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"Free markets trump government intervention every time."
This is a neat idea but it ignores the fact that the government could have driven the same changes at any time in the last 40 years by jacking up the gasoline tax. Instead it spent billions subsidizing cheap gasoline both through direct military interventions and through cash handouts to various dictators to keep the middle east stable.
Your argument doesn't really justify itself. Europe was much more prepared for skyrocketing gas prices (in the form of good public transportation infrastructure and a populous already embracing of higher mileage vehicles) precisely because they intervened in the gasoline market via higher taxes.
Americans, on the other hand, are going to be faced with having to rid ourselves of the now-worthless SUVs that the artificially low gas prices of the 80's and 90's encouraged and at the same time to come up with the purchase price of the new generation of vehicles (because the lack of demand for public transit until recently has left our public transit infrastructure in shambles, most workers will still need a personal transport for the near to mid term.)
Congress should intervene because the automobile industry and the energy industries own all the patents for alternative and efficient energy use.
Big corporations bought these technologies and filed them away out of sight.
American society is at the mercy of these CEOs who are motivated by short term profit for the quarter. Developing alternative and efficient energy use is a long term investment that could cause some shareholder's portfolio to dip...this quarter.
The smart car is unavailable for most Americans. I also hear the the smart car emissions standard is atrocious.
We can Smart Car all we want, Albuquerque's (and all of Red State America's) sprawl development patterns aren't going away overnight. We've been turning cheap, subsidized oil into cheap, subsidized land for far too long. The free market might have trumped in this case, but government's encouragement of exurban development was too strong.
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