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NEW YORK (Reuters) - When the richest man in the world invests $84 million in a company, you can be sure Wall Street notices.

That's why Neil Koehler, president and chief executive of Pacific Ethanol Inc. (Research), was looking as if he had won the Powerball jackpot on Tuesday.

"It gave us instant credibility and the equity financing to be very credible and real with our (business) plan," he said of the investment by Bill Gates, the Microsoft Corp. (Research) founder, whose personal fortune of $46.5 billion topped Forbes magazine's list of the world's richest again this year.

"It really differentiated us from the pack," Koehler said. Gates' investment firm, Cascade Investment, agreed last month to buy 5.25 million preferred shares in Pacific Ethanol, a producer of the corn-based fuel hailed by environmentalists as an answer to the earth's dwindling supply of petroleum.

The financing, in which the preferred shares will be converted into common stock, is expected to close in January and will net the Fresno, California-based company $84 million.

In an interview at Reuters' Times Square offices, Koehler said Gates' investment was a sign that ethanol can be a viable alternative to oil at a time of see-sawing gasoline prices and concerns about global warming and climate change.

"It's all coalescing and, obviously, a smart investor like Bill Gates sees that," said Koehler, who was in New York to attract institutional investors.

Gates' money will help Pacific Ethanol proceed with its plan to initially build five plants on the West Coast to process Midwestern corn into ethanol, he said.

"It's not only had a huge impact on our operations, but it's had a huge ripple effect on the whole industry. It has really caused a stir in the ethanol industry that Bill Gates has stepped up and said: 'I believe in ethanol.'"

The company went public in March and the $84 million will help finance the plant construction.

"This was very much our strategy and they very much synched up and helped us make it more real," he said. "They had decided they wanted to get into ethanol and had looked at many companies before they found us."

Despite the investment, Koehler has not met Gates, who is also known as a philanthropist.

"He's pretty hands-off," he said.

But just the name is enough to attract attention from Wall Street and oil companies, said Koehler.

"With Bill Gates and that whole left-wing, progressive position that he has and the philanthropic thing, it reinforces ethanol's green stamp," he added.

With crude oil at $50+ per barrel, Koehler sees the market for ethanol-burning vehicles growing. Already, U.S. gasoline contains about 10 percent ethanol and Ford (Research) and General Motors (Research) are developing cars to run on 80 percent ethanol.

With 150 billion gallons of gasoline sold in the United States each year, that represents some 15 billion gallons of ethanol.

"We could do what Brazil's done and have 30, 40 percent of our transportation fuel renewable," he said.

Brazil, which makes ethanol from sugar cane, and the United States are the two largest ethanol-producing countries, he added.

"It's a common fact, we are running out of oil and there is only one commercially-viable liquid fuel alternative," Koehler said.

But historically low gas prices and powerful big oil companies combined to stunt the ethanol industry for years.

"Because of the politics of the oil industry, ethanol has always been viewed as raining on their parade, interfering with their business model," said Koehler.

However, the situation has changed and oil companies now look more favorably on ethanol than other transportation power sources, such as electricity, fuel cells or hydrogen.

In addition, President Bush's energy bill included renewable fuel standards and starting on Jan. 1, it requires a virtual doubling of ethanol fuel use from the current 4 billion gallons to 7-1/2 billion gallons by 2012.

"With $50 oil and up, ethanol is very attractive from a price standpoint," said Koehler.

Ethanol receives a 51 cent per gallon incentive from the U.S. government and today it is selling wholesale for roughly $2 a gallon.

"The actual cost to a refiner is roughly $1.50 and wholesale gasoline is roughly $1.70 or $1.80 today," said Koehler.

And in another sign of the future, he said that, starting next year, the Indy Racing League is converting all Indy racing cars to run on the high-octane alternative.

"Ethanol is racing fuel," he added.