| Epidemic, there are huge energy costs involved: not only the fertilizer (takes lots of energy and fossil fuel to produce anhydrous ammonia) and the fuel cost for the machinery to plow, irrigate and harvest, but the fact that most of the grain or cane produced is waste (because we don't have any good processes to convert the cellulose, which is most of the plant, into sugar, which is the only part you can ferment into alcohol) and the fact that fermentation yields a material that is only 16% alcohol at best. The cost of removing the bulk of the water, so that the alcohol can be burned as fuel, requires that you distill the alcohol out or freeze the water out (reverse osmosis is not very effective for this). So the energy cost of concentrating the alcohol is probably the major input.
If you use the waste product (straw, bagasse, what have you) as fuel for the distilleries, you can recoup some of the costs. If you find good methods (that don't produce large amounts of toxic waste) to hydrolyze the cellulose to glucose, so that it can be fermented to alcohol, that will also help a lot in reducing the energy cost of alcohol. Those methods don't yet exist, either.
As a consequence, the energy cost of producing alcohol is equal to or even a little greater than the fuel falue of the alcohol produced.
At present, only three things are keeping alcohol an alternative fuel : Subsidies to raise grain, subsidies on gasohol production, and subsidies on dual-fuel vehicle production.
I wish it weren't so, and as you can see, there are steps that would help: improvement in catalysis, in separation science, and even in fermentation biology (yeasts that could produce higher concentrations of alcohol before being killed by it). But we're nowhere near there yet.
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