simply put the 3 laws of thermodynamics can be expressed as
1) you can't win, you can only break even (at best!)
2) You can only break even at absolute zero
3) You can never get to absolute zero
in summary if you want to find out what you are doing in respect of true efficiency you need to compare all the energy inputs versus the energy outputs and ultimately that is the only fair comparison.
I don't contest the use of ethanol; it clearly CAN be used as an automotive fuel, the issue is whether it is better than a given alternative from the perspective of energy efficiency.
There was a major study carried out by the European Commission (in conjunction with an oil industry trade association - but a very reputable one), which you can view here;
The conclusions are very interesting in respect of CO2 avoidance and not necessarily what you might expect. Not least of which is that even if ethanol was technically suitable, there simply is not sufficient agricultural land to replace the European fuel pool - by a long way!
Going back to the thermodynamics; even if you use waste cellulose it needs to be grown, harvested (probably using machinery using an ICE!), fermented, distilled, transported and used. Every step of the way you need to evaluate the efficiency of each process and a guestimate is that each phase will be less than 80% efficient, so ultimately you will get 0.8 * 0.8 * 0.8 * 0.8... and so on, leading to an ultimate efficiency which is rather low.
Just to illustrate the point;
Fermentation is a chemical process with no energy input and distillation of ethanol is at below 80 degrees so how do you conclude a larger energy input to output.
The fermenter must be constructed (that takes energy), the water used in the fermentation must be produced and distributed (that takes energy), the collection of the cellulose takes energy, as does the preparation (cropping and chopping), the waste must be disposed of - do you burn it or bury it?; the waste water must be treated (that takes energy). So there are energy inputs to derive your ethanol, and the distillation also takes energy (lots of it - and where does it come from, and what is the efficiency of generation and distribution?). Scaled up to a commercial process there would certainly be energy inputs.
I won't try and defend the oil companies, but they are not the problem... to draw another analogy they are simply the drug dealers; the demand comes from you and I; the addicts - if we didn't buy it they wouldn't sell it and MOST oil companies must purchase a significant proportion of their crude oil from government/state owened production facilities e.g. Venezuela, Middle East or Russia. It's not necessarily them who are pushing this, it's government that is the major interest here in respect of tax revenues (bit like smoking really... indefensible, but sooooo profitable for the government)
In summary; I'm not anti-biofuels, but we must start from where we are today and ensure that any changes really do achieve imporvements over today's situation and that the changes really do achieve what was intended.
Just as another example; I was in Sweden recently (a notoriously 'Green' country!). I noticed a large number of cars which were badged as dual fuel and asked my host what that was about: It seems the government offers tax breaks to consumers to purchase such cars which are equipped to use bioethanol based fuels. The petrol stations sell 'biofuel' at a price substantially below regular gasoline (another government tax break!). I asked my host where the ethanol comes from... Brazil!!! So the government offers tax breaks to purchase a new car whcih is less fuel efficient than a regular car; offer the buyer cheaper fuel, that is less efficient and transports the fuel half way around the world in order to do so! That is crazy and not 'green' at all - it's about as sensible as GW Bush's ethanol dash of a few years back that was only designed to reduce the US reliance on the Middle East, and led to people starving in Mexico.
The only way to force the producers to change is to tax the user and force them to pay if they want to pollute... then people will buy more fuel efficient vehicles - deeply politically unpopular, but the problem is not THEM, it's US.