The price-inelasticity of driving doesn't mean we can't do anything about it. Reducing driving requires different measures, like building a better public transportation infrastructure, improving land use planning and working on more livable cities (reducing traffic in cities is a big part of that, in turn). These can be paid for with a fuel tax. Or with any other tax.

Cars continue to be subsidised because the external costs of driving are not paid for. They are difficult to quantify. But they can be quite large, especially for the more polluting old diesels.

There was a recent report in Germany that rising driving costs and rising oil prices were 2 of the top 3 concerns Germans have for the next year. No politician is going to introduce further fuel taxes in this context.

If we're quite not at peak oil yet and oil prices go down again in the next few years, a drive for further fuel tax increases might become viable again.

Introducing fuel taxes on the EU level will remain impossible because all matters of environmental taxation have to be decided unanimously, also under Lisbon (though they inserted a passerelle clause, so there is a slight chance that this will change in the future).