Squeezed

Smallest apartment in New York

Advanced materials and design in Tokyo

A really narrow lot

Despite ol' Newt's (not geologically or mathematically possible) claim that if the Sierra Club would just get out of the way the U.S. could produce 4 million more barrels of oil daily, some rational people seem be on to the constraints our energy needs and wants face:  only 12% of future homebuyers now want driving-required houses in the suburban fringe, preferring nearness to town centers and walkability.  But buildings use half our energy, and people in areas already provided with public transit, most stressed by population density and cost of living, are developing some surprising ways to survive in changing conditions.
A married couple and their two cats live in New York's smallest apartment, calling it a "microstudio."  Located in Morningside Heights, it cost them $150,000 and they have adapted by not cooking there and storing their work clothes in office closets.  No car, of course, but speaking of cars, their home is the size of a parking space (175 square feet).
In Japan, microhouses (kyosho jutaku) are being designed and built utilizing narrow spaces, by going long and up to three stories high and experimenting with advanced materials such as superthin steel membrane and fiber-reinforced plastic.  Inner walls, doors and closets are eliminated, among other things we would be more hard pressed to think about living without.  Toyko's building codes must be quite receptive to innovation and the inspectors uncharacteristically open-minded.
For non-urban areas, some like Californian Jay Shafer of Tumbleweed Tiny Houses, who lives in a 70 square foot cabin himself, design and build single homes well under 300 square feet.  He got some publicity on HGTV's Design Star; I hope that helps him with his dream of a community of such "cottage houses" connected by paths with a green commons in the middle.  In upstate New York (Utica, I think), a similar co-housing community has existed for quite a while -- space is conserved by communalizing what can be (i.e., laundry, tools and maintenance equipment).  In both cases, Jay's dream and the existing community, cars are banished to parking on the edge.  Shared and public transit may reduce their numbers.
There are technologies, some used in the marine and RV industries, which would help make such radical living space reduction possible and economical, such as 12 volt lighting and fan systems.
Hot air from our lobbyist-purchased leaders and fear peddled by the apocalyptic religious evangelist-entrepreneurs will not solve any part of the energy problem facing us.  Hope for all of us lies in the creativity and rationality of a few of us.