In the short term, I don't see a drop in subsidies significantly affecting consumption. In the longer term, it will. In Europe, we have had high fuel taxes for twenty years, and as a result we drive smaller, more efficient cars than the US. However, the trend for the last ten years has been for larger, more powerful, heavier cars in general, and a fashion for SUVs in particular, because disposable income has been rising way ahead of the cost of fuel. We do not drive any LESS because of the fuel price. We are now just beginning to see a reduction in fuel consumption, due to changed driving behaviour. I suspect this effect is limited and short term, it is due to people driving more slowly and smoothly, etc., and cutting out a few unnecessary journeys, because of the price shock. However, our attention span is short, and behaviour will return to normal soon, if the shocks do not continue.

Our shocks are less steep than yours, precisely because of our high taxes. Indeed, our government has been reducing the taxes in real terms these last two years.

I think that a sudden removal of very high subsidies might cause a short term economic dislocation, as it would be difficult for people to adapt at short notice. However, that would simply make efficient transition to a reduced oil society even harder to implement.

Of course, we know price shocks will continue, and soon shortages. Those WILL reduce consumption.

Other critical factors in European demand are the higher population density, tighter city streets, less of a "cowboy psyche" whereby big trucks are socially preferred, greater availability of mass transit for short AND long-distance trips, more of a green consciousness, etc. I'm not sure how much of Europe's different driving habits are due to the former, and how much is due to higher prices/taxes, but my opinion is that the former factors are more significant than price. There have been periods in the past few decades when gasoline/diesel price just wasn't a very significant factor, and the European driving habits still differed in the same ways from America--I think this suggests that the key reason is cultural/geographic, and not price...

True, but I suspect that as fuel prices increase, more Americans will begin to demand European-style public transport, and then the political direction will hopefully be towards building more efficient transport.

At least I hope that will be the case. I am worried that the government will think that it is easier just to subsidise fuel, rather than make lasting transport improvements. The government will provide what the people want, but most people over here in Europe seem to be demanding subsidies rather than more efficient trains. (English trucker strike, Portuguese fuel riots)