The reality is that we NEED to be paying $7/gallon. No one wants to hear that and no politician is going to take that position, but our oil usage won't go down with regulations and subsidized gasoline. With $3.50 gas, gas taxes currently fall short of the income necessary to maintain our road system. If we legislate smaller cars/hybrids/EVs (the only way to get significantly higher mileage) people will just drive more. And the politicians (given past history) will probably just build in the loopholes for their favored constituents.

Regulation is probably the only practical way to implement safety and emission improvements. But the goal is to use less gas, not make it cheaper to drive. Significantly higher gas prices is probably the only thing that will work.