In inflation-adjusted terms, the cost of gasoline is no worse than it was in 1980. People complain about the increased cost lately, but it's not a serious hardship for most. What will change people's habits is a shortage of gasoline like in 1973, where no amount of money could buy the gas you needed. Remember the rush to efficient cars then? That would be market forces at work, but that's not the case here. Let gas reach $5-6 a gallon, then the market may force a change.

Problem is, individuals don't directly pay the external costs, or "externalities" of oil consumption, so they have little incentive to change their habits as long as the can personally afford gas. Governments pay these costs (overseas bases, military operations, vulnerability to oil-rich but unsavory countries, etc.). This buffer between the true cost and consumer cost is a market failure, and the government has a duty to step in. A higher CAFE standard is a completely reasonable move to reduce these externalities.

Mike