You're completely right, but remember improvements like that become exponentially more difficult.
Also, the new TDI is a vastly better vehicle than the 79 Rabbit.
In the late '70s, American car company management were afraid to put 4-speeds into higher production, because they were convinced that the average person would not or could not drive something so complicated (really). Now we are talking about 7 speeds -- automatics, I'm sure, but this kind of complexity used to be dismissed at the outset.
And that was a rational thing. The reliability was not good enough then. Now it is.
The high price of oil will do what it is supposed to: make alternatives realistic. It will now remain for Western consumers to break through the psychological barriers, and opt for the technical solutions. There will certainly be mis-starts and technologies that are not right, but once the barrier is breached, a real solution will emerge.
Oil may go down in price again, but the point about high mileage vehicles is that they are a hedge against price volatility.
check out what people are getting in mpg improvements at protiumfuelsystems.com...50-100% are common using a simple hydrogen gas generator and pulling the 02 sensor out of the exhaust stream so it won’t increase the fuel ratio due to more oxygen from the hydrogen. The car makers have to know about this technology which many people are using now but they are aligned with the oil companies and aggree with one and other to artificially keep the mpg’s down. Check it out, talk to some customers who are using them...ebay has many good hydrogen generator sellers that provide great increases in mpg’s. But the 02 sensor has to be dealt with because it is actually designed to screw up better combustion and high mpg’s by reading it as a lean burn and dumping extra fuel into the engine. The cost of the average hydrogen supplement system is aroung $250...the protium one being about $690.