Ethanol maker, caught in industry downturn, running on fumes

After laboring a quarter-century in the ethanol business, Neil Koehler insists the industry will become healthy again, maybe in as little as two years. Others agree with him.

But Koehler's company, Pacific Ethanol Inc. of Sacramento, might not make it to the promised land.

The unprofitable ethanol maker has warned investors it could run out of cash at the end of April and might have to file for bankruptcy protection – a stunning downfall for a company that once set out to conquer the West and counted Bill Gates as an investor.

Adding insult to injury for Koehler and other ethanol pioneers: As their industry struggles, their old nemesis, the oil industry, is prepared to gobble up the remains. Oil refiner Valero Corp. just agreed to buy seven bankrupt ethanol plants in the Midwest for 30 cents on the dollar.

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