Hybrids and the Rebound Effect

Futurepundit discusses the future of the market for hybrid cars and also considers how the rebound effect will decrease the impact of improved efficiency. Glenn Reynolds has also weighed in on the issue:

I'm deeply skeptical of the claim that most increases in fuel economy are simply "consumed" as people drive more miles. Most people I know drive as much as they want to already, and I don't think a decline in fuel prices would make much of a difference. I'm sure it would make some difference overall, but I doubt it's as substantial as claimed.

I agree that not ALL improvements are consumed as the cost of using fuel decreases with increased efficiency, but I think Glenn is missing the fact that "most people he knows" may not be the marginal case. There are a lot of people that may actually be limited in their driving by the costs (or the leisure time they have to drive, which should increase with wealth increases of improved efficiency in the economy) and will increase their mileage as the costs of driving go down.