The federal government this week signed a deal with the US to access their oil reserves should global supplies be disrupted and we eat into our meagre reserve.
Oil security is a hot topic in Australia – we consume more than a decade ago, produce less, and keep little in reserve. In fact, Australia is the only member of the International Energy Agency in breach of its treaty obligation to hold a 90-day “strategic petroleum reserve”. At the end of last year Australia’s oil reserves stood at 54 days of imports.
But the deal will do little to bolster our energy security given the oil reserves will remain on the other side of the Pacific. Instead, in the near term, the best way to improve it is to reduce our dependence on oil and prepare for a renewable future.
The oil deal
The US-Australia oil deal will enable Australia access to the US’ Strategic Petroleum Reserve - the vast caverns used to store oil in Texas and Louisiana.
This is a prospect that has been weighing heavily on the mind of policymakers after the attacks on oil tankers near the Strait of Hormuz in 2019, the key shipping route off the coast of Iran with more than 20 million barrels of oil passing through each day.
Russia and Saudi Arabia’s increasingly heated oil price war also shows how geopolitical tensions can easily shake the global energy landscape, as both nations threaten to flood the market with extra oil barrels.
On paper, the US deal will allow Australia to meet its international obligations. But in practice, the impact will be marginal.