A country wants to focus more on domestic production of oil. They choose to focus on domestic production through incentives.
However, if the ethanal prices are too high, imported oil will still be preferred.
The government chooses to subsidize ethanol through domestic production of oil, and tariff barriers on oil imports, too. Once the prices rise for gasoline, people will prefer to ethanol.
Demonstrate graphically possible shift of the gasoline market:
Demonstrate graphically possible shift of the ethanol market: