If you Google where Australia\u2019s emergency fuel reserves are held, the search engine\u2019s AI overview will tell you that a \u201csignificant portion\u201d of it is stored overseas in the US.<\/p>\n
Even though that is not true, other popular AI tools \u2013 Claude, Gemini and ChatGPT \u2013 all say we keep fuel in the US.<\/p>\n
Last week, the president of the Victorian Farmers Federation, Brett Hosking, said Australia\u2019s \u201cstrategic fuel reserve\u201d was stored in the US. And he is not the only one.<\/p>\n
Where is our fuel reserve? The government has said it is releasing some of it on to the market \u2013 when is this going to happen and how will it work?<\/p>\n
What happened to our fuel reserve in the US? Did we have one?<\/p>\n
For less than two years, a relatively small amount of Australian-owned oil was stored in the US\u2019s Strategic Petroleum Reserve. This is the world\u2019s largest emergency stockpile of crude oil, stored in underground tanks in Louisiana and Texas.<\/p>\n
The arrangement was orchestrated by the former Coalition government. In March 2020, the then energy minister Angus Taylor announced Australia would lease space in the US Strategic Petroleum Reserve to store and access Australian-owned oil during a global emergency.<\/p>\n
The Morrison government bought the oil in the first year of the pandemic, when it was dirt cheap. It did not disclose how much Australian-owned oil would be held in the US. At the time, Taylor told the ABC that a million barrels was about a day\u2019s worth of supply for Australia.<\/p>\n
In 2022, Taylor announced Australia would sell the oil on the international market as part of a coordinated global response to Russia\u2019s invasion of Ukraine. He said Australia had stored about 1.7m barrels of oil in the US \u2013 less than two days\u2019 supply, according to his earlier calculation.<\/p>\n
Additionally, Dr Lurion De Mello, an energy market expert and senior lecturer at Macquarie University, says the oil would have taken a month or longer to access, even in an emergency, because it would need to be brought to Australia and refined into fuel.<\/p>\n
So, even if we did still store oil in the US, we would not have much of it, it would have been time-consuming to access, and it would not have been our own \u201cstrategic fuel reserve\u201d because it was still in its crude form.<\/p>\n
Where is our strategic fuel reserve?<\/p>\n
We don\u2019t actually have a \u201cstrategic fuel reserve\u201d, according to De Mello, who says the term means a stockpile which is government-backed and funded by taxpayers.<\/p>\n
When the energy minister, Chris Bowen, talks about a \u201cdomestic fuel reserve\u201d or a \u201cstrategic reserve\u201d, he is referring to Australia\u2019s \u201cminimum stockholding obligation\u201d (MSO).<\/p>\n
Since 2023, the federal government has required importers and refiners to maintain a baseline level of fuel stocks across petrol, diesel and jet fuel as part of Australia\u2019s long-term fuel security.<\/p>\n
The government says the MSO captures entities representing 98% of all diesel and 100% of petrol and jet fuel supplied in Australia by fuel importers and refiners.<\/p>\n
The entities are not publicly named, but the government says they include importers, refiners and wholesalers in the Australian market.<\/p>\n
Mobil, BP, Ampol and Shell, which is run by Viva Energy in Australia, supply about 85% of the nation\u2019s liquid fuels.<\/p>\n
De Mello says oil companies are \u201cprobably happy to sell whatever they have in their tanks\u201d because there have not been any problems with supply to Australia \u2013 yet. He says he is worried about supply after May, if the war in the Middle East continues.<\/p>\n
This minimum stockholding obligation is set out in law: petrol and jet fuel refiners need to maintain reserves of at least equivalent to 24 days of usual demand, and 27 days for importers. The minimum for refiners of diesel is 20 days\u2019 worth of supply, and 32 days\u2019 worth for importers.<\/p>\n
The fuel is held by the companies, not the government.<\/p>\n
How is fuel released from Australia\u2019s stockpile?<\/p>\n
The government can reduce the amount of fuel companies are required to keep as a buffer under the MSO, meaning it can sold to customers.<\/p>\n
Earlier this month, in response to the Middle East conflict, which has resulted in the closure of the critical shipping route through the strait of Hormuz, the energy minister cut fuel companies\u2019 minimum stock obligations<\/a> to about 700m litres of petrol and 2.2bn litres of diesel respectively.<\/p>\n Under the Fuel Security (Temporary Reduction \u2013 Securing Regional Supply) Instrument 2026, up to 213m additional litres of petrol and up to 548m additional litres of diesel can be released on to the market.<\/p>\n That works out to be about five days\u2019 worth of petrol and six days of diesel stockholding.<\/p>\n The government has another lever it could pull, although it is very unlikely.<\/p>\n In the event of an actual or likely fuel shortage with national implications, the governor general may declare a national emergency, giving the energy minister special powers to control industry-held stocks of crude oil and liquid fuels, production by Australian refineries and fuel sales across Australia.<\/p>\n The emergency trigger has never been used.<\/p>\n