diff --git a/plugins/inventory/ec2.py b/plugins/inventory/ec2.py
index 0f7c198575..5f7bd061d7 100755
--- a/plugins/inventory/ec2.py
+++ b/plugins/inventory/ec2.py
@@ -334,23 +334,24 @@ class Ec2Inventory(object):
         self.write_to_cache(self.inventory, self.cache_path_cache)
         self.write_to_cache(self.index, self.cache_path_index)
 
+    def connect(self, region):
+        ''' create connection to api server'''
+        if self.eucalyptus:
+            conn = boto.connect_euca(host=self.eucalyptus_host)
+            conn.APIVersion = '2010-08-31'
+        else:
+            conn = ec2.connect_to_region(region)
+        # connect_to_region will fail "silently" by returning None if the region name is wrong or not supported
+        if conn is None:
+            self.fail_with_error("region name: %s likely not supported, or AWS is down.  connection to region failed." % region)
+        return conn
 
     def get_instances_by_region(self, region):
         ''' Makes an AWS EC2 API call to the list of instances in a particular
         region '''
 
         try:
-            if self.eucalyptus:
-                conn = boto.connect_euca(host=self.eucalyptus_host)
-                conn.APIVersion = '2010-08-31'
-            else:
-                conn = ec2.connect_to_region(region)
-
-            # connect_to_region will fail "silently" by returning None if the region name is wrong or not supported
-            if conn is None:
-                print("region name: %s likely not supported, or AWS is down.  connection to region failed." % region)
-                sys.exit(1)
-
+            conn = self.connect(region)
             reservations = []
             if self.ec2_instance_filters:
                 for filter_key, filter_values in self.ec2_instance_filters.iteritems():
@@ -363,10 +364,12 @@ class Ec2Inventory(object):
                     self.add_instance(instance, region)
 
         except boto.exception.BotoServerError, e:
-            if  not self.eucalyptus:
-                print "Looks like AWS is down again:"
-            print e
-            sys.exit(1)
+            if e.error_code == 'AuthFailure':
+                error = self.get_auth_error_message()
+            else:
+                backend = 'Eucalyptus' if self.eucalyptus else 'AWS' 
+                error = "Error connecting to %s backend.\n%s" % (backend, e.message)
+            self.fail_with_error(error)
 
     def get_rds_instances_by_region(self, region):
         ''' Makes an AWS API call to the list of RDS instances in a particular
@@ -379,23 +382,36 @@ class Ec2Inventory(object):
                 for instance in instances:
                     self.add_rds_instance(instance, region)
         except boto.exception.BotoServerError, e:
+            if e.error_code == 'AuthFailure':
+                error = self.get_auth_error_message()
             if not e.reason == "Forbidden":
-                print "Looks like AWS RDS is down: "
-                print e
-                sys.exit(1)
+                error = "Looks like AWS RDS is down:\n%s" % e.message
+            self.fail_with_error(error)
+
+    def get_auth_error_message(self):
+        ''' create an informative error message if there is an issue authenticating'''
+        errors = ["Authentication error retrieving ec2 inventory."]
+        if None in [os.environ.get('AWS_ACCESS_KEY_ID'), os.environ.get('AWS_SECRET_ACCESS_KEY')]:
+            errors.append(' - No AWS_ACCESS_KEY_ID or AWS_SECRET_ACCESS_KEY environment vars found')
+        else:
+            errors.append(' - AWS_ACCESS_KEY_ID and AWS_SECRET_ACCESS_KEY environment vars found but may not be correct')
+
+        boto_paths = ['/etc/boto.cfg', '~/.boto', '~/.aws/credentials']
+        boto_config_found = list(p for p in boto_paths if os.path.isfile(os.path.expanduser(p)))
+        if len(boto_config_found) > 0:
+            errors.append(" - Boto configs found at '%s', but the credentials contained may not be correct" % ', '.join(boto_config_found))
+        else:
+            errors.append(" - No Boto config found at any expected location '%s'" % ', '.join(boto_paths))
+
+        return '\n'.join(errors)
+        
+    def fail_with_error(self, err_msg):
+        '''log an error to std err for ansible-playbook to consume and exit'''
+        sys.stderr.write(err_msg)
+        sys.exit(1)
 
     def get_instance(self, region, instance_id):
-        ''' Gets details about a specific instance '''
-        if self.eucalyptus:
-            conn = boto.connect_euca(self.eucalyptus_host)
-            conn.APIVersion = '2010-08-31'
-        else:
-            conn = ec2.connect_to_region(region)
-
-        # connect_to_region will fail "silently" by returning None if the region name is wrong or not supported
-        if conn is None:
-            print("region name: %s likely not supported, or AWS is down.  connection to region failed." % region)
-            sys.exit(1)
+        conn = self.connect(region)
 
         reservations = conn.get_all_instances([instance_id])
         for reservation in reservations:
@@ -492,9 +508,8 @@ class Ec2Inventory(object):
                     if self.nested_groups:
                         self.push_group(self.inventory, 'security_groups', key)
             except AttributeError:
-                print 'Package boto seems a bit older.'
-                print 'Please upgrade boto >= 2.3.0.'
-                sys.exit(1)
+                self.fail_with_error('\n'.join(['Package boto seems a bit older.', 
+                                            'Please upgrade boto >= 2.3.0.']))
 
         # Inventory: Group by tag keys
         if self.group_by_tag_keys:
@@ -587,9 +602,9 @@ class Ec2Inventory(object):
                         self.push_group(self.inventory, 'security_groups', key)
 
             except AttributeError:
-                print 'Package boto seems a bit older.'
-                print 'Please upgrade boto >= 2.3.0.'
-                sys.exit(1)
+                self.fail_with_error('\n'.join(['Package boto seems a bit older.', 
+                                            'Please upgrade boto >= 2.3.0.']))
+
 
         # Inventory: Group by engine
         if self.group_by_rds_engine:
@@ -785,4 +800,3 @@ class Ec2Inventory(object):
 
 # Run the script
 Ec2Inventory()
-