current Wikipedia description (verbatim):
" Dry gas is an alcohol-based additive used in automobiles to prevent any water in the fuel from freezing, or to restore combustive power to gasoline spoiled by water. The name Drygas is actually a brand name, owned by Cristy. It is a liquid that is added into the fuel tank, that absorbs the water and keeps it in solution.[citation needed] Some brands contain methanol and some contain isopropyl alcohol.[1]
Some states require a 10-15% ethanol solution be sold at refueling stations.[citation needed] Most current gasoline-powered automobiles can safely run up to a 10% ethanol solution without any modification. However, at 15% or above older vehicles may require replacing the fuel lines to prevent degradation and rupture, and the electric fuel pump may need modification to prevent ethanol "dry rot". The belief that dry gas is not needed because the significant amount of ethanol is distorted because ethanol is a drying agent. Due to this fact it has a affinity for water which can be present into the atmosphere. The water that has been "absorbed" then causes issues with freezing fuel lines. The action of adding dry gas (anhydrous methanol or azeotropic iso-propyl alcohol) is suggested to mix with absorbed water lowering the freezing point of the now water and alcohol solution allowing the fuel lines to resist freezing, and allowing the water to be removed when the solution is used by the engine."
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Was a mediocre Chemistry student, but it sounds to me like ethanol pulls out water, which (or maybe, and) has a drying effect on components, BUT the ethanol doesn't combine with the water for combustion. Anhydrous methanol or azeotropic iso-propyl alcohol (geez -- Dry Gas) combines with the extracted water to form a combustible compound. Seems to imply that adding dry gas is even more important when burning gas with ethanol. (Seems to say that the ethanol water-in-gas issue can be solved by adding yet another form of alcohol -- dry gas --, but the damage to susceptible fuel lines would remain.) Seems that ethanol might improve combustion by adding alcohol (cleaner burning), and also by separating out water (albeit, not burning it).
So I guess non-ethanol gas is the winner (maybe with periodic dry gas added, if a particular condensation problem).