As far as ethanol goes, it may eventually be possible for it to be efficient and profitable without government meddling (most likely in local markets where transportation costs remain low). But as Jonah notes , that doesn’t change the fact that current government policy on it is unbelievably goofy. As Tim Carney has pointed out, the official policies on the stuff play like a game of ethanol Twister, in which the government’s game plan is to support as many contradictory policies as it can at any given time:
Ethanol is good, and so we subsidize it. Except foreign ethanol is bad and so we keep it out. Except some foreign ethanol plants use U.S.-made parts, and so we subsidize them.