Lake Macquarie City councillor Phillipa Parsons wants the council to develop a peak oil policy and action plan.

Councillors will consider the request at a meeting tonight.

A report, which Ms Parsons wrote, said the plan was needed to prepare the council and residents for dramatic rises in petrol and oil prices and subsequent social and economic effects.

She cited a 2008 CSIRO report, Fuel for Thought, which predicted the price of petrol could reach $2 a litre to $8 a litre by 2018.

"The cost implications for local government of such price rises are significant," Cr Parsons said.

"A typical council fuel bill may be in the vicinity of $1 million a year.

"This could increase fourfold if the CSIRO's worst fears are realised."

Scarcity of oil would affect economies, households, human behaviour and the design of cities and suburbs, she said.

"Development patterns need to be rethought, based on reducing our reliance on fossil fuels," she said.

"The priority given to creating more roads needs to be replaced with transport corridors and options that negate the need for oil."

The term "peak oil" referred to the time when "the supply of oil ceases to increase and begins to decrease".