Since ethanol will start to separate at about 3% water contamination you must be getting water in the fuel from somewhere. Since alcohol works to keep water in suspension in the gasoline I would think that removing the alcohol would only make the water problems worse rather than better.
I'm guessing that the problems with water in the ethanol in parts of the country have more to do with how the fuel is handled rather than the fuel itself. Alcohol has to be added to the gasoline just prior to retail delivery. If ethanol is shipped by pipeline it will be contaminated with water.
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