Bioethanol is the world's largest-produced alternative to petroleum-derived transportation fuels due to its compatibility within existing spark-ignition engines and its relatively mature production technology. Despite its success, questions remain over the greenhouse gas (GHG) implications of fuel ethanol use with many studies showing significant impacts of differences in land use, feedstock, and refinery operation. While most efforts to quantify life-cycle GHG impacts have focused on the production stage, a few recent studies have acknowledged the effect of ethanol on engine performance and incorporated these effects into the fuel life cycle. These studies have broadly asserted that vehicle efficiency increases with ethanol use to justify reducing the GHG impact of ethanol. These results seem to conflict with the general notion that ethanol decreases the fuel efficiency (or increases the fuel consumption) of vehicles due to the lower volumetric energy content of ethanol when compared to gasoline. Here we argue that due to the increased emphasis on alternative fuels with drastically differing energy densities, vehicle efficiency should be evaluated based on energy rather than volume. When done so, we show that efficiency of existing vehicles can be affected by ethanol content, but these impacts can serve to have both positive and negative effects and are highly uncertain (ranging from -15% to +24%). As a result, uncertainties in the net GHG effect of ethanol, particularly when used in a low-level blend with gasoline, are considerably larger than previously estimated (standard deviations increase by >10% and >200% when used in high and low blends, respectively). Technical options exist to improve vehicle efficiency through smarter use of ethanol though changes to the vehicle fleets and fuel infrastructure would be required. Future biofuel policies should promote synergies between the vehicle and fuel industries in order to maximize the society-wise benefits or minimize the risks of adverse impacts of ethanol.