I am the first to admit that my numbers that follow are "pro forma" from the dollar amounts and investment percentages that have been made public, but it is pretty clear that there are fat profits to be made and pretty quickly too. No wonder the Seattle-based Imperium Renewables had no trouble with third round financing of some $213 million for their 100 million gallon a year plant in Washington state.

A fast lesson in the ecomonics of great returns comes from the masters of giganto-profits, Chevron. Chevron is a 22 percent partner in a new refinery in Houston (okay, near Houston at Galveston Bay) that will be producing biodiesel in the next few months. The initial capacity of the plant is just 20 million gallons annually, but they hope to expand that to 60 million gallons by next fall, and to 100 million gallons soon thereafter. What was Chevron's investment? Well, frankly, I don't know. But the reported cost of this mini-refinery is just $10 million, so in the world of Houston oil-finance and banking that is about equivalent to pocket change in any oil company's accounting department. I used to work, briefly, in the accounting department of an oil company in Canada where I was answering queries (accounting challenges) from joint venture partners about the legitimacy of expenses attributed to specific projects. I felt that if I couldn't save them at least $100,000 a day from denied charges to joint venture partners I wasn't up to my own standards for doing my job. I didn't fall short very often either, though that job didn't last very long. Pocket change really is the category of a $2 million investment for a major oil company, though it is actually just as likely that they simply went "at risk" by becoming a guaranteeing co-signor on some form of note or other financial vehicle, without a penny from their actual own accounts.

The so-called "bottom line" on the Chevron investment in this plant appears to be that if it was an all cash investment (not likely, but just for the sake of this example) that they will be making a cash on cash return of about 50% annually considering only the initial investment and the initial capacity. (A gallon of transportation fuel is estimated, as I showed in a previous column to have about 20% of retail price attributed to taxes and about 20% to profit on $2.50/gallon for biodiesel. That's about $5 million per year on 10 million gallons. Assuming an investment of about $2.2 million brings them about $1.1 million a year in profit for Chevron's 22% share.) Now that is smart investing.

The Houston Chronicle online reports that Bill Spence, President of BioSelect Fuels of Houston, the Houston biodiesel plant operator, said that cheaper sources are going to be needed than food crops to be viable in the future. He cited castor beans or the Chinese tallow trees as possibly better, cheaper sources. When it begins operation in March of this year, 2007, the feedstock will be soybean oil.

Toro Company, the lawnmower manufacturer, has announced a whole line of biodiesel ready golf course maintenance products. The maker says that they have more than 20 products across the Toro Reelmaster®, Groundsmaster®, Greensmaster®, Workman® and MultiPro® product families that will be available by 2008 as well as biodiesel "upgrade kits" for these same products selling for as little as $30, all available this year in June. The equipment will be certified for "up to" 20% biodiesel known as B20. That still means 80% petroleum based diesel, but it certainly is a step forward.

Tom Vilsack is out of the presidential race, officially. A lot of people were counting him out earlier, but his inability to raise money was cited as his main reason for dropping his bid. In my opinion the good that may come of this is that some people had to get some early experience developing his energy policy, and that some of those people (well, all of them really) will be available to formulate other candidates energy policies. The fact that there was a demonstrated awareness of key issues in Vilsack's energy policy was encouraging. No, I was not well pleased with the specifics of Vilsack's proposals, but at least some of the issues did get his attention. I hold out some hope that this will eventually translate into better overall energy positions from the others in the race.

That hope may be excessively optimistic given the news this week of over-reactive bickering between the Barack Obama and the Hilary Clinton campaign camps. When will they learn that despite an item appearing in a major newspaper columnist's declamations, that it doesn't become news if you don't react to it. Senator Joe Biden had no ill intent when some media reporters tried to stir a hornets' nest from his nearly glowing report of his opinion of Senator Obama, and with a gracious response from Obama, Biden has more than survived. But Hilary's minions came up with the ridiculous (and impractical) suggestion that Barack should not only denounce his billionaire supporter, but also give back the money. Of course you can't believe everything you hear or read in the media (or in this column either, for that matter), but I heard one report that Mr. Geffen, who is now so critical of the Clinton's honesty, helped raise $18 million for the prior Clinton campaigns over the years. Obama's campaign apparently benefited something in excess of a million dollars from the single fundraiser that Geffen and partners sponsored for him, but that's a not insignificant sum even if it is a small portion of the funds he will need to have banked by the time the primaries begin next February.

It used to be that by August in election years my wife started moaning that she'd be glad when it was finally over. At this point it is starting to look like this August is going to start the election saturation lament a year early this time. Still, it is gratifying to think that perhaps we will really get the best candidate this time. I listened to Arnold Schwarzenegger this morning ABC television, and his protestations that he has not turned over a new liberal leaf but merely has taken to heart that his real job is to serve the people not some particular political party. Those words were the kind of statesmanlike statement that causes those "hope springs eternal" kind of feelings, in me at least. On the other hand, he is an actor, and whether you are really a good actor or just a passable but charming, amiable one seems to make little difference in whether you can be elected Governor of California.

Come to think of it, "bad actor" seems to be a fitting description for a lot of the presidents we have had in the last couple of hundred years.

I prefer to end on an uplifting note, so I will say that seeing Martin Scorsese's Best Director Oscar, presented by Francis Ford Coppola, George Lucas and Steven Spielberg was a pleasant occasion. I especially liked that they joked with Lucas about the fact that he was the one who, despite their long friendships and innumerable close collaborations has not won an Oscar either. An Oscar is nice, the financial and artistic freedom to do what you want is even nicer. That point seemed emphasized by the fact that as they came off-stage Mr. Scorsese was greeted by a hug from everybody's favorite rogue, Jack Nicholson, sporting a shaved head to go with his tuxedo.

love

Stafford "Doc" Williamson