By using more ethanol countries would be less dependent on foreign oil import, and volatile oil prices. Big domestic production of ethanol would ensure that domestic money stays in country instead being spent on expensive foreign oil. Of course increased domestic ethanol production would also create more jobs, and would also very likely lower the fuel costs.
Ethanol burns cleaner than gasoline meaning less greenhouse gas emissions are emitted and this is the most significant environmental advantage that ethanol has over gasoline.
Ethanol fuel also has some disadvantages and I will start the cons story with the fact that large share of ethanol production comes from food crops which has the potential to increase the cost of food prices and even lead to food shortages. This is the main issue of fuel vs food debate because by significantly increasing ethanol production much of the arable land would be used for ethanol production instead to produce food, and this would lead to food shortage and increased food prices, and would likely result in even more hunger in the world.
Ethanol has 34% lower energy per unit volume compared to gasoline which results in around 51% higher consumption in pure ethanol (E100) consumption in an engine.
Ethanol tends to be very corrosive because it can easily absorb water and dirt and without the proper filtration system ethanol can soon cause the corrosion inside the engine block.
Specialized gas stations that offer E85 ethanol are still pretty rare so many drivers would have to drive further distances to find them.
Current high compression ethanol-only engine designs have 20-30% smaller fuel efficiency compared to gasoline-only engine designs.
Ethanol tends to increase fuel enthalpy of vaporization meaning that engine that uses high ethanol blend may have problem starting during the cold weather (winter).
Burning pure ethanol in a vehicle will result in a 34% reduction in miles per US gallon, given the same fuel economy, compared to burning pure gasoline in a vehicle.