When Winston Churchill became First Lord of the Admiralty 98 years ago he made a pivotal reform that assured the British navy's dominance of the waves during World War One.

The British fleet had been powered entirely by Welsh coal until 1911, a fuel that forced long and tiresome refuelling stops that forced warships into port and away from battle.

Churchill was looking for an answer.

He found one in oil. Fifty one years after a crazy Yankee known as Colonel Edwin Drake found black gold in Pennsylvania, Winston Churchill converted his fleet from coal to oil, a step that changed

war, peace and business for the rest of the 20th century.

Nearly a hundred years later the stuff is showing signs of running out.

Just how quickly it's running out depends on who you talk to.

A recent leak from inside the International Energy Agency predicted oil was running out at a quicker rate than had been admitted.

'We have (already) entered the 'peak oil' zone. I think that the situation is really bad,' an unidentified agency source told Britain's Guardian newspaper last month.

The agency's public numbers, released in its World Energy Outlook, offer a little more hope.

'Global energy use is set to fall in 2009 for the first time since 1981 on any significant scale as a result of the financial and economic crisis,' the outlook says.

But not for long.

'Demand is set to resume its long-term upward trend once the economic recovery gathers pace. By 2030, the Reference Scenario, which assumes no change in government policies, sees world primary energy demand a dramatic 40 per cent higher than in 2007.

'The continuation of current trends would have dire consequences for climate change. They would also exacerbate ambient air quality concerns, thus causing serious public health and environmental effects, particularly in developing countries.'

So when Nobuo Tanaka, the agency's executive director, talks about the need for wholesale transformation if the globe is to have any chance of avoiding catastrophic climate change, it's easy to understand why.

'Collective action to tackle climate change calls for the wholesale transformation of the global energy system.'

The problem was well defined by Daniel Plainview, the protagonist in the 2007 film There Will be Blood. He knew all that mattered was money when it came to oil.

'Ladies and gentlemen ... I've travelled over half our state to be here tonight. I couldn't get away sooner because my new well was coming in at Coyote Hills and I had to see about it. That well is now flowing at 2000 barrels and it's paying me an income of $5000 a week... So, ladies and gentlemen... if I say I'm an oil man you will agree.'

Money begets oil, oil begets money.

As oil becomes harder to get, it will become worth more.

Then the giant oil companies will spend more money to get at deeper, poorer-quality crude.

However, a 2007 bipartisan report handed to the Senate warned 'the difficulty, cost and environmental problems of exploiting (deeper oil reserves) means it is unlikely that they can be brought on stream in time or in enough quantity to make up for the predicted decline of conventional oil'.

While the coming of peak oil remains largely unaddressed in Australia, environmentalists are desperately attempting to drag it into the light.

Two governments have almost wholeheartedly ignored the February 2007 report in the Senate. Both John Howard and Kevin Rudd have done nothing in response to recommendations.

In the second last week of parliament, Greens senator Christine Milne reminded her colleagues of the report.

She called on the 'government to immediately develop a national plan to respond to the challenge of peak oil and Australia's dependence on imported foreign oil'.

The request was not only knocked back but rejected by 31 votes to six.

'The global financial crisis drove manufacturing from the developed world into the developing world, thereby replacing oil with coal and increasing greenhouse emissions,' Milne said.

'If we don't start planning now, peak oil will repeat that process many times over with disastrous outcomes. Australia needs to kick the oil addiction before peak oil kicks it for us by driving prices sky high.'

Because oil is such a good, easy money earner, there aren't many in the system too interested in wholesale transformation.

Because cars run very easily on oil, the auto companies aren't too interested in change.

But what will change all this is consumers.

The price of petrol is only going up so motorists are buying hybrid cars and ethanol-blended fuel.

Consumers are again taking the lead.

Despite the seeming solutions on the horizon, nothing comes close to offering the base load given us by oil.

Economist and crude expert Daniel Yergin's history of oil, The Prize, offers no solution to the coming peak.

'The fierce and sometimes violent quest for oil' and for the riches and powers it conveys - will surely continue so long as oil holds a central place.

'For ours is a century in which every facet of our civilization has been transformed by the modern and mesmerising alchemy of petroleum.

'Ours truly remains the age of oil.'

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