The Oil and Gas Journal of 11/26/07 published an article by Larry Kumins of the Energy Policy Research Foundation, Inc. of Washington,D.C. titled, "Energy system limits future ethanol growth." It says the rapid growth of ethanol between 2002 and 2006 "will prove to have been a one-time event that captured two thirds of the ultimate near term market."
The argument boils down to the assertion that ethanol was substituted for MBTE as an octane booster when MBTE was banned for environmental reasons. That "natural" ethanol component of gasoline amounts to about 500,000 b/d, which is around the present usage and roughly 5%.
The author maintains there is a 10% or 15 bg/y "cap" to the amount of ethanol that can be blended with gasoline given automobile technology and ethanol distribution difficulties. He says that ethanol production capacity is approaching that 15 billion gallons per year, a serious over- capacity problem that will result in much lower ethanol prices.
Any amount of ethanol over 15 bg/y would require car manufacturers to make many more E85 or flex-fuel vehicles and for consumers to buy them, both doubtful developments. In addition, and at least as important, the distribution system for ethanol would need major changes to become more robust. Thus, the "easy" ethanol use goals have already been largely reached.