100% gas does cost more because ethanol is subsidized, but depending on your engine you can get more than that back in mileage. (The same mechanic told me that some 6-cyl Toyota engines lose 42% of efficiency on 10% ethanol.)
He's off by a magnitude. E10 has about 97% energy density as 100% gasoline (http://www.afdc.energy.gov/fuels/fuel_comparison_chart.pdf)
A 42% loss would be huge. A 30 MPG Toyota would get about 18-19 MPG.
It just isn't possible to lose 42% from running E10. You won't even lose that much efficiency from running low octane fuel in an engine that requires high octane.
Are you getting E10 confused with E85? E85 is a whole different beast and will ruin a car not designed to run on it.