(grifter editorial note. I'm intentionally leaving the subject of this post anonymous. I'm sure he wouldn't mind but I stupidly didn't ask permission to use his name and I do have some standards)
As I posted earlier, Saturday I had an interesting lunch with a man from South Georgia.
Before we get to our conversation, I'm going to shock you a bit. I've had to travel to my ancestral home many times over the past year. About a month ago, I began hearing rumblings of an ethanol plant being built in the region. Now here's the shocking part for you big city folk. When I heard that a group of south Georgia farmers and business men were getting together to build a high tech energy plant, I knew something was up. Many times, when it comes to managing resources, cutting edge innovations go hand in hand with knowing how to run a tractor or fix a combine. If you don't believe me, simply go to the F.U.E.L. website and look at the pictures tying this venture to it's illicit past. There's a reason men in overalls knew to use corn to make liquor.
The man I met on Saturday is typical of those I knew growing up. Most people would not expect a vibrant energy from a south Georgian. Most have the image of the slow talking hayseed with not much to say. This gentleman may be that way until you start to talk about ethanol. The secret we all keep is that we do generally keep to ourselves, until you mention something that's an interest. Then, we can't shut up.
I admitted that I knew very little about ethanol but since Dateline, 60 Minutes and, as I was leaving my house that morning, CNN had covered the subject, I thought I should learn a few things.
I received the answers and more. To be honest, the amount of information was a bit overwhelming and the numbers had my head spinning. It's taken this long to absorb everything. I am not going to go into details here but I encourage to visit First United Ethanol's website and view their slide show. It's fascinating.
My two main questions were could ethanol be profitable and why south Georgia?
Admittedly, my questions on profitability rose from my memories of the gas shortage in the 70s. I remember lots of excitement about products like gasahol, but I also remember the economics of processing these alternatives was not feasible. I had stuck in my mind the old canard that it takes three gallons of gas to make one gallon of ethanol.
What I discovered on Saturday is that most people still have these ideas floating around in their head. The problem is the industry has improved but no one knows. It's been 30 years since the last fuel crisis and alternatives were seriously discussed. The ethanol industry has not been sitting around doing nothing. Plant operations and refining processes have grown to the point of effeciency that a plant of 50 employees can produce massive quantities of ethanol. With the rise of effecient technology, the economics have now reached feasibility. With gas prices at their current cost, ethanol can be competitve. Even the E85 blend that requires "flex vehicles".
Let me interject that I believe there is still a psychological problem with Americans giving up their gas guzzlers but I am not going to go into that here. The current fuel crisis combined with a growing awareness of the public that we are beholden to some not so friendly people I believe will eventually overcome the stigma of driving "hybrids".
My second question was why south Georgia?
As a native of the area, I know that it is the most agricultural portion of the state, but they don't grow much corn. As my guest put it, farmers grow what will make them money. I believe he had an eye to the future with that statement but the current economics is cotton and peanuts will make a heck of a lot more money than corn. There are two reasons for building a plant in this are and both are compelling: distiller's grain and carbon dioxide.
Carbon dioxide? Yeah, I had the same quizzical look on my face that you probably have right now.
CO2 and distillers's grain are by-products of the modern ethanol refining process.
Distiller's grain is easy to understand. For many years, grain by-products have been used for livestock feed. That there is significant portions of this grain left over from the refining of ethanol is a fortunate coincidence. That there are many cows in south Georgia and a high demand for feed products is not.
CO2 sounds odd when you first here it, then you get the explanation. Chicken McNuggets. CO2 is used in the freeze drying process for processed chicken. There are two large chicken processing plants in Camilla and Moultrie. They always need more carbon dioxide. Once again, no coincidence.
The business model incorporates these two potentially profitable by-products into the economics of the plant. The hope is these two additional revenue streams will make up and surpass the cost of having to import the ethanol corn.
Maybe the most important item I took away from my lunch is that ethanol appears to be viable and potentially profitable. First United Ethanol has a solid business plan and good financial backing. The names on its board of directors will not be familiar to you but they are to me. This is not a group of wacky environmentalist sitting around a campfire singing kumbaya. These are business men. They intend to make money and it appears they have a plan to do just that.
Maybe next time, you see that farmer driving a John Deere with a twinkle in his eye, you will have second thoughts about calling him just another backwards hayseed.