[thackney]

An engine designed to burn ethanol would have nearly the same miliage as a gasoline engine due to increased effiency from higher compression.

Higher compression is not going to overcome a 34% reduction in energy. If it could, diesel would have a huge improvement in MPG with its 11% increase in energy content and greater compression. You can deliver more horsepower per cubic inch with greater compression, you are not going to get significantly greater MPG.

[dangerdoc]

It will overcome half of the difference leaving a car with nearly the same miliage.