This has been discussed here quite a few times. Without getting into the whole issue again, ethanol production from corn is net energy negative, that is more BTU's are required in the production of the ethanol than are released when it is consumed as a motor fuel. Even if it were energy positive, approximately 35% more ethanol is required to go the same distance in a car.
Now for cost. The production cost compared to gasoline depends on the price of corn as well as the price of
oil. The higher the price of
oil, the more attractive corn based ethanol becomes. Actually very little fuel ethanol would be produced if it were not for the government incentives. Now the kicker; the price of
oil goes up, the governement says we need more ethanol, the price of corn goes up (this is basic economic supply and demand theory at it's best), the President says plant more corn, the price of corn goes down temporarily then goes back up as more and more ethanol is produced and the price of oil continues to rise.
What is the result? Lots of ethanol is being produced and used to power cars. There is no reduction in oil being used as explained above. However, the price of corn and most other grains is now at, or close to, all time record levels so using corn to produce ethanol is going to drive up the price of many food items. Historically, corn sells for $2.25 to $2.50 per bushel whereas it is now over $5.00 per bushel. Wheat is now at an all time record level. Bread, pasta, meat, and anything containing corn sweetner is going to cost significantly more.
There is a positive side to the fuel ethanol use in the US as it has also been used as a replacement for a gasoline additive called MTBE which was contaminating ground water.
In the future, fuel ethanol will be produced from waste cellulose which will be a much more efficient method. Unfortunately, the cost of cellulose to ethanol production is far too high right now but technology will be improved and a new way to do will be discovered.
Wayne