Robert Rapier at the R-squared Energy Blog has written a very good analysis of how ethanol may be more efficient a transport fuel than gasoline, despite the fact that ethanol contains fewer BTUs per gallon than gasoline. The upshot of it is that because of ethanol’s incredibly high octane rating (over 100!), it is possible to run an engine on ethanol at a much higher compression ratio than one could with gasoline. This would allow you to extract more work from the ethanol than can be extracted from the gasoline.
(note: Robert works for Accoya, one of the most interesting green materials companies out there. I currently have a sample of their product and if I order from them for a project I’m working on, I’ll blog about it here.)