Billmon asks what a rational energy and transportation policy would look like.

About 90% of oil goes to transportation; about 40% of primary energy in the U.S. So energy and transportation are largely one and the same. For both, start with land use. It's the huge, easy-to-pick fruit that is just hanging there, waiting for hands to pluck it.

That is: We need dense, walkable neighborhoods in every city and town. New development should be in the form of walkable neighborhoods clustered around existing intersections and roads. We should cease all road expansion and put all dediated transportation funds into reviving or creating a rail and bus infrastructure. But mostly, our transportation problems are not the result of too little transportation, but too much. We need to create communities where people can live without cars, or with fewer cars, and where they can choose to drive but can also choose not to drive.

The example of the Rita and Katrina "evacuations" -- compared to the smooth, successful, and incredibly speedy NYC evacuation by transit, foot, and private vessel on 9/11/01 -- should show that a new development paradigm is not just a matter of efficiency, but also safety.

So how does this play out in policy? Transportation dollars should be handed over to local jurisdictions, who should be allowed to use them to subsidize transit operations as they see fit. Current rules governing "level of service" (aka vehicle delay) and "planning" (aka project current trends in a straight line into the future) should be abandoned. Bicycle and pedestrian safety should be the paramount concern on every path, road, and highway, far above vehicle driver safety. These are all no-cost policy changes.

Meanwhile, it's time to start taxing imports to monetize the destruction they wreak on local manufacturing and on generations of folk wisdom about such necessities as how to make shoes. This is the kind of stuff we need if we are to survive the end of oil -- we need to subsidize our cobblers or tax imports to the point that going to a local cobbler makes sense.

And no, this is not bad for the exporting countries. The last thing they need is to go into debt turning their countries into sweatshops. Vietnam will gradually become a ghost town as oil gets pricey enough to make domestic production more profitable than shipping goods 10,000 miles. Better for them to develop an economy of domestic production for domestic consumption, the post-WW II India model. It's that or a catastrophic future collapse.