The following is my opinion:
The cost of producing ethanol is almost exactly the cost of producing gasoline.
However, our taxpayer dollars go to subsidise the corn growers who would otherwise rather grow crops that generate a profit on their own. Therefore we pay more for the fuel, indirectly.
There is no congress on the horizon that will resist writing the annual huge "FARM BILL" because of the lobbyists that support it and live off it.
The corn grown for ethanal is not identical to the corn grown for food, yet the labor and other costs are the same.
Corn syrup (food variety) is an ingredient in a huge number of food products in your local grocery store so there is a demand for it. Just for myself I avoid it and sugars in general. Check your food labels.
The published government reason is that we will eventually not have to import oil from countries that don't like us for the purpose of producing gasoline. Question: Is there a oil producing country that likes us from whom we buy?
The govt further poroposes we go to a 20% ethanol blend. However, it is known that this will cause rapid deterioration in the auto fuel systems unless ethanol-resistant components are retrofitted. Should be a considerable cost per car. If we switch to methanol (wood alcohol) this is even more costly.
The same test engines that determine octane ratings would probably be able to test efficiency of alcohol blend. If not that, then a dyno could.
Here in the People's Republic of California the gasoline composition is specified by law, so importing gasoline from another state is unworkable. This makes CA gas $070 to $1.20/gal more expensive at times. The periodic seasonal changover and the planned refinery maintenances oddly coincide with rises in the cost of oil. I wonder why?
Having said all that, we now have our very first diesel, and, happliy, current diesel prices are lower than regular gasoline. We don't count on that being always true.