EthanolAlley

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