(I think this has been addressed below a bit by now as well.)

Face it, it's pretty intimidating to drive a tiny car, when you're being bullied by tanks driven by angry, impatient young guys.

I have no idea why they are so expensive in the US but I bought mine here two years ago at the equivalent of $13,000. For the two occupants they are considerably more spacious than a Golf. 0 - 60 mph in 15 seconds may not be anyone's idea of a sports car but is lively enough if you want it for transport and not to prove your sexual virility.

The upright  seating position is a fair bit higher that a Golf and I don't think many people feel intimidated, at least in UK traffic conditions. We do however have less urban assault vehicles on the road. However small they may look from the outside, from the inside they feel like you are driving a moderate size European saloon car because the space immediately around you is about the same. Only when you look over your shoulder and notice the car stops 60cm behind your head or lean forward and notice there is very little car in front of the bottom of the windscreen do you realise you are in a very small car.

The luggage space is small but it easily takes a week's food shopping or suitcases for a weekend trip for two. With only the driver in you can fold down the passenger seat and pile quite a lot in. I have brought home an insulated 300 litre hot water tank in mine.

The ability to park head on into the kerb means that you can nearly always find a parking place in the crowded cities laid out hundreds of years ago for horse traffic that are common in Europe.

In the UK the annual tax disc is free for the basic diesel version and £40 for the petrol version against £175 for a most SUV's. They are also exempt from the £5 a day congestion charge in the centre of London.

The diesel version can be converted to run on pure vegetable oil with a small diesel tank for starting. The petrol version can be converted to run on liquefied petroleum gas (largely butane and propane) that is available in the UK at about half the price of petrol or diesel.

Some of these reasons may not apply to the US at present but as peak oil strikes, giving up the idea that vehicles such as the Smart Car are a joke will be one of the least uncomfortable adjustments you may have to make.

Try driving one. I think you will be surprised.

As a quick note about fuel economy - the Smart will never be very fuel efficent in terms of aerodynamics, if only due to its height. As for its weight, that is in part because of its fairly decent crash safety, which is one of the things that Mercedes considers important in general in terms of its image.

multiplying around London like rabbits.

Built in Bangalore.  Range about 40 miles.

They don't pay congestion charge and they get 4 hours free parking in the Borough of Westminster (ie the West End of London-- think Manhattan Midtown).

Biggest problem is it would not be legal to string a recharging cord across the sidewalk to power them.  However that is what owners must be doing (because Londoners don't have garages).

I still think we need to focus primarily on the forms of transportation which are active -- walking and biking.

Total re-ordering of the way we live is possible, it also takes plenty of energy and imagination, which is a significant part of why we are so resisant to the change.

Our imaginations are pretty bound right now, and I see this as the biggest part of our problem.

The more we move toward truly Smart Cars and especially to walking and biking as normal daily human transportation, the more our imaginations can be freed up to make even more changes.

I know that when I committed to riding cargo trikes and pedicabs six years ago or so, that freed my imagination up to understand just how bound we are to  completely self-destructive ways of moving around and getting food and other goods.

We are bound to these ways so much that we cannot imagine how they are 1) optional -- not necessary; 2) in place to make loads of money for specific interests; 3) a sure way to destroy our health and the viability of the planet we live on.

So the smart car is undoubtedly a good thing, as are a number of other smartly designed vehicles.  If we move enough in the direction we need to go, that movement itself can open up newer insights amoung more people, and so we can move further in the directions we need to go.

The question seems to be whether or not we will make positive changes or get further sucked into resource war and so ignore the real crisis which needs concerted effort -- our overstressed and rapidly changing habitat.

Today I volunteered with my daughter to help clean up after the Twin Cities Marathon, and I was appalled at the amount of wasted energy and materials were involved in the event:  rows of cars mand SUVs lined up on the freeways and streets surrounding the endpoint of the event -- not to mention in many other places.  There were tons of garbage in the form of discarded drink bottles and cans and food wrappers and such.  There were vendors hawking all kinds of totally absurd trinkets and materials to be ingested in place of food.  There were bands blaring music through huge amplifiers, big-screen displays of pooped-out runners coming into the finish line, and thousands upon thousands of people there to "take it all in."

Fun in a way, but also rather bizarre when one copnsiders what kind of energy and materials go into such events without a thought -- and that is crucial to keep people consuming: Without....A....Thought.

This is normal and to be expected as an entitlement.  Anyone who suggests otherwise is insane or evil or both,

Our imaginations are bound and so we are bound to the Establishment which exists by "despoiling the earth and filling people with goodies merely to make money." (Sorry, there's that Douglas quote again.)

Let's keep creating creative disequilibrium, folks!  In the way we walk as well as in the way we talk!

http://www.malcolmgladwell.com/2004/2004_01_12_a_suv.html

Are the best performers the biggest and heaviest vehicles on the road? Not at all.   Among the safest cars are the midsize imports, like the Toyota Camry and the Honda Accord.   Or consider the extraordinary performance of some subcompacts, like the Volkswagen Jetta.   Drivers of the tiny Jetta die at a rate of just forty-seven per million, which is in the same range as drivers of the five-thousand-pound Chevrolet Suburban and almost half that of popular S.U.V. models like the Ford Explorer or the GMC Jimmy.   In a head-on crash, an Explorer or a Suburban would crush a Jetta or a Camry.   But, clearly, the drivers of Camrys and Jettas are finding a way to avoid head-on crashes with Explorers and Suburbans.   The benefits of being nimble--of being in an automobile that's capable of staying out of trouble--are in many cases greater than the benefits of being big.  

I'd be sorely tempted to get one a Smart Car if it were a hybrid or pure electric.

In an industry with long lead times, high fixed costs, and relatively price inelastic consumption, price swings are dramatic.  

The former is true on the supply side because it takes a big, sustained increase in the price of oil before there is more exploration activity, tar sands development, coal to oil etc.

On the demand side, 2/3rd US demand is transport which is highly price inelastic.  People still have to go to work, people still have to fly, goods still have to be delivered.  The whole US economy is built around space.  The greatest productivity revolution in the last 15 years has been WalMart and the Big Box ilk, and that depends on space.

The US is not configured geographically for public transport.  Nor does it have the rail infrastructure to massively increase freight transport.  (just a comparative number: rail freight is 10% of all UK freight movements, just 10% in the country which invented the railway).

So again the short run price elasticity of demand is very low (-0.1 estimated).  Medium term it is much higher (-0.5 est.) however the income effect also cuts in: as incomes are higher, people have more cars and drive them more, live further away from work, etc.

So the outlook is very much for volatile prices-- it takes big moves in the price, to cause changes in demand and supply.

But that's just not how things work.  That's why people are driving around in $30K-$50K SUVs and sports cars.  People operate in ways that are frankly pretty dumb for materialistic and status reasons.  The guys who want to show off by buying an expensive car may buy a hybrid, but they're never going to be willing to put aside their pride and buy a cheap commuter car.  

Personally, the thought of even spending $20K on a car turns my stomach.  It's not so much a question of whether I could afford it, but rather it being something I would never do.  You're talking to the right person about price, as I purchased by Geo Metro for $2000, and even if I have to have the engine rebuilt eventually I'll still be money ahead over a brand new car.  

I don't really understand why you are mentioning your belief that Peak Oil will be a slow and measured decline, as I don't see how that is relevant to whether a small car or a hybrid makes more sense to own.  Both save gas, just in different ways.  I also think this is a bit of a false choice as there is nothing stopping car manufacturers from making small cars that are also hybrids, and surely over time there will be cheaper hybrids than the current Prius (there already are hybrids which cost less than the Prius).