It creates demand for ethanol, which will increase its availability and lower its cost.
No offense, but obviously you're not an economist.
The law of supply and demand will result in a price increase the greater the demand, regardless of whether or not the supply is sufficient. When the supply is insufficient and the demand is high, the price is even higher.
Since Ethanol is a domestically produced, renewable-based fuel, it is already helping meet some
needs now and will in the short-term future as well. However, one of the issues facing Ethanol based fuels is the fact the supply is not nearly great enough to meet potentially future demands in the event of an acute gasoline shortage, let alone a chronic one, and thus is not a long term replacement for fossil fuels, such as gasoline.
Therefore, as demand rises and supply tightens, cost will rise.
In addition, the predominant source of Ethanol is corn (as well as other grains and starches), but not enough can be grown to meet potential future demands. Agriculturally speaking, fields can't produce the same crop year in and year out, even when soil supplementation is employed.
Furthermore, Ethanol results in a fuel mileage decrease of upwards of 25% compared to Gasoline, yet the cost per gallon is essentially equivalent.
The bottom line is, it's a niche product and will not meet future demands. That said, look for virtually all future GM high performance vehicles to be E85 compatible, along with being forced induction. There are many reasons for a trend toward FI engines as I've stated before but the fact they can also take advantage of higher octane fuels, which Ethanol is, is yet another.