There were a number of interesting comments. Let me respond to some of them--first noting that the absurd $100 rebate proposal is dead. Congratulations to Congress.
One comment proposes a "Manhattan Project" to develop substitutes for fossil fuels. I am sympathetic in principle, because I am concerned both about global warming and about the instability of many foreign oil-exporting countries and the political leverage that these countries enjoy; for example, Iran's implied threat to reduce oil exports is probably a factor in the reluctance of China to support sanctions against Iran with respect to its nuclear program. But better than a government-planned and -funded project would be, in my opinion, heavy gasoline taxes. They would give private industry strong incentives to discover good substitutes and also means for reducing carbon-dioxide emissions and indeed removing carbon dioxide from the atmosphere. The Manhattan Project was necessarily a public project because of its scale and because of security concerns; in general, private enterprise is more successful at innovative projects than government is.
Several comments express an understandable concern with the impact of high gasoline prices (and taxes that would maintain those prices at high levels) on people of moderate financial means who are already committed to a long commute in a gas-guzzling car. One answer is to phase in higher gases gradually--say a 10 percent increase per year--which would give people time to adjust. Another answer is to make high gasoline taxes revenue-neutral, meaning that other taxes would be cut, and the cuts could be targeted on lower income groups (including higher earned-income credits for people whose incomes are so low that they pay no income tax).
A number of comments question my contention that the American people cannot be "educated" to accept the need for high gasoline prices. I stand by my contention but emphasize that I was not meaning to suggest that people are dumb. There is such a thing as rational ignorance. It just does not pay most people to become well informed about how markets work. Perhaps this is a deficiency of our educational system; it is not a sign of stupidity. To put the point in economic terms, there are costs of becoming well informed, and especially about issues on which the individual's influence is very small the costs are likely to exceed the benefits. What makes economics a very interesting and challenging field is that many of its findings are counterintuitive. Naturally people not steeped in a subject reject counterintuitive assertions. That is a rational reaction.
Two comments require me to qualify economic assertions made in my posting. One comment points out correctly that requiring that cars be more fuel-efficient does not necessarily eliminate the incentive to take other measures of fuel conservation, such as switching to public transportation. However, most people need to have a car even if they would be willing to commute via bus or train. If forced to buy a fuel-efficient car, they may decide they might as well commute by car (since gasoline is cheaper for them by virtue of the greater fuel efficiency), though left to their own devices they might have preferred to drive less and substitute public transportation.
Second, it was correctly pointed out that heavy gasoline taxes will reduce the incomes primarily of those countries that have high production costs. That is, as prices rise, reducing demand, the first production to be withdrawn from the market will be the costliest, and that may be domestic production, North Sea production, and other "friendly" production, rather than production from Saudi Arabia or Iran, which have low costs of production.
Finally, with respect to the oil companies' "obscene" profits. I do not thnk excess-profits taxes are sensible. But in any event, anyone inclined to impose such taxes should note two things: most profits of U.S. oil companies are actually earned abroad, rather than from sales to people in the United States; and the income taxes paid by the oil companies rise with increases in their profits.