TimSt sent me a very good link from Chevron outlining some of the issues with Ethanol Oxygentated fuels.
Attached is the link and some key points.
"The situation is different for gasoline oxygenated with 10 vol % ethanol. The gasoline-alcohol blend can dissolve more water (6000–7000 ppm at 21°C/70°F). When this blend is cooled, both the water and some of the ethanol become insoluble. Contacting the blend with more water also draws ethanol from the blend. The result, in both cases, is two layers of liquid: an upper ethanol-deficient gasoline layer and a lower ethanol-rich (up to 75% ethanol) water layer. The process is called phase separation and it occurs because ethanol is completely soluble in water but only marginally soluble in hydrocarbons. After phase separation, the gasoline layer will have a lower octane number and may knock in an engine. The fuel also is less volatile. The engine will not run on the water/ethanol layer. As the concentration of ethanol is decreased, the aromatics content of the gasoline is decreased, and as temperature is decreased, less water is required to cause a phase separation.
The potential for phase separation requires that gasoline oxygenated with ethanol not be exposed to water during its distribution or use in a vehicle. Because of this requirement, gasoline oxygenated with ethanol is not transported in pipelines, which sometimes contain water. Rather, the ethanol is added to tanker trucks at the terminal immediately before delivery to the service station. Housekeeping at the service station is very important to prevent water contamination. This water sensitivity also means that extra care should be taken when gasoline oxygenated with ethanol is used as a fuel for boat engines. Ethanol blends are hygroscopic (absorb moister from the air) and in time can phase separate during storage if the tank is vented to the atmosphere and is subject to breathing as a result of temperature changes.