Moments of Clarity

consolidation

This is just another reminder that very soon, all posting for Ethanol Alley will be done on my main blog/corporate site www.mitchgroup.com.

From a formatting, linking, general effort perspective...this is the right decision.  If you link to this site or blog roll it, I will understand if you decide not too...now that my other business, Midwest, family writings will be intermingled. 

The purpose for launching the Ethanol Alley blog was to build awareness and to further the message that the U.S. must become energy independent.  Many others are carrying that torch very well today. 

In the near future, you'll be seeing an increase of ethanol related posts as I have redoubled my efforts to start a company that provides supporting technologies for the ethanol industry. 

Filling the Pipeline

I've wondered when this would happen. 

Ethanol production is increasing ever rapidly...while transportation of the product is proving more dicey than ever.  Since today, it's generally accepted that ethanol corrodes pipelines and thus cannot be transported in this method, we're stuck. 

Enter Senators Harkin (D-Iowa) and Lugar (R-Ill) who've introduced a bill directing the US DOE to do a feasibility study on transporting ethanol via pipeline from the Midwest to the coasts. 

Benefits will only continue to grow

A piece appeared in the USA Today entitled, "Midwest farms reap benefits of ethanol boom"
on October 2.  The article describes the ripple effect of higher corn prices, land prices, and lower property taxes that certain farming communities have experienced with the boom of ethanol plants around Iowa and the greater Midwest. 

The final paragraph of the article takes the usual parting shot at the industry:

There are some doubts that alternative fuels can end the country's dependence on foreign oil.

For years, studies showed that more energy is required to produce ethanol than is saved when it's used in gasoline. A University of Minnesota study released in July concluded that ethanol and biodiesel made from soybeans return more energy than is consumed in growing the grains and distilling them into fuel.

The citizens of U.S. understand this and accept it by now folks.  Someday, corn will not be used in any form to make Ethanol I'm guessing.  That's not the point.  The point is that we've crossed the threshold of "Home Grown Energy Independence".  Now if we seize this opportunity and the U of Iowa and Iowa State do their jobs, this wonderful state will lead the transition of the Midwest from "farming and manufacturing" to "bioscience and energy production technologies".

Momentum

Iowa's biggest name in Venture Capital is putting together an $800 million deal to fund ethanol production plants.  In this article found in the Des Moines Register, John Pappajohn is apparently trying to put together a co-op of rural ethanol production plants using a $300 million IPO and a $500 million debt placement.

Pappajohn was reported to say that he, "Didn't want to see someone take over ethanol that didn't have the farmers' best interest at heart."

This is a very big deal. Funding moves like this are what continue to fuel the fire in Ethanol Alley.

Honda = Success

Anytime Honda gets involved with something, it increases the likelihood of success by a large factor.
Read this piece from the USA Today discussing how Honda may have found a more efficient way to convert bio-mass into fuel.

Just In....$200 million for Cilion?

Cilion, the 3 month old Ethanol production/Grain milling partnership has likely just received a massive influx of $200 million in venture capital.  The story is developing and followed here on Venture Beat.

The NIMBY Crowd Invades Iowa

<p>It didn't take long for <a href="http://www.kcci.com/news/9725540/detail.html">someone in Iowa to join the <strong>Not In My Backyard</strong> (NIMBY) crowd.</a>  I thought we'd be immune to this for a bit longer but I was wrong.  </p>

It's Beginning

The discussion, debate, influx of money, politics, and reality of Ethanol is playing out just how many have hoped.  The door was opened and around the U.S. we've finally walked in.  Now, research in biochemistry and cellulosic Ethanol production is accelerating.  This article in the Des Moines Register discusses this.

We're just at the beginning of a curve where corn is easy, fast, and not so efficient in Ethanol production.  Soon, we'll be wondering what took us so long to become energy independent as a nation as new crops and processes accelerate production and efficiency.

It's a great time to be in Ethanol Alley.

May the Best Billionaire Win

Business 2.0 Magazine wrote a nice piece about the burgeoning battle between types of ethanol production, and the billionaires betting on them, including Branson, Gates, Doerr, Allen, Case, and Khosla. 

Finally, the Heart of the Matter

Someone is finally making headlines with the key issue to U.S. wide adoption of Ethanol.  A Minneapolis Star Tribune piece on Kevin Schieffer and his attempts to get a new rail line built through the Midwest appeared yesterday.

If this piece of the puzzle is solved along with removing inefficiencies in the trucking portion of the logistics, we'll convert as a nation much more quickly.

Prices Surge

USA today had a piece on Ethanol spot market prices and how they've spiked.  Will Ethanol Plummet next year? 

If prices do plummet, I'd like to hear your ideas on what this will do to the overall state of Ethanol production/distribution in the U.S.

More Dollars Makes Sense

Read this post on the Converting Green to Green weblog, entitled "What So Wrong With Making A Profit?"

Anytime someone calls for the penalization or summary attachment of a "windfall tax" for energy companies and they've immediately lost credibility with me.  But this site and its author have clearly demonstrated that logic and basic economic principles shouldn't be messed with in times of clear economic advantage for the oil companies.  Although I don't believe that we'll run out of oil any time soon or that we're going to heat up the planet and kill ourselves if we don't go completely green by 2016 (please refer to articles circa 1970 where the "scientific community" was touting the coming of a new ice age)...I do think that the economics and attitude in America are right for this shift now.  It took economics and global politics to make this shift become real, just as it always does...and there's nothing wrong with that.  Oil companies may use the big profits they're reaping now to morph their businesses over the long term.  How long do you think it will be before the top 5 oil companies own and influence biofuel production? (They probably already do yet this author is simply ignorant of it).   

What's really interesting to me is listening to typical broadcast media types interview oil company leaders on TV.  The show hosts speak as though global warming is an absolute and that we're on the brink of death at any moment.  (Did they drive their own Mercedes S Class in to the studio today or did they opt for the Lincoln town car limo?  Do their estates run on solar, wind, and geothermal?  Somehow, I think not)  The oil company execs have really figured this thing out.  They agree in absolute terms that global warming is happening and that "they're spending $X billion on making oil cleaner."  Perfect.  How can you argue against this?  We make fossil fuel use cleaner, transition to XX % biofuel usage, and let the economics sort things out.  If oil drops to $30 a barrel and ethanol remains at say $3.00 per gallon...will you still ring the bio bell?  Ed Begley will, and he's about the only one that walks the talk.  As Al Gore what his jet fuel bill has been over the last 12 months.  My guess is that it would pay for all of my readers children's college educations...or is Al running the bio jet made from recycled hemp fibers these days?

Encouragement

For all of the normal poo poo about Ethanol not being sustainable if oil drops in price...please read this piece by Scot Lehigh of the Boston Globe.  It will bring things into perspective.

Transportation Conflagration

So capacity of Ethanol production is on the hockey stick growth curve but transportation is still the choke point.  To get the rail mode updated will cost billions and take years...and it's still a bet for those guys.  Spurs are being built out everywhere now but as we read in "Ethanol's Rail Jam"
there's still a 1.5 year backlog on tanker car production anyway.  We already know that ethanol wont get the luxury of a pipeline. 

Can someone provide Ethanol Alley with an average cost per gallon per mile to move ethanol via tanker truck? 

Since rail will NOT be able to keep up with demand, we must look at bringing another mode of transportation up that has virtually limitless infrastructure (roads). 

Talk About FLEX Fuel

Truly, flex fuel in its purest sense would mean "It burns just about anything you can give it".  A company in Iowa called Hydrogen Engine Center, Inc. have created an "industrial engine" that will bolt into various applications (kind of like CAT engines bolting into school buses, semis, etc.).  This engine will presently burn hydrogen, ethanol, natural gas, propane, or digester gas from landfills.  If we add electric/hybrid and bio-diesel to the mix...someone would have to create a new pricing software to calculate the best price alternative nation wide for all options at all times and deliver it to your inbox, cell phone, or via RSS feed.  Hummmmm.

The Basics

Here's a basic primer that you can share with anyone who's trying to get "This whole Ethanol thing".

Understanding Ethanol

IPO's a comin'

Will the upcoming IPO's of VeraSun, Hawkeye Holdings, and Aventine Renewable Energy Holdings be a boon or bust for the Ethanol industry?  If you read this piece on US NEWS & World Report, you don't really come away with a clear picture.  In the piece, the author says that, "Analysts warn that there is probably already plenty of ethanol supply coming to refiners."  What?  I guess while I was sleeping last night, the government rallied the National Guard to install E85 pumps at every gas station in the U.S.  If the author means that "For mixing blend purposes, there's enough supply," that could be true. 

Demographics and the future of Ethanol Alley

A must read piece appeared in 2 parts on Guy Kawasaki's blog .
I've linked you to the second part which discuss in more depth...where the growth in the US will likely take place.  What Dr. Joseph Chamie has to say about the heartland is quite alarming.  The only thing that will prevent his predictions from coming true...is the creation of Ethanol Alley right here in the Midwest.

"The population will also be more urbanized, with large movements to outlying suburbs and smaller cities, and significant regional shifts to states in the South and West. Over the next twenty five years, for example, the five fastest growing states are expected to be Nevada, Arizona, Florida, Texas, and Utah. In contrast, states in the Northeast and Midwest regions, such as North Dakota, West Virginia, Iowa, Ohio, New York, and Pennsylvania, are projected to experience negative or close to zero population growth over the next quarter century.

Momentum

I believe that Iowa still has the Ethanol momentum in its favor.  I've been connecting with more local Ethanol industry folks and associations and they're very upbeat but realistic.  They're not over hyping like used car salesmen.  That's a good sign.

I'm attending a conference in August that will be very informative.  More to come.

A critical decision point..

The Des Moines Register editorial board just released a position piece on an eminent domain bill that has just passed.  The bill prohibits the use of eminent domain for economic development purposes.

Remember a few posts back I discussed the NIMBY crowd?  Well, sometimes you have to crush the little guy and move on for the greater good and I support this position.   Iowa is going to continue its population backslide and brain drain problem unless we can smartly kick people off of land that's necessary to fuel the state's economic growth engine.

VETO it Governor Vilsack. 

Progressive Racing

A post today on the USA TODAY Weather Guys site discusses the fact that in 2007, the Indy Racing League (IRL) will go to 100% Ethanol to power their machines.  This is great...but no one watches IRL.  When (not if...but when) NASCAR makes a similar move, prepare for the NASCAR nation to demand Ethanol at the pumps.  Now that Toyota is entering NASCAR next year...I think GM/Ford will lose yet another opportunity to capture market share with their FlexFuel options. 

Not Aggressive Enough

A  tepid and "politically non-confrontational" start to Iowa's public policy on Renewable Energy was released was reported in The Des Moines Register.
a few moments ago.

The state of Iowa needs to step up and goals like Governor Vilsack's "25% of all fuel sold by 2020 by renewable" don't cut it.  Especially considering that it accounts for 10% in Iowa already. 

The following piece:

"House File 2574 also gives retailers tax incentives and grants to install equipment needed to sell more highly concentrated ethanol to help meet the goal. “This is an important investment in Iowa’s future,” Vilsack said."

is correct.  Solving a piece of the distribution problem (where do I buy this stuff anyway?) is KEY.

I hope and pray that our next generation of Iowa Gubernatorial leadership will get aggressive.  Let's find someone with low aspirations (doesn't want to be President) and unreasonably high expectations of its citizens (like President Kennedy) and let's do this. 

SPECIAL MESSAGE TO THE CONGRESS ON URGENT NATIONAL NEEDS

On May 25, 1961, President John F. Kennedy made a special speech to a joint session of Congress that has come to be known as the "Man on the Moon" speech.  I cannot help believing that United States is in need of the "Energy Independence" speech for the ages. 

As a nation energized by the possibility of energy independence, we should review this speech and read it in the context of what we're facing today.  As a nation, we're on the brink of a political party-less and economic acceptance of renewable fuels as the norm.  I hope you find my modifications acceptable.

1. Now it is time to take longer strides-time for a great new American enterprise-time for this nation to take a clearly leading role in renewable energy achievement, which in many ways may hold the key to our future on earth. 
2. I believe we possess all the resources and talents necessary. But the facts of the matter are that we have never made the national decisions or marshaled the national resources required for such leadership. We have never specified long-range goals on an urgent time schedule, or managed our resources and our time so as to insure their fulfillment. (unchanged quote for the ages)
3. For while we cannot guarantee that we shall one day be first,  we can guarantee that any failure to make this effort will make us last. We take an additional risk by making it in full view of the world, but as shown by the feats of the state of Iowa and its leadership, this very risk enhances our stature when we are successful. But this is not merely a race. Energy Independence is open to us now; and our eagerness to share its meaning is not governed by the efforts of others. We tackle the goal of energy independence because whatever mankind must undertake, free men must fully share.
4. First, I believe that this nation should commit itself to achieving the goal, before the year 2020, of delivering 90% of our energy needs from renewable sources. No single energy project in this period will be more impressive to mankind, or more important for the long-range independence from foreign energy sources; and none will be so difficult or expensive to accomplish. We propose to accelerate the development of the appropriate renewable energy technologies. We propose to develop alternative fuels until certain which is superior.
5. Let it be clear-and this is a judgment which the Members of the Congress must finally make-let if be clear that I am asking the Congress and the country to accept a firm commitment to a new course of action-a course which will last for many years and carry very heavy costs.  (unchanged)

6. This decision demands a major national commitment of scientific and technical manpower, materiel and facilities, and the possibility of their diversion from other important activities where they are already thinly spread. It means a degree of dedication, organization and discipline which have not always characterized our research and development efforts. It means we cannot afford undue work stoppages, inflated costs of material or talent, wasteful interagency rivalries, or a high turnover of key personnel. (unchanged)

7. New objectives and new money cannot solve these problems. They could in fact, aggravate them further-unless every scientist, every engineer, every serviceman, every technician, contractor, and civil servant gives his personal pledge that this nation will move forward, with the full speed of freedom, in the exciting adventure of Renewable Energy Independence.

A Corndog's Chance In Hell

A great post appeared on a Renewable Fuel blog yesterday.  Here's Corndog's approach to national energy policy and commentary on Senator Clinton's plan to capture the Iowa vote...I mean free the nation from the petroleum based chains that bind us. 

(Any plan that places "you make so much money that we need to take some" taxes on public companies..is immediately dismissed in this author's mind). 

Attempting To Retake The Colonies!

I got this from the daily email blast from the Des Moines Business Record publication.  An English company is dumping 140million British Pounds into a Fort Dodge, IA Ethanol production plant.  That's another 100 million gallons friends.

Let This Be Your Compass

Silicon Beat reports great news on Green Technology venture funding.

Year over year investment in "Green-Tech" businesses is up 52.9% according to the Cleantech Venture Network quarterly report.  (That's $357 million).

Sure this encompasses a LOT of different technologies...but Ethanol is right there and will continue to be a leading attractor of funding for a very long time. 

Silicon Alley is pick up steam.

More Coverage of Kleiner Perkins

Forbes wrote a piece covering John Doerr's newest passion.  The article called "Tree-Hugging Capitalists"
does a great job of highlighting what "Green-Tech" means.

A couple of key quotes for me follow:

"As venture investors we’re always thinking about market size," said Lane. "If you pick a small market, you’re screwed. This is as big a market as it gets."

and

Clad in hiking pants and Birkenstock sandals (with socks), Doerr's co-emcee Bill Joy looked more like a tree-hugger than a calculating VC. But he's clearly been running the numbers: "There is a big wave coming as Moore’s Law meets the biotech and nanotech revolutions. Opportunities abound in new materials, new pathways, new organisms, new forms of magic."

Ethanol Production Boom Will Continue

A nice piece appeared in the Des Moines Chamber's Business Record publication describing how Iowa's Ethanol plant volume and production are just taking off.  It seems every week that someone is launching another 50+ million gallon plant.

Keep it coming.

Grow Iowa Values Fund...a model for the nation

Sales of E85 fuel in Iowa are 9X year to date...versus 2005.  That's big.  The Iowa Renewable Fuels Association is helping our state solve a key component of the E85 distribution dilemma...the availability of E85 pumps, by providing a cost share grant through the Grow Iowa Values Fund.  The bottom line is that now over 100 businesses will get assistance in reducing the cost of adding E85 pumps...versus the 20 or 30 before. 

This is a reasonable use of our tax dollars considering our nation is increasingly behind energy independence. 

Ethanol Alley's Rise to Power

I was recently forwarded a link to a story by my good friend at BusinessLit  on Silicon Beat entitled,

John Doerr has gone half-Green; gets word to President

confirming that I'm on the right track believing that Iowa and the Midwest in general are going to become Ethanol Alley , attracting funding, seeing technology businesses blossom, and watching masses of tanned folks flock inward from the coasts only to make my perfect little home town of Des Moines Iowa a congested mess. OK, I'm stretching a bit here...but the likelihood of this transformation looms greater every day.  I was completely floored that the Sand Hill Road deity John Doerr has possibly shaped the future of the US:

"Turns out, Doerr and his team were responsible for getting the "end-oil-addiction" wording inserted into President Bush's state-of-the-union address. We had no idea how accurate we were with our headline at the time: "Bush echoes Silicon Valley's Doerr -- It could be the stalk" (stalk referring to the stalk of corn, for ethanol)."

Of course there's profit to be had for Doerr and Kleiner-Perkins but that's what we do here in this wonderful place that we've been blessed to be born in (or hopefully legally immigrated to).  We see problems (social, political, environmental, transactional, emotional). We dream up new technologies to address them (blogs, incentives, systems, databases, marketplaces), and we PROFIT from them!  Doerr and Company have been paving the way for innovation by providing capital and talent for a long time and I believe they're on the cusp of making a global impact that will be felt for generations.  If you think that's a bold statement, look over Kleiner's history of disruptive technology funding. 

With every passing day, I'm becoming more and more hopeful about our chances for reaching a new equilibrium here in the US where we thrive on the spirit of American innovation and self-reliance that would make our founders proud.  (Cue the music and forgive the MIDI).  Now grab some tissues and reflect on how lucky you are.  Amen.

US News and my comments

Occassionally, someone else believes that I've made sense.  US News & World Report online has published my comments on an article they produced.

The put out a few good pieces including Ethanol Explained and Gauging The Gas Alternatives

The Automakers, Congress, and other unfortunately relevant 3rd parties

Another article appeared today in USA TODAY discussing congresses efforts to reach the "25% of the nation's energy needs me with renewable fuels by 2025".  It's the kind of article that appears about 10X daily now, mixing quotes from industry, politicos, and other talking heads.

Bill Ford even chimed in with, "If we want to be a game changer, and a game changer in very short term and in big numbers, then ethanol is a very good play for this country."  Great update Bill.  I wish Ford was in a better position to affect change.  How about putting the $200 in parts into most vehicles you make and simply charging a $300 surcharge on EVERY car called the "E85 Flex Fuel Option"?  Great margin, great idea, great execution. 

Lets face it, the key factors preventing widespread instant adoption of E85 are 1) supply 2) transportation of ethanol and 2) the availability of pumps.

We're handling #1 with Venture Capital so done deal.  #2 is something that I'm addressing with a new start-up.  If we added the "government incentives" to #3 meaning,

"If we reallocate the money that we take from everyone in the US (taxes) and give it to another set of businesses that we like (incentive), then we could achieve widespread adoption as quickly as people can manufacture the equipment and install the new tank/pump assemblies."

Really, look at the pork that flies in the US or the spending bills that get through with very little effort.  I don't even flinch anymore when I hear "Congress or the President has introduced a $286 million bill designed to blah blah blah."  So, just cook up one of those bills and fund the installation of E85 pumps nationwide.  Yes, I'm advocating an incentive to a business segment.  I'd even accept a new tax to achieve this and that's REALLY different for me.

I'm actually starting to let the "Lobbying and Big Oil are preventing this from happening behind the scenes through dinner meetings over Silver Oak Cab and a 24oz bone in rib eye at the Capitol Grill," argument creep into my head.    You know, how much is it worth to the oil companies to spend $XXX million to keep this transition put off for even 1 extra day at current market conditions?  Someone has done the math. I would. 

This is a wonderful time.  Coming from CA, I never uttered the word Ethanol until President Bush's State of Union Address in Feb.  Now, I'm deeply involved and the nation, both left and right leaning, are finding common ground.  We can overcome the political wrangling and back door deals with venture capital, ideas, and the juice that makes America the most amazing place.  Could we not achieve total energy independence in 10 years, sparking incredible technology growth and economic prosperity?  Of course we could. 

We need today's equivalent of the  "Put a man on the moon" speech to spark this fire. 

Change is in the air...and it smells like sweet corn and moonshine.

Resurgence of the Midwest

This author believes as I do that we're on the cusp of a revolution that will bring prosperity and prestige to the Midwest.  I hope it doesn't get too crowded here in Iowa.

I found this article posted on www.drivingethanol.com

Ethanol Fueling a New Economy?

Source: FoxNews.com

May 9, 2006 — The burgeoning ethanol industry is changing the economic landscape of rural America, as companies pour billions of dollars into production plants in a race to meet demand and ease America's addiction to gasoline.

Ethanol backers foresee vast vistas of corn fields churning out feedstock for the clean burning fuel additive running millions of cars in the United States, the world's largest consumer of energy.

"Ethanol is a tremendous economic engine for rural communities, it results in good paying jobs. You hear stories about opening up new gas stations and businesses taking off the boards from windows on main street," said Matt Hartwig of Renewable Fuels Association.

The Politics of Corn Squeezin's

Today's Des Moines Register has an article discussing the political football that ethanol has become.  I believe that Iowa and the Midwest in general will transcend the politics of this issue and forge ahead. 

Here's a quote,

Nationally, polls show fuel costs as the second most-pressing issue facing Americans, behind the war in Iraq. Renewable fuel has cracked the top handful of political issues for gubernatorial candidates this year in Arkansas, Colorado, Ohio and other states.

But in Iowa, the nation's leading producer of ethanol and soy diesel, the issue is particularly salient, said national pollster John Zogby, president of Zogby International. "It's probably more acute in Iowa, where there is a perceived solution."

We absolutely see the solution here in Iowa.  We are at the forefront of a revolution that can and will be maintained.  Later in the article, an economist spread the typical doom and gloom that is indicative of most economists 50% accuracy rate with regard to forecasts.

But Harl echoed Blouin's sentiment that ethanol's days as the nation's fuel savior are numbered.

"Obviously, it's important to Iowa to have a vibrant ethanol industry as long as there's demand for the product," said Harl, a national expert on the agricultural economy. "The real issue is that we should not head down a road that in a few years turns out to be a road less traveled."

This quote shows just how bland some economists can be and why they are typically not entrepreneurs.  A few years is not a time horizon that alternative fuel leading to the freedom from foreign oil supplies can be judged against.  Also, the statement, "as long as there's demand for it" is ridiculous when viewed in the context of ethanol's very nature.  Until we are using Ethanol for 85% of all gasoline applications and until some other advanced technology has economically supplanted the need for combustion all together, I do believe there's demand.

I'd have a tough time in his class at Iowa U.

Forge onward Ethanol Evangelists and Create the enabling technologies that will allow you to grow your company and put out help wanted ads for economists, then interview them, and refer to articles they wrote about "temporary demand."

We shall overcome!

Mainstream Moonshine

A great article appeared tonight on Foxsports.com
Apparently, last year, GM asked NASCAR to switch to ethanol...and Democrat Tom Harkin of Iowa made the same plea.  What a great marketing tactic this would be for the ethanol cause. 

"NASCAR could help get people fired up about ethanol - and help itself in the process," the article states.  That's exactly right and brilliant.  If my driver does, I do it...or win on Sunday, sell on Monday are common mantras that are absolutely TRUE in the NASCAR world.  If you don't believe me, stop by my home office sometime and observe my die cast cars, Jimmie Johnson figure, my Lowe's 48 hat, and my fridge magnets.  (I haven't yet bought a Chevy because my driver runs that platform...I have my limits...but Toyota will be fielding teams next year!)

A few years back, NASCAR made the switch from a cigarette sponsor (Winston/RJR) to a technology based sponsor (Nextel) and they're reaping the benefits big time.  We're just now seeing the power of this relationship evolve. I don't think we had a ton more Winston smokers because they sponsored NASCAR but that's just a hunch.  This is the next step in NASCAR's progression to absolute mainstream America and Ethanol's ticket to the big time. 
This could also be the fuel that gets GM and FORD back on track because once the NASCAR nation is behind something, you better be able to support the demand or you'll be jettisoned.

Universal E85 here we come. 

Meeting in the Middle

An article in the Sunday edition of the Des Moines Register addressed a key issue facing the future of Ethanol and Iowa's leadership in the marketplace.  The bottom line is that fuel blends with 10% Ethanol (the current blend that replaces the MTBE blend throughout the US), will top off someday in the near future, leaving the E-85 (the purest blend of Ethanol right now consisting of 85% Ethanol and 15% gasoline) to drive the market.

The article points out the car manufacturers have already joined in by promising delivery of a much larger percentage of Flex-Fuel vehicles over the next few years.

The big AH-HA in this article though is the realization that we've come full circle now with respect to clean air and Ethanol production.  The oil industry an produce cleaner burning fuel without Ethanol whatsoever.  This has really become about "renewability" and that's a good thing in this author's opinion because for whatever reason, we've found a bit of equilibrium between the "clean air/renewable at whatever the cost" crowd and the "don't overburden business while we transition to the new technology" crowd.   I think substantial Venture Capital is supporting this balance.  Also, no one is talking about milking the rich to fund these initiatives (Yet.  Give it time).

Additionally, I'm pretty certain that we're in 100% agreement on the "get the power back from the middle east" piece. 

Douglas Durante, executive director of the Clean Fuels Development Coalition, says, "Clean air is not a driver.  We really have come all the way around."   

Biofuel Bills Before Congress

The great thing about the Ethanol debate, as I've mentioned before, is that both sides of the political isle are finding common ground.  It's not about left or right anymore it's about our attempt to, "Send our energy dollars to the Midwest, not the Middle East," according to House Minority Leader Nancy Pelosi, D-California. 

The dems introduced a bill last Friday that would require ethanol to account for 11 % of all fuel for cars and light trucks by 2012.  That's 15 billion gallons...and about 2x the amount required by a bill last year. 

In the Senate, Tom Harkin, D-Iowa proposed a target of 30 billion gallons of ethanol and bio-diesel combined by 2020 and 60 billion by 2030. 

Some quick facts as reported by this article appearing in the Des Moines Register.

US Capacity:  Ethanol plants can produce 4.5 billion gallons per year (GPY)...but facilities under construction will add 2.2 billion GPY of capacity.

Iowa Capacity:  22 plants are producing 1.3 billion gallons.  Another 600 million gallons of production capacity is under way.  (This is the main reason that this site exists).

Limit: 15 billion gallons of ethanol can be made without disrupting food and feed supplies according to the National Corn Growers Association.

I think that we could produce enough ethanol for the entire US right here in Iowa by using available land.  Have you driven across US-80?  Trust me, we can DO this.

The Short Term "Ethanol Factor"

A great article appears today on SmartMoney.com entitled The Ethanol Factor. The article correctly points out that right now, Ethanol is actually increasing the price of gas.  As MTBE is phased out of gasoline for environmental reasons, companies are making the switch over the Ethanol blending and prices have spiked.

The article makes another point, a key driver in the formation of a new business model that I'm working on.

One of the downsides of ethanol is that it's extremely difficult to transport across great distances because it can't be moved through a pipeline. Since the vast majority of ethanol production is concentrated in the Midwest, ethanol must be shipped via barge, railway or truck to blending facilities around the country.

Now, at the same time that energy companies are figuring out how best to transport ethanol from the Midwest to those hard-to-reach states making the switch, the entire country is shifting from a winter blend of gasoline to a summer blend, which is less likely to evaporate harmful chemicals during the warmer months. Each of those transitions can require that energy companies put extra trucks on the road (some hauling ethanol; others hauling summer-blended gas), but energy companies only have so many trucks. As a result, there were gas shortages earlier this month in places like Dallas and Norfolk, Va., which are transitioning to ethanol from making the MTBE.

Solving this transportation issue, freeing up the movement of Ethanol, and providing a smooth logistics management platform for it are key to prices coming down. 

The general public is beginning to believe that we can make the transition to energy independence and I'd like to assist  that same public  to be correct in its assumptions.

The I.O.W.A. Act

Great news from Washington.  The "Indpendence from Oil With Agriculture" Act (IOWA Act) will be introduced by Republican Representative Jim Nussle of Iowa.  Nussle is running for Governor of Iowa also.

Having a Market Impact

Gas shortages hit the East Coast is the title of a CNN online article that just hit the wires minutes ago.  Here's the bottom line.  ETHANOL is having an impact on the market but maybe not for the reasons you may have thought (for now).

Here's the scoop:

The shortages are not because refiners are not making enough gasoline, or because of a recent rupture on the key Plantation Pipeline that carries supplies from the Gulf Coast to the East Coast, industry officials said.

Rather, the oil industry is rapidly eliminating a gasoline additive called MTBE, banned in several states for polluting ground water, and replacing it with ethanol, a renewable fuel that can't be shipped by pipeline because it absorbs water.

"There's not a shortage of supply," said John Eichberger, a spokesman for the group. "It's a transitional issue."

Because ethanol is a solvent, it will strip corrosion and impurities that build up inside gasoline storage tanks, allowing them to mingle with gasoline supplies.

That means terminal operators must drain giant tanks that hold gasoline stocks and scrub out the impurities before they can be refilled with ethanol-enriched gasoline, he said.

"That's going to compromise supplies for awhile," he said.

The Yellow Storm Is Coming

A great "catch all" article appeared today on the Southwest Farm Press.  (I know left and right coasters...it's hard to believe that publications like this exist)...but they do exist and they say a lot about what's REALLY happening in America.

Energy production offers opportunities to farmers

The call to action comes at the end of the article and I couldn't agree more.

Sims said farmers, as they anticipate new rounds of farm bill debates, cannot afford to sit and wait for someone to carry the burden for them. �Farmers have to get politically active,� he said. �They have to know legislators personally. They have to go to meetings, ask questions and demand answers

Will The Population Slide Last?

An article appeared today the Des Moines Register discussing Iowa's population slide.  In fact,

"About 35,000 more people left the state between 2000 and 2004 than moved here from elsewhere in the United States. Immigrants from other countries are keeping state population relatively stable, other census figures show."

I believe that this trend will reverse over the next 10 years as Des Moines and other cities across the state continue to attract high tech business, venture capitalists, and a truly hot "start-up climate".  The Ethanol Boom will transform Iowa and possibly stretch the burbs well beyond today's boundaries. 

Another Big Hitter Weighs In

Bravo to another Midwestern producer of farming equipment.  A statement hit the wires today from Robert Lane, CEO of John Deere.  Here's the quote,

"Iowans need to make strategic investments that will keep their state competitive in a changing global marketplace, the Chief Executive Officer of Deere & Co. says.

Speaking during the recent Hoover-Wallace Dinner at Park Place Even Centre, Robert Lane said the reality was that "well-educated people outside the U.S. are often willing to work smart, hard and for less money."

Iowans, he said, "must continually resist the temptation" to ignore such changes and must be prepared to take advantage of the opportunities they present."

Excellent.  This is more of the Can Do Attitude of Midwesterners that I posted about yesterday when Caterpillar's CEO Jim Owens spoke up.

Keep this kind of rhetoric alive and positive things will happen for Iowa.

Have I Accidentally Found Myself In "Ethanol Alley"

As a California Expatriate and new resident of the Des Moines Iowa metro area, you can imagine my surprise that Iowa has become a "Hot bed of venture capital activity" (some may even say speculation) centered around the Ethanol industry.  Leave it to me and my unquenchable thirst for new new thing to start a site called Ethanol Alley

My years spent on the Digital (or Tech) Coast (Southern CA) and traveling to Silicon Alley (NYC)  and Silicon Valley (Northern CA) got me thinking.  We need a catchy slogan here in the beautiful Midwest now that it actually might be "cool to live where the corn grows." 

The Ethanol Alley consists of the corn growing and ethanol producing area in the middle of the United States typically deemed fly over country by left and right coasters.  Now, as venture capitalists and other entrepreneurs figure out what the airport code is for Des Moines (It's DSM), I'm feeling quite good about the prospects for our state and for my participation in this market place. 

My goal in starting the Ethanol Alley Weblog is to create a cohesive one-stop shop for industry experts, venture capitalists, legislators, and citizens alike to get straight talk and insightful content about the coming storm of activity surrounding the production of Ethanol.  It may seem like a far fetched idea right now, but I believe that we can become nearly energy independent in 25 years.  Why shouldn't we strive for this?  This is America and its time we embraced a challenge like this.  God knows we have the available land to grow the crops that when fermented produce Ethanol. If you've flown lately (and Rich Karlgaard can confirm this), you've probably noticed there's not a lot going on down there for much of the trip.

President Bush's mention of Cellulose based renewable fuels during the State of the Union Address said it clearly, "We'll also fund additional research in cutting-edge methods of producing ethanol, not just from corn, but from wood chips and stalks, or switch grass. Our goal is to make this new kind of ethanol practical and competitive within six years."

What a noble goal.  6 years!  This is nearly unheard of in a Presidency.  Most initiatives are far lengthier and unattainable.  This is something tangible and could become President Bush's most impactful legacy.

Let this be the "Space Race" of our time.  Let us "Defeat the Evil Empire" of relying on others for our energy supplies.  Let's get busy engineering fantastically high yielding crops and improving the ethanol refining process.  Heck, I don't care if Ethanol costs as much as gasoline (for now).  However, I'll take corn sweetened pleasure that every piece of that fuel molecule was born, raised, harvested, and processed in my home town, in middle America. 

This is not a left or right issue.  This is about our Independence.

Let (energy) Freedom Ring

Welcome

Welcome to Ethanol Alley.  This weblog will serve as a point of aggregation for expert opinion, news articles and other information on the emerging ethanol industry around the world.   

I firmly believe that this new focus on Ethanol and Cellulose based fuels in general will bring a boon to the Midwest and provide an inflow of venture and investment capital into this region.   Time will show that it has become a bit more desireable to live in "Corn Country". 

Yours truly from Des Moines Iowa,
Doug