The Federal Government has struck a deal to tap into the US government’s tightly guarded emergency fuel reserves.

The deal might help lower the risk of Australia falling into an economic and national security crisis caused by a lack of fuel. However, it has been criticised because it will not actually see any more oil stored onshore in Australia.

Australia imports about 90 per cent of its liquid fuels, but only has 54 days’ worth in storage. This is well below the 90 days it is obliged to stockpile under an International Energy Agency (IEA) agreement.

Australia’s dangerously low fuel supplies have left consumers vulnerable to price spikes and rationing if supplies are disrupted.

With increasing volatility in key shipping routes such as the Strait of Hormuz off Iran and the South China Sea, the need for a deal has been growing.

Reports last year revealed last year that the Morrison government was in talks with the Trump administration to buy millions of barrels of oil from the US Strategic Petroleum Reserve.

A deal now appears to have been struck, with reports saying Australia will lease US storage facilities so that it does not have to spend billions of dollars building new storage facilities in Australia.

The oil, while stored in America, will count towards Australia’s overall supply and allow it to meet its IEA requirements.

“This landmark Australia-US arrangement represents our joint commitment to maintaining fuel security and improving Australia’s resilience, as well as strengthening the close bonds between our two great nations,” Energy Minister Angus Taylor said.

“The US is a trusted ally who has been essential for global oil security and we are glad to be building on our strong, longstanding relationship, while ensuring Australia is best prepared to act during a global oil disruption.

“This arrangement further improves our ability to ensure stocks of critical diesel, petrol and aviation fuel to keep the economy going in the event of disruptions to supply chains.”

Mr Taylor says he will sign a deal with US Energy Secretary Dan Brouillette to kickstart detailed contractual negotiations about exactly how much crude oil Australia can buy from the US.

The US Strategic Petroleum Reserve was set up by former president Gerald Ford in 1975 in response to devastating shortages.

The US stores its oil underground in massive caverns in Texas and Louisiana, holding more than 640 million barrels of crude oil in caverns so big they could fit some of the world’s largest skyscrapers inside.

The new deal will see Australia lease space in the underground caverns.

During his visit to the US, Mr Taylor will visit the oil and gas capital of Texas to meet with industry executives, and drop in on the US government’s National Renewable Energy Laboratory in Colorado.