E85 can get better fuel economy from the same displacement by lean burn aka 14.7:1 REAL Air-Fuel Ratio. That's the same Lamda value as Gasoline at 22:1. Direct Injection or semi direct injection just gets better results from Ethanol due to the latent heat of evaporation. I'm not an expert on Ethanol's properties only that they exist. A turboed charged engine with an oxygenated/alcohol fuel like ethanol or methanol gets better results from lower octane fuels because of this trait.
It has been possible for some time, its already been done too.
20mpg Taurus.
My point is the benefit to E85 in Flexfuel vehicles is only during lean burn and HIGH compression.
The best choice for me is downsizing but adding a turbo to keep stock performance. Not necessary but nice for driving around.
And my final comment is a quote from the 20mpg Taurus Article,"Because the heat of vaporization of ethanol is 2.4 times that of gasoline and the octane number is in excess of 100, compression ratios of about 15:1 are possible with direct-injection, giving optimized efficiency for a spark-ignition engine."
Methanol is only 25% higher "heat of vaporization than ethanol so once you switch to alcohol the benefit is not as much as it is compared to switching from a petroleum based fuel. This is also the reason Ethanol has cold starting issues, it doesn't freeze till below zero but it does gel at a certain point.
I'm in favor of alcohol/oxygenated fuels as a whole not just corn based ethanol. At the best case corn-ethanol is temporary until we can mass produce ethanol. Worse case ethanol will never reach critical mass for country wide usage and production. I'm concerned about the formaldehyde(sp?) content in ethanol emissions but it's not enough to justify NOT using it. It will save more lives by a better local economy with less long distance transportation of fuel than it will by exhaust emissions. There is always the research of catalysts for cutting formaldehyde(sp?) emissions. Methanol is even more poisonous than Ethanol emissions and made from either tree alcohol or even Natural Gas so it is not an option for a renewable fuel. Gasoline is fossil fuel and altogether a poor choice of fuels. Even if it doesn't really "run out", the fuel quality will always be the lowest design limitation.