OTOH, the "death of the suburbs" would create pressure for housing "close to work," and thus house prices would increase to the point where incremental gas costs are preferable to living closer in.
The net result, probably, is not the death of the suburbs, but rather an economic downturn stemming from people being forced to cut back on non-essentials due to lack of ready cash.
Exactly. In my area, houses in 'the city' are twice as expensive as comperable or larger places 30 min away. So, if more people move to the nice parts of the city to stay close to work, that's only going to make the housing prices there go up, and make it more economical to live outside the city.