A new report by the CSIRO has warned the cost of petrol could rise to as high as $8 a litre in the next 10 years.
The Fuel for Thought study by the Future Fuels Forum says that would be the worst-case scenario if oil production does not keep up with increasing demand.
Petroleum engineer Phil Hart from the Australian Association for the Study of Peak Oil and Gas believes it will not be long before the demand for oil will outstrip supply.
"Oil production has been essentially flat since 2005, and we have only another couple of years at this same sort of level of production before we start seeing oil production going into decline," he said.
Doctor John Wright from the CSIRO has told ABC's AM program the study also suggests that such an oil shock would have a greater impact than a carbon emissions trading scheme.
"If we, for example, end up, as a result of an emissions trading scheme, [with the] price of carbon dioxide credit at something like $40 per tonne, which is probably reasonably likely, that would increase the price per litre of fuel by about 10 cents," he said.
Monica Richter from the Australian Conservation Foundation has told AM the report should serve as a wake up call to the Federal Government.
"So we need to do two things," she said.
"We need to urgently get [the] Government to help manufacturers re-tool, for building cleaner cars here in Australia.
"And of course the other thing we need to do to help vulnerable families and low income families is for the Government to invest in public transport."