I can only conclude that after the bitterness of the primary campaign, Paul Krugman has decided to bury the hatchet and work himself back into my good graces. His column today, on oil prices, is very good. But click over to his blog, and you’d think you were reading the Bellows. Well done, sir.

In particular, I like that he’s making an effort to puncture the canard that America’s population density is far too low to support public transit. One, much of America is pretty densely settled. Two, settlement and density patterns respond to the policy environment and built infrastructure, and changes take time. And Krugman goes on to make the elasticity and available substitute arguments at which I’ve been hammering away:

Canadian gasoline is somewhat more expensive than in the US — but not European-level expensive. Otherwise, Canada looks a lot like America, and Toronto almost speaks the same language, eh? Yet a high-quality transit system and different land-use planning make a big difference.

What’s more, as far as I can make out from the data, a lot more Canadians than Americans (as a percentage of the population) have switched to public transit over the past year; because the system is there, they have more flexibility.

All in all, this comparison is a reason not to believe apocalyptic warnings about the long-run effects of energy scarcity: there’s a lot of substitution possible. America’s main problem is that we have a capital stock — cars, public infrastructure, and housing — designed for dirt-cheap oil. And the transition may be nasty.

The lessons are these–that when more options are available, it’s easier to substitute away from driving and expensive gasoline, and that if one wishes to help Americans avoid the pain of expensive gas, the solution is not to offer tax holidays or new drilling, but to build better and allow substitutes like transit and walkable neighborhoods to grow.