oxygenated fuel requirements followed by MTBE being removed from the market started this ethanol thing. The price of E85 matters about as much as the price of eggs in India unless and until supply far exceeds what is availible now.  First, you have to meet the need for ethanol as an additive, then you have to meet the need for ethanol as an octane booster (10% turns UL87 into UL89, or UL85 into UL87), then when those markets are filled you can finally think about selling ethanol as a stand-alone fuel.  

With Ethanol pretty much the only game in town for meeting oxygenated fuel standards in many metro areas the price really doesn't matter because if you want to sell gasoline in those markets, you must make it meet the standards.  You can't shut off a major metro market because of an additive that adds a couple cents at most to the price, if the price of the ethanol used as an additive doubles, it still doesn't really make any difference because the market has to pay it.