People will just buy diesel cars then. That happened in Europe, people bought diesel cars because it was cheaper, because of taxes. Not great for the environment.

Make $200 per gallon of diesel? This has the potential to collapse entire economies. Shipping will be more expensive, which will in turn make everything more expensive. Food will be more expensive too, tractors use diesel. Few things don't depend on diesel at some point or another.

Tax only the fuel used by cars? Many people still need their car to work, not every job can be remote, at $200 a gallon, you may as well quit, unless you get paid the difference, which again will increase the price of things.

Maybe a few decades from now, if could be $200 a gallon without breaking everything, but certainly not now.

Sometimes countries can formulate energy policies that accomplish two goals at once.

They can keep taxes on refined petroleum products low in order to not destroy the present economy, while simultaneously fostering a budding renewable energy industry. USA is the second largest producer of renewable energy in the world behind only China. California + Texas by themselves rank 6th in the world.