...or so it seems at this point. Fuel grade ethanol (less than 1% water) contains only about 67% of gasoline's energy content. One only needs to look at a car's flex fuels EPA mileage on gasoline versus E85 to grasp this. Thus the 2008 Chevy Impala 3.9 liter engine on gasoline gets an EPA rating of 17city/25 highway on gasoline and 12 city/19 highway on E85! Okay now that I have your attention...

A study at Mankato State U (Minnesota), American Coalition for Ethanol : News , used four 2007 model vehicles: a Ford Fusion, two Chevrolet Impalas (one flex-fuel and one non-flex-fuel), and a Toyota Camry.
The defiance of thermodynamics is that the vehicles got better mileage with ethanol blends (20-30% ethanol not E85) than the ethanol's energy content would predict. The E85 Impala got 15% better mileage (using the 20% blend) than on gasoline.

I got onto this by reading the December 10 issue of Chemical & Engineering News and then "googling." Will this info now die never to be heard of again or will it lead somewhere remains to be seen. However, eleven years of college says thermodynamics doesn't lie. So what is going on here? Is ethanol somehow increasing the driving energy recovered from gasoline (a miserable 30% normally)? Most of the energy content of gasoline goes into the radiator or out the tail pipe as heat.

Ethanol was introduced as an emissions improvement.  Mileage is only secondary and not any intended benefit other than the benefit to farm/grain production and profits.  Remember that Alcohol fuel processing is subsidized by Federal grants and at-the-pump price adjustment.  Research will reveal that the C6R Corvette racing vehicles are permitted to install a significantly oversized fuel tank because of the huge mileage and energy loss over running gasoline only.  

ethanol was mandated by congress to cut down on the importing of foreign oil. also the corn producers lobbied for it.