1161049--12/29/2006--WESTERN_PLAINS_ENERGY

related topics

{gas, price, oil}

{competitive, industry, competition}

{cost, regulation, environmental}

{property, intellectual, protect}

{operation, natural, condition}

{loss, insurance, financial}

{regulation, change, law}

{product, market, service}

Risks Related to Our Business We are a relatively new company with a limited operating history in an emerging growth industry. Our business is not diversified. Our revenues will be greatly affected by the price at which we can sell our ethanol and distillers grains. Our financial performance is significantly dependent on corn and natural gas prices. Corn, as with most other crops, is affected by weather, disease and other environmental conditions. The price of natural gas is also affected by market and environmental conditions and other factors beyond our control. The spread between ethanol and corn prices can vary significantly. The price of ethanol may decrease as new ethanol plants become operational. We sell all of the ethanol we produce to Ethanol Products under our ethanol marketing agreement. We sell all of the distillers grains we produce to UBE under our distillers grains marketing agreement. We engage in hedging transactions that may be costly and ineffective. Hedging activities themselves can result in costs because price movements in corn and natural gas contracts are highly volatile and are influenced by many factors that are beyond our control. Advances in ethanol production technology could require us to incur costs to update our plant or could otherwise hinder our ability to compete or operate profitably. Risks Related to Ethanol Industry New plants or decreases in the demand for ethanol may result in excess production capacity. We operate in a competitive industry and compete with larger, better financed entities. We compete with other gasoline additives. Competition from the advancement of alternative fuels may lessen the demand for ethanol. Cellulose-based ethanol may compete with corn-based ethanol in the future . Ethanol imported from Caribbean basin countries and Brazil may be a less expensive alternative to our ethanol. Consumer beliefs may affect the demand for ethanol. Risks Related to Regulation and Governmental Action A change in government policies favorable to ethanol may cause demand for ethanol to decline. Government incentives for ethanol production may be eliminated in the future. Changes in environmental regulations or violations of the regulations could reduce our profitability.

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1161049--12/29/2006--WESTERN_PLAINS_ENERGY_LLC