Sorry to end my post mid-way. The answer to the question of Ethanol's energy efficiency is that the state of the art production is 1.52 units per 1 unit according to the USDA in 2005-06. The Average return is 1.3:1 not 1:1 or even .89:1 like Gasoline, and not just from Wikipedia either I've seen that number before. Ethanol is only 83% of a gallon of E85 at a Maximum, there's always 2% of the total volume in denaturant. So infact you are way offbase for a gallon of E85 since there is already a portion of low grade gasoline in with the Ethanol. And second you are estimating to the worse case scenario for a fuel conversion if you try and estimate for a Gasoline Engine's economy with Ethanol there is no way anyone would switch to Ethanol with that much mileage difference, people in the US would totally oppose it. Hence why Diesel is more attractive to YOU despite only getting better mileage due to more energy per gallon. Diesels powered vehicles need to have a much bigger and heavier engine with displacement/turbo to get the same HP so either you accept half the HP or accept the same FUEL EFFICIENCY as a gasoline car. If you accept half of the HP you're not getting better mileage because it's just more efficient which it is, but because you're running a much lower output engine. It looks fine from a MPG perspective but there's no way we can grown enough biodiesel for anything and Gasoline became more popular than Diesel for certain reasons(not discussing that part here). The production per acre of soybean based biodiesel is worse than corn ethanol and the alternatives are all tropical based just like sugar cane.
The biggest advantage like Shovel said, is that E85 can be used in the same pumps and pipelines and with some tuning, internal part replacement in formerly-Gasoline engines. Ethanol with gasoline is marginally more corrosive and gas stations can upgrade to longer lasting hoses and not lose a fortune or start a fire. Some gas stations still run Carb era pumps and fuel lines that Gasohol will eventually tear down faster than "pure" gasoline fuels and they will need upgrading to modern hoses anyway.
I think there needs be a deemphasis on Flexfuel vehicles unless they tune them to run extremely lean on E85 but instead more emphasis on DIYs building Ethanol powered engines for Daily Driven cars. There's no other economical way to do it. There has to be more demand for it. And while some car modders are picking up on E85 they use even more fuel to make better HP while Daily drivers are the most ambivalent group of them all! I see many a people turning away from using E85 because the MPG is worse or the stations are too far(15 miles in some cases). From my personal perspective that group of people is the one that will decide whether ethanol becomes a niche for hotrodders, tuners, and car modders or if it becomes the fuel of commuters as many Midwesterners have become.
I live in Kentucky and corn fields for animal feed are everywhere. The nearest E85 pump is 30 miles away and I don't commute to work, I work from home at our farm. I think it's actually easier for me to convert to ethanol having a farm in the middle of nowhere Kentucky and not commuting because I can get 100 gallons(or a month's fuel whatever it might be) at a time while in town on a grocery run and fill up our cars at home. We only go to town for food, material, tools and supplies. We don't go out on the town but once every couple months. I used to commute to school 15 miles and I thought that was pretty bad for living in a decent sized city. That is until my Dad had to commute 70 miles to work to keep his old job after moving to Kentucky
. Even at that distance it was cheaper to keep his job making decent money than accept anything local because jobs out here are junk. He spends $350 a month just on fuel (and now even more for powersteering fluid) for his beater buick which still doesn't make him less money than the local jobs he's found. He commutes 60 miles now but he still makes better money than local.
Big cars are different than what we're talking about here, now if you were discussing big engines vs small engines I could see that being ontopic. I think a small displacement engine with a turbo has been proven to be practical for Daily Drivers and more efficient than a bigger engine even with lean burn.
My example is a Ford Focus compact car, 2600lbs stock with .36 CoeF 21 Sq.FT Frontal area and 24.3" Diameter tires. Factory, the 2.0l DOHC puts out about 130ft-lbs at 4400RPM depending on the year. If you could get a Suzuki G10 hooked into it with a small turbo to spit out 10lbs of boost max, then run it. On Gasoline you'd have to lower the Static Compression Ratio which is bad for Fuel and Power and still require running it extremely rich under boost and possibly even under cruise. With E85 not so, you can gear it taller, and even run it lean or stoichometric with a higher compression ratio on a stock or economy cam but with the same boost. It'd probably work since the G10 is 200lbs lighter than the Ironblock Zetec in the early Focus and the SOHC means flatter torque even if the peak is much lower. And this is without Direct Injection. The 1.3liter in the Geo Metro actually has a DOHC setup that makes 18% more HP with a higher redline but it throws torque away. It's actually one of the few production engines I've seen that doesn't have the same/similar peak HP as Peak Torque.
You'd think I was crazy but I know guys have run higher Dynamic Compression with E85, I'm a member at E85powered.com where guys customarily run higher than 20:1 Dynamic Compression under boost. Seen an article with a 12.5 StaticCR F-150 with boost but running on C16 which I've seen similar results in modded cars as E85, it was a race truck not Daily Driven so it didn't have a stock cam. I've seen a Honda guy run 12.5:1 SCR pistons on a stock Vtec cam complete with a dynamometer chart. How much extra torque you get with higher compression is also important because bottom end is where a smaller engine suffers the most in a turboed engine. If you get 30lbs of vehicle weight per 1Ft-lbs you should have enough power to at least drive around town albeit without power for high speed maneuvers.
Also, I hang out on teamswift.net forums and they get some HP out of the G10 engines. Converting a G10 to MultiPortFuelInjection and 12.5:1 Static CR and I think I could coax more than 70ft-lbs at 1500RPM out of the 3 cylinders. With a slightly shorter first gear and a similar FinalDrive x Overdrive, the MPG would be truly the same as the Gasoline version but running on E85. That's something we've not seen often enough.
I actually have an article where Ford converted a 93 Ford Taurus to E85 and besides running lean burn they installed experimental catalytic converters and got almost exactly the same MPG out of the 3.0l engine as a Gasoline powered Taurus. I'd like to know where they keep this "experimental" catalytic converter, I hear them used in E85 cars for studies but I've never seen them on the market. In my personal case I could run a no-cat E85 and still be street "legal." Technically federal law prohibits tampering with anything emissions related, but if you get legal emissions it doesn't matter what you're running according to a seperate law regarding switching the fuel the engine runs on. Technically it's been said that it is "illegal" to run anything but what your vehicle was designed for. The EPA passed a new regulation several years ago specifically for CNG conversions stating the vehicle had to pass emissions set for the Gasoline version with CNG to be smog legal. We don't have emissions programs or smog laws here in Kentucky so I think state law concerned it's "legal" to got catless and not because of lack of enforcement. But Federal Laws are sketchy because they act like they're the law of the land but legally they're meaningless in states not regulating emissions. These aren't set in stone so I feel confident that with some more research I could find the truly legal requirements of an E85 conversion. Too bad it's so much like work.