So if I were going to write a book describing, chapter by chapter, how I think the world would look at various higher costs for fuel, what would I do?
First, I would not focus exclusively on the cost of gasoline/transportation fuels. Heating costs in this country are an important part of the household budget for some regions. If gas is costing $8/gallon, heating oil is Not Cheap Either. You could readily predict things like: all those home appraisers that had started switching over to doing energy audits at $3 and $4/gallon gasoline prices will be giving seminars in How to Make Big Bucks Doing Energy Audits, and there will be want ads for people to do weatherization and people who do blow-in insulation will be growing their business by double digit percents every year and blah blah blah. Around $10-12/gallon for gas and whatever for heating oil, the people selling the works-in-cold-weather heat exchangers will be overwhelmed with business, and around the same spot, you'll start seeing "geothermal" installations become widespread. If you're thinking hot springs, you are thinking the wrong kind of "geothermal" -- these are exploiting the fact that down deep, everything is temperature stable (not _that_ deep), so you can dig a well and run an exchanger on that to heat in the winter and cool in the summer. [ETA: this is not as speculative as it sounds. This was tempting to a lot of people during the recent spike. Sustained prices at last year's level would push a small fraction over the edge. Sustained above $10 would make it a no brainer.]
Plenty of people in the Northeast won't be able to afford this kind of thing. But plenty of people in the Northeast can double up. And they started to, but that'll happen a lot more. And not just in the Northeast. In general, renters will move closer to their jobs and/or public transit and/or otherwise reduce miles driven in a car. As people are able to sell houses, they'll preferentially move to places with a good base of transit choices, and sacrifice space and other conveniences for it. Somewhere in there, lawn size will shrink and we'll see more landscaping that requires less maintenance and the Return of the Muscle Powered Push Mower.
Not all kids are driving at 16; there will be fewer and fewer of them able to afford to drive, and more and more won't bother to get a license. After the number of kids in colleges coming in with cars drops somewhat, colleges will start banning incoming students from bringing cars to campus, so they can build more dorms on the parking lots. The kids that didn't learn to drive at 16, won't drive in college. Then they'll get a job in a city and they won't drive there. We may get a significant minority of an entire generation that never drives at all. Getting rid of 2nd cars (nth cars) in a family reduces tax/licensing/insurance costs, freeing up that money to spend on fuel for the other car. The kids who shared dorm rooms in college will continue to double up in apartments and rental houses when they graduate. They'll make sure at least one of their roomies has a car, and chip in for the costs associated with it as long as they get assistance with big store runs. R. thinks we'll see the return of smaller grocery stores, as more and more people walk/push a cart/bicycle to the store.
There will be some holdouts. People who own houses a ways out that they can't sell but can afford to live in will be reluctant to move, unless they prefer living in the city. Some number of those people really loathe cities -- they'll stay put as long as they can. Over time, people who don't need to commute (retirees, other people on fixed income, etc.) may migrate out to the further suburbs as long as there are adequate stores etc. there.
If people quit vacationing in Aruba, or Europe or whatever, that doesn't mean people quit traveling. There was train service from the East Coast out to Yellowstone almost as soon as there were trains. It wasn't just the uber-rich going out there with their Brownies to snap a photo by the geysers (yeah, the trashy folk washed their laundry in the paint pots. yuck). It's interesting to speculate about what the vacations of the future look like at various price points for transportation fuel, but it seems reasonable to predict that motorcoaches, trains, and full cars/vans will continue to move people about to places they'd like to visit, whether that's grandma or aunt so-and-so who lives in the exurbs (and now has time for a huge organic garden that she or someone else trucks the excess produce into the farmer's market once a week?), or a tour of the Western National Parks as a once in a lifetime event.
If young people never own cars, and have their children in the city, but grandma lives in the exurbs (ex-exurbs?), how do gen 2 and 3 get out of town? Several possibilities spring to mind. They could take public transit as far as they can and then get picked up. So our hypothetical Mom and Pop could take Dick and Jane from their home in Somerville out to, say, Ayer on the commuter rail, where Grandma could drive over from Hollis to come pick them up for a week in the country. Never mind that Jane grew up in Hollis, and Grandma used to commute to work for State Street for over a decade, while Grandpa worked at Digital in Maynard, then a series of related companies, until he was telecommuting while working for HP.
Once upon a time, it seemed like everyone was buying Chevettes because they had high gas mileage. R. pointed out that the Fit/Yaris/Versa/etc. are probably the new Chevette. I gotta wonder if the Tata Nano is going to come over here some day. Sure, it can't meet current crash standards. But if high gas prices remove every SUV and many trucks from the road, and result in everyone driving a whole lot slower, there might be a place for a Tata Nano, even in the Land of the Interstate. After all, it's not clear to me how much more dangerous it is to be in a Nano than it is to be on a bicycle, assuming you don't go more than about 15 mph on either one, and you are not hit by someone going much faster in a 2 ton vehicle. The Nano is more likely to kill a pedestrian, of course.
It might get profoundly expensive to maintain our street infrastructure, and that's been used as an argument against funding bicycle infrastructure. But might there come a day, at $20/gallon, when there just aren't that many cars on the road, and the tractor trailers have really taken it on the chin and the railroads are booming, that it makes sense to take a bunch of the roads and just say, no more cars here (unless you live here, or are delivering to here, and then only during these hours, and btw, 15 kph max -- not 15 mph, 15 kph). Those roads will need very little maintenance. Peds can tolerate crappy surfaces, and human powered vehicles don't require much more if they are moving at a slow pace. And without the high flow (and heavy trucks), other than damage caused by temperature variation + water (freezing and water really does a number out here), those roads won't wear hardly at all. There are 2 lane highways in parts of Eastern Washington that were built over 50 years ago and haven't been touched since that I was pissed as hell at how nice they were -- until I realized they were that old and had received no maintenance at all since then.
See? And I didn't even mention things like: bike racks, everywhere! Bicyclist insurance. Auto insurance attached to the driver, rather than the vehicle. As cities get very packed in, the infill on car sizes to exploit smaller and smaller parking spaces. The rise of the weatherized golf cart. Harsh penalties for speeding enforced by traffic cameras as a way to make the roads safer for the golf carts, bicyclists, etc. The proliferation of multi-lane roads where each lane has a separate speed bracket -- the 30 mph lane, the 20 mph lane, the 10 mph lane, and the peds lane -- some of which are grade separated (which sidewalks are now, but you can do the same thing to separate out bicycles).
It could be a cool book, but it's not clear it offers up any investment plays. And I suspect, actually that that's part of what went wrong with $20 per gallon. You take a Forbes writer, and he really wants to identify specific winners and losers in existing companies, so you can make bets on the market. A lot of what I'm suggesting is very difficult to turn into a bet.