Bikes are often very practical in cities but not when it's raining and not when the gradients are significant. Despite the rain and minor inclines I have a Brompton http://www.brompton.co.uk/ here in London and adore it.
Rain is not really a factor, Copenhagen is rainy all the fucking time. Steep roads definitely is. But it isn't all. In Buenos Aires, which is relatively flat, I saw maybe 3-4 bikes in as many weeks. The major factor, IMO, is presence of bicycle paths and the fact that bicycles are actually a part of the design of the 'traffic flow', which means that bikers are first class citizen in Danish cities, while I would never even fuckin' dare to ride a bike in Buenos Aires - it's simply not safe.
Ok, there is a 180% tax on cars. 15k Honda fit = 42,000$ (ouch), but that just makes the used car market more valuable. I had a working old Volvo that was worth ~1k and needed 1-2k of work done per year to keep on the road. So buying one of those would have cost 2.8k with 1.8k of that in tax so it's not exactly making car's illegal and keeping it on the road cost is only 200$ / month. You just need to find the loophole.
Gasoline in Denmark costs around $9 per U.S. gallon. http://www.swivel.com/data_columns/show/8682935
In the Netherlands, gasoline is around $10 per U.S. gallon. http://www.swivel.com/data_columns/spreadsheet/8682923
Oh and, you should have seen my dutchie friends biking on ice this winter, absolutely impressive.
A nice follow-up to this article would be to photograph /film Dutch cyclists in heavy rain.
When I was in Seattle, though, plenty of people biked to work. Yeah, we didn't have bikes all over the streets, but it was a refreshingly good start.