8 in 2001.

No one can fault these companies, or other domestic ethanol producers, for making a lot of money while the market price of their fuel is high. But Americans can fault Congress for driving up the price of that product. High ethanol prices today, and the resulting additional bump in gas prices, owe to a host of congressional actions, from the ethanol mandate in last year’s energy bill to a refusal to grant legal liability protection to producers of MTBE, another gasoline additive, thus effectively eliminating that competition for ethanol. Import duties on foreign competitors have also played a role.

Regardless of whether Congress passes Mr. Shadegg’s bill, global demand will likely keep prices high. But surely a Republican Congress will be able to agree that the government shouldn’t drive prices even higher with protectionist taxation. Republicans in the Senate were briefly willing to contemplate raising a tax to confiscate “windfall” profits. Eliminating “windfall” profits by cutting a tax, we’d think, would be a no-brainer.