I couldn’t make this stuff up if I tried. The following was called to my attention in an e-mail earlier today after Ron Steenblik uncovered the story:
Yuma doctor hopping on board booming ethanol trend
Continuing the trend that I reported on previously, amateurs continue to jump onto the ethanol bandwagon:
Dr. Sultan Lalani doesn’t lose sleep over the biggest project he has ever done. And he said he doesn’t lose any sleep over criticism of the proposed 55-million-gallon per year ethanol plant he hopes to build near Tacna either.
With a construction cost of $125 million, this plant is serious business, but Lalani said it doesn’t overwhelm him. He wants to do the project, located at Avenue 47-1/2E and Highway 80, because he believes it will be good for the environment and good for Yuma County.
Lalani, an ear, nose and throat doctor in Yuma, said the idea to build an ethanol plant grew out of conversations with his daughter, Anita, who is a staunch environmentalist. They created Agrinext Ethanol LLC to try to make that happen.
“I come from a family that is industrial, business. Medicine is my passion, medicine is what I do, but of course, I do enjoy other challenges,” Lalani said. “I thought this was a very good challenge.”
Speaking of which, I have been thinking of getting into the ear, nose, and throat business. I enjoy a challenge, and I think I could make a lot of money. It would be a nice compliment to my other planned business ventures in raising llamas, writing software, and manufacturing pharmaceuticals.
The article continues:
Lalani was born in India and came to the U.S. in 1969. He received his medical training at St. Louis University, and in 1978, he came to Yuma to start his practice. While he says he would never leave medicine, Lalani said he had other goals, too. One is to make the ethanol plant a reality.
Because of America’s dependence on foreign oil, Lalani said, he was interested in fuels that are renewable and domestic. One of the investors for the ethanol project started a grain facility in Kenya that Lalani later joined as a partner. Lalani said that experience in the grain business combined with the Arizona location make ethanol a logical next step.
What is it with people born in India and ethanol? They certainly seem to have a special passion for it. I have written extensively about ethanol. Needless to say, the energy balance is marginal, and the further the ethanol plant is from the feedstock, the more marginal the energy balance becomes. I think it is a decent bet that the energy balance of an ethanol plant in Arizona will be less than 1.0, which means it would actually increase greenhouse gas (GHG) emissions. And of course if he proceeds with this plan:
Lalani said Agrinext hasn’t decided on a power provider but is leaning toward clean-burning coal to run the plant.
You can be pretty confident that GHGs will increase. Yep, good old clean-burning coal. Good stuff. That is also a good signal that his energy balance is not good, given that he is leaning toward cheap coal over more expensive natural gas.
There was one other funny note to this story:
In other business, the board is scheduled to hold a public hearing on a minor amendment land use change to the Dome Valley/Wellton Planning Area of the Yuma County 2010 Comprehensive Plan for the proposed Agrinext Ethanol plant. The change would be from Agriculture Rural Preservation to Heavy Industrial.
Likewise, I am thinking about a minor land use change as well. I would like to turn my home into a nuclear power plant. I hope there are no permitting issues.
I will say again: When a commodity has such incredibly low barriers to entry, it is only a matter of time before capacity is overbuilt and the price crashes. That’s why I expect ethanol producers to continue lobbying congress to increase the amount of mandated ethanol usage and to accelerate the timeline. Otherwise, a lot of ethanol producers will struggle to stay in business in the next few years as their increased demand for corn continues to increase the price, while all the new ethanol capacity is flooding the market. Profit margins will evaporate (although corn farmers should earn a windfall). What we may see is a bail out reminiscent of the Savings and Loan debacle of the 1980’s.
3 thoughts on “More Amateurs to Build Ethanol Plants”
At least they are investing their own money in what they believe. Most environmentalists think ethanol and renewable fuels are very good investments for OPM. “Other Peoples Money”.
I frequently run into environmental activists who have better ideas for our money.
They say something like, “We don’t need more dependence on fossil fuels. If we stop this project there will be more money for solar.” Well whose money is it anyway?
We say, no and thanks for the cheese.
“Otherwise, a lot of ethanol producers will struggle to stay in business in the next few years as their increased demand for corn continues to increase the price”
We can only hope. Hope that corn prices get so high that other biomass begins to get the attention it deserves…sweet potatoes anyone?
I must conclude that these types of ethanol proponents are suffering from a common ailment in the business world: the ‘Desperate Optimism of the Invested’.
I suspect that most vocal ethanol proponents are motivated either by personal risk (have personal investments in ethanol ventures) or reputation risk (have recommended ethanol ventures), or both.
Comments are closed.