If the prices stay "high" you will begin to see people make rational decisions that affect demand a lot- car pooling or parking Yukon's and driving Geo's instead, for example. When only the very well to do and the people who actually need (rather than want)one of full-size trucks, big vans, or SUV's,are driving one, demand will go down.
When you consider the cost of living vs discretionary income (I haven't seen any recent figures) the Huntsville, AL area is one of the richest areas in the nation. The last time I was out in rush hour I saw more F-150's and Grand Cherokee's than Honda Accords coming in from 30+ miles away. It may not be as great an effect as the supply side, but there will be an effect. Every gallon voluntarily saved will have some effect. I fear price controls and gas-guzzler taxes more than I fear anything else.
That does explain why we'll be seeing these new small cars coming out in 2006:
Honda Fit (known as the Jazz in most of the World):
Toyota Yaris:
Both cars offer impressive amounts of interior space for such a small vehicle, and I expect them to be very popular as commuter cars and as entry-level cars.
The rational is simple. I live in Idaho and hunt and haul things, like trailers. Also haul scouts and church groups into the mountains...and not to your drive there on a paved road places. Places that require the low end of the $X$ that are forty and fifyty miles in on very rough roads.
I also use the vehicle to get back and forth to work, so youy may see me (or people like me) driving down the highway to wrok, alone in our vehicles. So, do not judge too quickly..
I do this because the vehicle is safer, I need the power and the space, and because I can afford to do so...even at $3+ a gallon.