What would you do with $35 billion?

$35 billion (that's billion with a B) in 90 days....
Roughly extended to the entire year that is somewhere north of $100 Billion!
There's lots of stories on the same topic right now, but here's my take on it.

People get outraged when they see repeated huge profits at their (perceived) expense. Welcome to capitalism. The oil companies have found a way to make huge amounts of money by continuing to do what they do - take advantage of the fact that the government and the people in this country haven't figured out yet that this isn't a short-term spike. There's no incentive for them to dramatically increase production and supply to reduce gas prices or crude prices (where they have control over it) because that means they won't make as much money, and they have little control over demand in India and China, or the unrest that is present in most of the oil-producing areas of the world. So we continue to ride on the razor edge between expertly played capitalist supply and demand and price-fixing. Occasionally we hear about an inquiry into alleged price-fixing, or some half-baked idea about giving everyone a rebate that equals about 1-2 tanks of gasoline, but no one's really doing anything about it except complaining, yet.

The way I see it, we're missing a significant opportunity to dramatically increase our funding of alternative energy and improving our infrastructure for existing alternative fuels without impacting the US deficit.
Problem #1: There's not nearly enough money being invested in alternative energy to produce results as quickly as they are needed.
Problem #2: Nearly every biofuel that is available now is suffering from an infrastructure problem. Detroit's building E85 vehicles like crazy, but there's few stations outside of the Midwest where it's readily available, so most of them will use straight petrol. Biodiesel, same basic problem. Even if the distribution channels were resolved, there's a production scale problem.. none can be made in sufficient quantity to fuel all of the vehicles that can support it with little or no modification.
Problem #3: Oil companies don't want us to find a cheap alternative to oil because it's their bread and butter.
Problem #4: Oil companies don't like independent station owners selling biofuels at their branded stations, because they usually are from an independent source. The main objection is that they can't vouch for the quality of the fuel because they didn't produce it, and it stands to dilute their brand quality if it's crap. This is a valid argument, but one that is fairly easily solved.
There's also question of liability if someone puts the wrong type of fuel into their car and ends up trashing it, but that's a junk argument.. The oil company isn't liable today if some moron puts diesel into their unleaded-fuel-only machine, why would these be any different?

Solution: Force the oil companies to provide alternatives to standard gasoline. Maybe they have to subsidize them with their profits to start with, but the idea is to force them to refocus on some less profitable areas now while they have the cash to cover it, so that as we shift away from oil, they don't just fade into obscurity.
BP and Chevron have both had ad campaigns in the past that seem to imply that they're funding alternative energy research to some extent, but here's what I would do:
All oil companies would be required to provide at least one pump every 25 square miles (where gas stations currently exist) for E85 and Biodiesel. Doesn't matter which company, in areas where there's multiple stations, they could work out an agreement to balance the costs. In company-owned stations, this is straightforward, but since many stations are independently owned, the company providing the gasoline and diesel would be required to fully fund the addition of all equipment needed to support this set of pumps, including permits, tanks, inspections, etc. This would also mean that they'd have to provide the fuel, or buy it from a third party and certify its quality.
In order to ensure that it would sell, they would be required to absorb some percentage of the costs to make it competitive with the existing petro-products and give people an incentive to use them. They would not be permitted to pass this cost on to the independent station operators. This is especially important for something like E85 that actually reduces fuel economy while decreasing the amount of gasoline burned. This means that it would be in the oil companies' best interests to decrease the costs of production. Maybe that pushes them into lobbying to eliminate the tariffs on importing ethanol, or funding research into a hybrid sugar cane that can grow in the Midwest, or finding a way to actually make ethanol from switchgrass, cornstalks, and other biomass economically, or all of the above. I'd bet that the market for used fryer oil and other vegetable oils jumps too...
While I'm not convinced Ethanol will ever become a viable alternative, this at least gives it a fighting chance to let market forces decide instead of propping it up with subsidies and CAFE loopholes. On the diesel side, once the supply problem is solved, it's even feasible to switch to a biodiesel blend and phase out straight petrodiesel altogether, since most diesel engines can burn biodiesel with almost no modifications. Different blends would be available based on time of year and climate, since biodiesel is more temperature sensitive than petrodiesel. Couple that with some lobbying to ensure that all new diesel engines can run on up to 100% biodiesel, and existing ones have retrofit kits available from the maufacturer, as well as ensuring that consumers and large commercial interests are compensated for any modifications to their vehicles to support biodiesel, and you can make that switch for an immediate reduction in petrodiesel use.

On top of that, each company would be required to invest some percentage (maybe 10 to 25%) of their annual profits on funding alternative energy research. Think of what an annual injection of $10-25B on top of the existing government and private-sector funding would do to jumpstart alternative energy research and development! If they're smart, they'll keep that in-house, like BP Solar, so that they can eventually benefit economically from that research, but even if they don't, this would be a big deal.
Yes, I realize that what I'm suggesting is not capitalist supply and demand. We all know that straight capitalism, unchecked, crushes the competition, rapes the environment, and takes all of the little guy's money in its pursuit of a dollar. This sort of tweaking to use the engine driving capitalism to improve our energy prospects just makes good sense - much more so, I think than trying to do it just through government subsidy.