Re: Why not extract ethanol using butane instead of distilling from water?

The ethanol water mixture separation isn't a problem until the azeotrope 
reaches an ethanol purity of @96%. At this point, the ethanol water vapor 
is also @96% purity and the separation stops. The polar hydroxyl group 
holds on to the water molecule and requires additional steps to free those 
water molecules, dehydration.
Dehydration can be achieved with an azeotrope "buster" like benzene, or an 
absorbant like zeolite.

The miscibility of ethanol with gasoline decreases with the increase in 
water content. The dehydration step is necessary. Ethanol for use in fuel 
needs to achieve a 98-99% purity. 

The butane separation you suggested would also suffer from a lack of 
miscibility. The ethanol content of the butane would be low and the cost 
considerable.