Ethanol is a normal component of today's gasoline. All gasoline-powered cars sold in the United States are designed to use gasoline containing up to 10% ethanol, also known as E‑10 Unleaded. In some states and large metropolitan areas, all of the gasoline contains ethanol, and has for several years.  Gasoline containing up to 10% ethanol has been available in over 41 states for more than 10 years. Today, over 40% of the gasoline in the U.S. contains ethanol, and the percentage is projected to continue to increase. 
Ethanol is an alcohol based fuel produced from plant sugars such as corn and sugarcane or from cellulosic feedstocks (grass, wood, crop residues, or old newspapers). Ethanol is a high-octane fuel; octane helps prevent engine knocking and generate more power in engines designed to operate at a higher compression ratio. Ethanol enhances the octane properties of gasoline and is used as an oxygenate to reduce CO emissions.
A blend of 10% ethanol with 90% gasoline fuel (E10) can be used in most vehicle engines and generally have a high octane rating than unleaded gasoline. Low-octane gasoline can be blended with 10% ethanol to attain the standard 87 octane requirement. As an alternative fuel, E85 (85% ethanol and 10% gasoline) is used in flex-fuel vehicles. While ethanol is not produced in Hawaii, a 2006 State mandate requires all gasoline sold contain at least 10% ethanol.
National Energy Policy
The United States’ energy policy calls for increased use of alternative fuels for transportation. The national Renewable Fuels Standard requires 7.5 billion gallons of ethanol and biodiesel fuel to be incorporated into the nation’s fuel supply by 2012. Current U.S. use of ethanol fuel is about 4 billion gallons per year.
State Energy Policy
Cost-effective, reliable fuel supplies are essential for Hawaii’s economy. Hawaii’s need for ground transportation fuels is projected to increase. Renewable fuels can contribute to Hawaii’s energy supply, as well as to several of Hawaii’s energy objectives. Diversification of fuel supplies can reduce Hawaii’s future dependence on imported fossil fuels and the impacts of oil price increases or supply disruptions.
Since ethanol can be made from many locally available materials, including agricultural products and even yard or wood waste, it can provide long-term energy diversity and energy security, using plentiful renewable resources. Energy diversification is similar to establishing a diversified investment portfolio: when some prices increase and others decrease, the net effect is a more resilient portfolio with less total risk.
Since April 2, 2006, gasoline distributors in Hawaii have been required to distribute gasoline containing 10% ethanol.  At least 85% of the gasoline distributed to fleets and retail fueling stations is required to be E-10. Fuel marketers prepared months in advance for the transition, to ensure that properly-blended E-10 Unleaded gasoline would be available from your favorite service station.
Gasoline is made from petroleum (crude oil). Global demand for petroleum has doubled in less than 3 years. There is concern that prices may continue to rise as the remaining oil becomes more difficult and expensive to extract; also, there are concerns about national energy security associated with increasing levels of dependence on petroleum. Most of the world's reserves are located in the Middle East. More information on global and U.S. energy issues is available from the United States Energy Information Administration. For these and other reasons, a gradual shift towards transportation fuels which can be made from sources other than petroleum is projected to be very important in the long term.
Federal and State incentives reduce the cost of ethanol in order encourage its use, reduce our dependence on imported fossil fuel, and develop renewable alternatives that can be produced in the U.S. and in Hawaii. Several studies have concluded that ethanol produced in Hawaii can be competitive with imports, and cost-effective for blending with gasoline. The Federal incentive is 51 cents per gallon of ethanol. If 40 million gallons of ethanol are blended into Hawaii’s gasoline, Federal payments to blenders in Hawaii will be $20.4 million per year. This can offset startup costs associated with the program.
Where can I get more information?
More information is available from many sources, including:
 All of Minnesota, since 1997; Chicago and Milwaukee, since 1999; St. Louis, MO, since 2002; and, since December 2003, all of Connecticut, most of New York, and all of Los Angeles, San Francisco, San Diego, and San Joaquin Valley. Other areas have been using it to reduce pollution during the winter months: El Paso, TX; Denver, Boulder, and Longmont, CO; Missoula, MT; Provo, UT; Las Vegas and Reno, NV; and Phoenix, AZ.
 Source: Energy Information Administration, 2005.
 The Annual Energy Outlook is available here: http://www.eia.doe.gov/oiaf/aeo/
 The ethanol content law (HRS 486J-10) was enacted in 1994. The specific requirement (HAR 15-35) is for at least 85% of the gasoline delivered to retail gasoline stations and fleets to be E-10 Unleaded. An exemption is allowed if competitively priced ethanol is not available, or in the case of undue hardship.