Here's Mankiw's take:
In a myriad posts I mention that much like the own-price elasticity of gasoline demand is IMOP very small. Mankiw has pointed out many times in his series on Cross-Price Elasticity of Demand that high gas prices are causing people to use public transportation, flock to buy smaller cars, and in many ways the evidence is undeniable that this is occurring.
But I've pointed out in the past that the "big and direct stuff" (not just people buying smaller cars) - ie the more direct effects of a potential change in gasoline consumption: like changes in commute patterns, or major aggregate change in vacation trips etc, or reduction in travel (VMT) has not been strong at all - at least not from info I see (though admittedly I'm no expert). All this leads to the fact that some people may be buying smaller cars, but the reduction in gas consumption and the uses of said gasoline have not fallen much. To my point:
"Even in these tough times, 59% of Americans plan to take a trip of 100 or more miles in the next six months - only slightly below the 61% average of recent years."
And as I mentioned in my post entitled "Pigou is Gassy," one wonders how much of the cross-price elasticity effect is really sustainable as a matter of the actual price effect vs. how much is due to the "psychology" of the day, which may wear off in weeks or months to come.