While lower ethanol blends can be used in most cars and dispensed with existing equipment, E85 with its higher volume of ethanol, which is corrosive, requires the installation of specialized equipment at service stations and the production of vehicles capable of operating on the higher blends.

The cost of installing specialized equipment to dispense E85 "may be a significant impediment for many potential retailers," GAO said, particularly given the few vehicles currently on the road that can use E85, and the relatively limited availability of ethanol. "Absent a breakthrough in cellulosic technology (to produce ethanol from non-food sources), it is likely that little ethanol would be blended as E85," GAO said.

In 2006, an estimated 4.5 million flexible fuel vehicles capable of operating on E85 as well as gasoline were in use, out of about 244 million US vehicles. US automakers have pledged to increase production of flexible-fuel vehicles to about 50% of their annual production in 2012. Eventually, if all the pieces fall into place -- the vehicles, commercial-scale cellulosic ethanol production, and the availability of refueling outlets -- E85 may eventually come into its own.

Gallon-for-gallon, ethanol contains only about two-thirds of the energy of gasoline, the GAO report said, which translates into fewer miles/gal with ethanol blends. At low levels of ethanol, the difference is probably not discernible to most motorists. However, drivers "experience about a 25% reduction in miles per gallon in vehicles using high blends such as E85," according to GAO.

Of course, that's where a flex-fuel vehicle has an advantage: You can always fill it up with gasoline.