Ethanol is an interesting thing. It's added to gasoline for three reasons: first, to reduce the amount of crude oil needed to produce a gallon of motor fuel. Second, to add oxygen to the combustion process to reduce unburned hydrocarbons in the exhaust, and third and most important, to get the agribusiness in Iowa to support Al Gore in his run for president in 2000.
Unfortunately, it not only replaces crude oil in the production of fuel, it can absorb water which replaces the gasoline in the fuel you buy at the pump. This is good for the oil companies because water is a lot cheaper than actual gasoline. It's one of the reasons your fuel economy drops as much as 10% on this stuff.
Another down side is that the water in your fuel and the extra oxygen atoms in the ethanol also work to oxidize things like fuel tanks and engine parts(oxidize is a nice word for corrosion A.K.A. rust).
Ethanol is a fancy name for alcohol. Alcohol is a pretty good solvent. One of the things it dissolves and carries away is chemicals known as plasticizers. Plasticizers are added to things like seals and hoses to keep them flexible, which is usually important to make these things work properly. Have a fuel hose that is as stiff as a piece of steel pipe? Thank a farmer in Iowa for ethanol. Have a fiberglass fuel tank in your boat that has dissolved and gummed up your $9000 engine? Yep thank that same farmer. Your BMW vibration damper turned to goo? Yep, thank a farmer.
Last, not only does ethanol do all the cool stuff above, but it actually requires more energy to make than it provides as fuel for our vehicles.
One thing that really stokes my sense of irony is that when I am travelling on I-80 across Iowa, the prime source of corn for ethanol, it is the easiest place in all the states I have been in to get no-corn fuel. I've been in gas stations where only one pump out of 6 has 10% ethanol fuel, the rest being the "good stuff". Must be they're selling so much of that crap to the rest of us they don't have enough for themselves.