The trouble is that you get far less energy in a gallon of ethanol than you do with a gallon of gas. You get 115,000 BTU/gallon of gas while you get 76,000 BTU/gallon of ethanol. In addition, current ethanol plants are not as efficient as tests done in small scale. This eliminates and even makes ethanol higher in cost per BTU. But let us assume that the cost to make a gallon of ethanol is about half to make gasoline. This would mean that we would have to overcome the cost to build an infrastructure that supports ethanol to replace the current one built around gasoline. This would mean building who knows how many ethanol plants and replacing all the gas powered vehicles we drive. It is too much of a hurdle to jump until the cost of gasoline rises dramatically higher.
There is also one crucial factor that ethanol proponents overlook. It takes a lot of land to produce enough corn to make enough ethanol for our country. It would require up to 97% of our land to grow enough corn to produce enough ethanol that our country requires. So what this means is that we would have to import corn from foreign countries, and then instead of the problems we have today relying on foreign oil, we'll have problems resulting from relying on foreign corn.