I recently went to a Creationist Scientist's lecture in town--Dr. Kurt Wise--and he revealed one of the latest theories (and he gave us evidence that may support the theory) about the origins of the oil (and why it is indeed an exhaustible supply).
Now of course it is all conjecture at this point, and he freely admitted that, but it was very fun to be allowed into the thought processes of the elite Creationists for a moment.
He said that the original land-mass that God created (and that Genesis testifies was all drawn into one place) may have had massive reefs surrounding it, and out, beyond the reefs, floating vegetation mats--great islands really--of almost subcontinental size , of graduating thickness, even with trees atop the thickest parts. There is ample fossil evidence for the existence of such floating mats. A few small versions even exist in the world today. These floating islands would have supported (both above and below) countless creatures of bizarre and wonderful form, many of which we have evidence in the fossil record today.
When the Flood cataclysm came, these floating islands would have very quickly succumbed to the tidal disruption and would have been forced to the bottom of the ocean, and there by the processes inherent in the death and trauma of the Flood, been turned into the vast reservoirs of what we now know as oil. I can't remember the technical process that he described that turned the mats into the oil. I was too busy reeling in delight, thinking of Perelandra and the "Fixed Land" and the "Floating Land".
Just a very fun speculation, one which frequenters of THIS forum will appreciate as much as I do
"If you believe what you like in the Gospel, and reject what you don't like, it is not the Gospel you believe, but yourself."--St. Augustine of Hippo