The peaking of world oil supply will have significant economic and social impacts for rural Australia. This paper looks at the peaking of world supply, the role of energy in our global industrial society and its use in agriculture. It further looks at replacement fuels and how we will be unable to sufficiently replace conventional oil in its role as a transport fuel or in our society as a key driver of our industrial economy. It then considers Australia's awareness, planning and policy responses and argues that this represents a critical risk management failure. It concludes by looking briefly at what this may mean for rural Australia and options for response that could build an economically and ecologically sustainable future for rural society.