The Energy Blog today has an article about a new engine that researchers at MIT are developing in collaboration with Ford. This gasoline engine, which injects a small amount of ethanol at times of peak demand (i.e. acceleration) can deliver the same power as current engines at a much smaller size and weight, leading to a 20-30% increase in mileage. The amount of ethanol required is small – estimates are that you would use 5 gallons of ethanol for every 100 gallons of gasoline. This is looking like a cheaper engine than a hybrid – estimates are for a $1K premium over current engines, versus a $3K extra cost for current hybrid engines.
You can read the full EnergyBlog article on this ethanol boosted engine at this link.