Good question ericy - here's some responses to consider.

"Would the United States work to reduce demand if China did nothing, for example? Or what if all nations agreed to reduce demand, but some only made half-hearted attempts?"

I think this could be done hand in hand with multilateral trade & security agreements. If a country did not participate or made meaningless gestures, the rest of the group would have to threaten to do something meaningful like increase trade tariffs or kick them out of whatever regional defense network they belong to. But the idea is that solidarity is paramount. If that's not possible, then it's back to laissez-faire market demand destruction - messy, inequitable, social upheaval - in other words, the perfect environment for dictators and demagogues. We need to have proactive leadership now to head off the more ominous scenarios later.

To fight the power of a cartel, you have to think like a union. We hang together or hang separately. Plus, by reducing your net consumption of oil you are improving your balance of trade, holding down inflation, which at these prices is a real risk.

Finally, if we did all of these things and were able to successfully bring the price down, would there not be a strong urge for people to try to backslide into old behaviors?

The idea is to start to put into place the societal behaviors that will reduce consumption in a more orderly and equitable way that maintain the social fabric. Some of these short term measures would be done on an "emergency basis" at first but they might gain popularity as they make people less dependent on oil and can be supplemented by more long term investments in efficiency in buildings and increases in gas mileage on newer cars.

China is busy building new airports for their growing middle class and the increasing number of tourists.

http://www.chinahighlights.com/china-flights/china-airport/

Well put Glenn.

Working in favour of cooperation is the fact that fighting climate change and addressing oil shortages actually go together quite nicely. Net importers have many incentives to reduce their imports, including the huge one of energy security. The trick is to make oil expensive locally but at the same time protect the poor and keep the money from flowing, in the form of scarcity rent, to the producing countries.

Peter Barnes has developed a great approach called Sky Trust; an Irish think tank has a similar approach called Cap and Share. These are what the world needs.

One of their strengths is that it isn't all or nothing... individual nations or regions can start, and others can join them or not down the road. The Irish government, I understand, is seriously considering this. It is the ultimate buyers' strike. Although their focus is on climate, they have written about peak oil and how a cap and share approach would keep energy scarcity from, in their words, crucifying the poor.

http://www.capandshare.org/

Yes - that's about what I had in mind. thanks

I've heard this kind of system justified on Georgist grounds. http://en.wikipedia.org/wiki/Georgism

The time we need to carry out these things is actually not that much longer than a modern war so I would think that straight out rationing should be the starting point. Introducing some trading makes some sense if it is done at the level of the individual. Tradable Energy Quotas (TEQs) have been discussed here: http://www.theoildrum.com/story/2006/8/4/163554/8625
and the US DOE rationing plan includes a ration white market. Cap-and-Trade though tends to benefit legacy polluters and I think it needs to be avoided.

Chris