EXHIBIT 10.6

                DESCRIPTION OF NON-EMPLOYEE DIRECTOR COMPENSATION

         Effective as of May 18, 2005, non-employee directors of Pacific
Ethanol, Inc. (the "Company") receive $1,500 per board meeting attended, in
person or via telephone, in consideration for their services as members of the
Board of Directors. Effective as of May 18, 2005, the Chairman of the Board of
Directors receives $80,000 annually for his services as Chairman of the Board of
Directors. In addition, effective as of May 18, 2005, the Chairman of the Audit
Committee receives a fee of $3,500 for each calendar quarter of service, in
consideration for his services as Chairman of the Audit Committee, which amount
is in addition to the fees payable for attendance at meetings of the Board of
Directors.

         Non-employee directors are reimbursed for certain reasonable and
documented expenses in connection with attendance at meetings of the Board of
Directors and its committees.

         Non-employee directors may also receive options from time to time under
the Company's stock option plans and otherwise.

         The following non-employee directors received grants of non-qualified
stock options in the following amounts to purchase shares of common stock of the
Company:

                    DIRECTOR                                  NO. OF SHARES
                    --------                                  -------------

                    William L. Jones                              50,000

                    Terry L. Stone                                20,000

                    Kenneth J. Friedman                           15,000

                    Frank P. Greinke                              15,000

                    John Pimentel                                 15,000

         In addition, new directors, upon their appointment, are to receive
grants of non-qualified stock options to purchase 15,000 shares of common stock
of the Company.

         The options granted or to be granted shall include the following terms:

         o        The options shall be granted under the Company's 2004 Stock
                  Option Plan (the "2004 Plan") to the extent shares are then
                  available under the 2004 Plan and the grant under the 2004
                  Plan can be made in compliance with applicable securities
                  laws.

         o        The exercise price of the options shall be equal to the Fair
                  Market Value of a share of the Company's common stock as
                  defined in the 2004 Plan.

         o        The expiration date of the options shall be ten years after
                  their date of grant or such earlier date as is provided in the
                  2004 Plan or in the applicable stock option agreements.

         o        The options shall fully vest and become exercisable one year
                  following their date of grant.