As you point out, alcohol has an affinity for water. In fact it's not possible to have 100 percent alcohol in normal conditions, because it will absorb water from the atmosphere to bring it down to about 98 percent. (Which is why "pure" grain alcohol is "196 proof".)
If you have a good fuel supplier, water in fuel should not be an issue. But suppliers can and will add water to fuel. It is not that uncommon for someone to gas up their car at a discount filling station and have it quit down the road with a tank full of water. The difference with E10 or E85 fuels is you can have a lot more water in the fuel before it separates out.
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Today's Featured Article - An Old-Time Tractor Demonstration - by Kim Pratt. Sam was born in rural Kansas in 1926. His dad was a hard-working farmer and the children worked hard everyday to help ends meet. In the rural area he grew up in, the highlight of the week was Saturday when many people took a break from their work to go to town. It was on one such Saturday in the early 1940's when Sam was 16 years old that he ended up in Dennison, Kansas to watch a demonstration of a new tractor being put on by a local dealer. It was an Allis-Chalmers tractor dealership,
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