Here is a good article detailing the politics .... and economics ... of ethanol. Give it a read to get a very good overview of the entire ethanol issue.
The short version is this. Ethanol made from corn is highly inefficient taking nearly as much energy to make as it gives back. But the agricultural lobby in Washington is so strong that we do it anyway, essentially subsidizing major agricultural interests (can you say, ADM?).
Meanwhile ethanol made from sugar cane (like in Brazil) is highly efficient and
is a viable option. Unfortunately, U.S. politicians are so in-bed with the sugar industry that sugar prices are inordinately, and artificially, too high to make ethanol production economically viable domestically. Brazil, mentioned above, grows enough sugar cane to make enough ethanol to have now made themselves energy independent.
So once again, our energy policies make no sense because major corporations continue to fuel (pun intended) our petroleum dependence while wasting money on corn based ethanol.
What a sweet deal!