Strachan, who will address the annual SEAAOC Conference in Darwin on July 16-18, said that as the oil price escalates, the global free market in oil trade would dissipate as the countries with oil become more selective in how they sell.

"Oil could become unavailable at any price to some countries, as non-market forces, including political favouritism, emerge," he said.

"Australia only supplies around 60 percent of what we use, the rest is imported.

"Whatever oil Australia possesses may need to be reserved for public transport, strategic and emergency use."

According to Strachan, the country's large gas resources in the Browse Basin and the coal seam potential in Queensland could provide some breathing space if petrol and diesel-powered motor vehicles are converted - or replaced - on a large scale to natural gas.

However, Strachan said the real returns from CSM are at least a decade away and the gas prices would move towards energy parity with oil.

"Also, gas is a finite resource and can only be considered a stop gap before we find a sustainable alternative fuel or control our population to meet available resources," he added.

The analyst also said there has been a lack of significant oil discovery in the country over the past 10 years and as the oil price rises and supply diminishes, state governments will need to have plans in place to expand the public transport networks.

Strachan said while several small oil fields in the Cooper Basin have rapidly been developed, the growth in production of liquid hydrocarbons has come largely from condensate associated with additional gas production for LNG projects and oilfield development focused on discoveries made in the 1990s.