August 2006 - Ethanol is a subject of interest for me lately. As an amateur environmentalist, callow investor, and day time engineer, implementing a renewable energy source like ethanol is quit intriguing. Being the skeptic I often am though, I’m wondering whether ethanol is a good investment. Now by saying “investment” I actually mean two things, namely financial and environmental. Let me try to explain.
Looking at the financial aspects of ethanol, one could argue the optimism is flourishing. Big hitter Bill Gates supposedly bought a large piece of Pacific Ethanol Inc. If so, with the stock being up around 80% since January things are looking fairly positive out West. Even Archer Daniels Midland Company from Illinois is doing quit fine with their ethanol efforts. In addition, while visiting my home town “Hayward Kafe” which is smack dab in the middle of the Midwest, I’ve noticed a few more farmers purchasing high priced café lattes. This leads me to believe even the stoic conservative Norwegian community is excited about the possibilities of Ethanol.
All in all I would have to agree with the optimism ethanol gives our pocket books. Vinod Khosla states in his Google Tech Talk “Biofuels: Think Outside the Barrel” that it only costs car companies an extra $30 to make a car flex-fuel. Watching the myriad truck commercials filling up petroleum hogs with corn stocks leads me to believe car companies are on board. While filling a 17 miles-per-gallon gas guzzler on a recent trip to South Dakota, I noticed numerous E85 filling stations. With the delivery infrastructure in place, car companies on board, and the number of ethanol plants popping up all over, I recommend investing in ethanol. And if you don’t like investing in ethanol, I’d recommend looking into corn commodities. As a capitalist I like the competition presented when corn grown to produce ethanol competes with corn grown to increase the average American’s waist line!
From an environmental point of view, I also like what ethanol offers. In MIT’s August 2006 “Technology Review” Jamie Shreeve states in his “Redesigning Life to Make Ethanol” that burning ethanol adds little carbon dioxide back into the atmosphere due to the fact that any carbon dioxide given off is consumed by the plants growing to produce the next drop of ethanol. Ah what a wonder nature is! It cleans itself like a cat! Of course this is in contrast to fossil fuels, which most likely contribute to those annoying toxic air warnings our local bureaucrats warn us about on beautiful sunny days.
Lastly, if you think I’m totally crazy about liking ethanol from both a financial and environmental point of view then let me try this. Even if ethanol is not the silver bullet for renewable energy, at least it’s starting debate and stirring emotion. As one of my trusted acquaintance eloquently stated, ethanol is a gateway source to alternative thinking. It’s starting more dinner discussion about bio-diesel, wind power, and hybrid cars. If the only thing that ever comes of ethanol is pontification and heated debate about renewable energy sources, I’ll consider ethanol a success and worthy of the investment.
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In "Biofuels: Think Outside the Barrel" he says that Corn is not the best material for creating ethanol. Switchgrass and sugarcane are substantially better. How does this affect your investment?
"Even Archer Daniels Midland Company from Illinois is doing quit fine with their ethanol efforts."
I hope so! ADM has been the largest producer in the US for many years.
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