The following correction was printed in the Guardian's Corrections and clarifications column, Thursday April 12 2007

In the article below, Totnes is in Devon, not Cornwall. This has been corrected.

There is, as the ads say, no Plan B. The age of cheap oil is drawing to a close, climate change already threatens, and politicians dither. But the people of Lampeter, a small community in the middle of rural Wales, gathered together earlier this week to mobilise for a new war effort. They decided to plan their "energy descent".

It was in fact the biggest public meeting in Lampeter anyone could remember. West Wales has a long tradition of alternative living, but the scale of this was different. More than 450 people filed into the hall in a place where the total population is just 4,000. They had come to turn themselves into a Transition Town - one of a rapidly growing network of places that have decided not to wait for government action, but to prepare for life after oil on their own.

First, the coordinator of the Transition Town movement, Rob Hopkins, told them how urgent the crisis is. Hopkins, who helped create the earliest Transition Towns in Kinsale, Ireland, and Totnes, Devon, and advises the 20 or so others that have signed up, describes himself as an early topper.

He's one of those who think that in the next five years we will have reached peak oil - the point at which half the world's oil reserves have been used up. After that production goes into irreversible and rapid decline and our main source of energy starts running out. Since we have not so far identified another viable energy source to replace it, the only rational response, he said, is to plan our energy descent. "Life after oil will have to look very different."

The world, he explained, divides into early toppers and late toppers. The early toppers, made up largely of former industry geological experts, calculate that world oil production has already or will very soon peak. The end of oil is nigh, in other words.

The late toppers, made up mostly of more optimistic oil companies, governments and economists, predict we have longer, with peak oil some 20 to 30 years away. "I tend to believe the people with no vested interest, but either way this is one of the most dramatic shifts humanity has had to face," Hopkins warned.

By now the people of Lampeter, from ageing hippies to young activists, were shifting in their plastic seats (made with oil) and drawing anxiously on their water bottles (made with oil) if not reaching for their medicines (made with oil). Hopkins told them they were likely to experience a range of common symptoms that accompany initial peak oil awareness.

One might be an irrational grasping at infeasible solutions. At hydrogen, for example. No good, running the UK's cars on hydrogen would need 67 Sizewell B nuclear power stations or a wind farm bigger than the south-west region of England. Or what about biofuels? No again, it would take over 25m hectares of arable land to run the UK's vehicles on biodiesel, and the UK only has 5.7m hectares of arable land. We need to eat too.

Unfortunately, British farming has evolved "into a system for turning oil into food", reliant on the energy-intensive manufacture of synthetic fertiliser, heavy use of oil-based plastics, and centralised just-in-time distribution systems that also guzzle oil.

After Hopkins, Guardian columnist George Monbiot, who lives near Lampeter, tried to cheer them up. Unlike Hopkins, he said he had been persuaded that the end of oil was not nigh, but only nigh-ish. We may have another 10 to 30 years. And there was lots of coal for energy.

The problem was that if we switched back to sin fuels that increase our emissions, climate change will undo us even faster than peak oil.

The drive for change in Lampeter has come in part from a group of local farmers - both Patrick Holden, the Soil Association's director, and Peter Segger, the businessman who was the first to supply the mass market with organic foods through the supermarkets, have their land nearby. Both have decided that the future lies in selling more of their produce locally instead of having it trucked round the country.

Segger and his partner Anne Evans have already switched from supplying the major retailers to selling half their vegetables within Wales..

Holden confessed to a touch of both survivalism and optimism. As an organic farmer who does not use artificial fertiliser, he said he had been feeling smug until he heard Hopkins speak a couple of months ago.

But he realised his produce was also part of the problem once it left his farm, feeding into the system of centralised distribution. Now he is trying to make his farm self sufficient in energy: he has already invested in burying half a mile of pipes under a field to extract heat from the soil that keeps his house warm.

Four hours into planning their energy descent and over bowls of local cawl broth the crowd in Lampeter were considering what they would like to happen - a ban on advertising that encourages consumption; turning the local supermarket into a giant allotment - and what they could they could actually do - install a community wind turbine; encourage low-energy buildings using sheep's wool for insulation; swap skills.

Someone suggested that a local landowner give the town an acre for a community vegetable garden. There was an awkward silence until someone else remembered a playing field that would serve the purpose, if the council agreed.

There was plenty of inspiration from pioneer towns.

Transition Totnes has introduced its own currency with notes that can only be spent in local shops. Its businesses are being audited by an accountant who provides a wake-up call by identifying parts of their operations that become unprofitable as oil prices rise. The town is planting nut trees which can provide emergency food and timber for construction while also acting as carbon sinks.

Lampeter decided emphatically on a show of 450 hands that it would meet again to plan its next stage. And then its people spilled out on a clear spring night into the car park and, just this one last time, drove home.

How we use oil

· 130kg packaging made from oil-derived plastics is consumed by British households each year. Two-thirds of it is used in food production

· 57miles is the average distance a tonne of freight now travels by road. In 1953 it was 21 miles

· 95% of our food products require the use of oil, and the supply of food accounts for 21% of Britain's energy use

· 3.5 litres of oil is needed to produce half a kilogram of steak