In the wake of the COVID-19 pandemic, global oil prices have plummeted.

US oil prices went into negative for the first time ever on Monday — at -$38 a barrel — when oil producers effectively ran out of space to store the supplies of crude oil that have not been used during the pandemic.

Australia must take advantage of this. As a nation dependent upon imported liquid fuel for more than 90 per cent of our refined fuel needs, a glut of cheap oil is a bonanza.

Australia's four oil refiners only produce a small portion of our liquid fuel needs which means the rest has to come from the Middle East and Asia. Singapore currently supplies about 51 per cent of our liquid fuel as it is an important logistics centre for crude oil trade.

Buying up big right now would allow us to significantly improve our stockpile and potentially reach compliance with our obligations, as a member of the International Energy Agency.

As a member of the IEA we are required to maintain net stocks equivalent to 90 days of liquid fuel. Australia is currently in breach of that obligation.

The recent liquid fuel security review conducted by the Department of Environment and Energy in April, 2019 indicated that Australia has a current reserve of 18 days of petrol, 22 days of diesel and 23 days of jet fuel. These low fuel reserves put us at significant risk.

We're dependent on overseas supply

The most obvious is that our dwindling stockpile makes us highly dependent upon international supply chains.

As the COVID-19 crisis has so clearly highlighted, this type of dependency makes us vulnerable. If there was a disruption our dwindling reserves at home would not last very long.

A sustained disruption in the international supply chain means Australia may face the very real prospect of running out of fuel.

This would be catastrophic and would fundamentally undermine civil society. In its last liquid fuel security report, the government committed to rebuilding our fuel stockpile by 2026.

One element of this was an arrangement to purchase oil from the Strategic Petroleum Reserve (SPR) in the United States.

On March 10, the United States and Australia signed an arrangement which sought to allow Australia access to vast crude oil reserves of the SPR and storage entitlements. The agreement was entered into pre-pandemic, when it was felt that fuel security for Australia was best achieved by tapping into the SPR rather than gradually building internal capacity.

Apart from the obvious costs associated with US agreement, the current situation shows the arrangement is fundamentally problematic because it depends upon international transit.

And this is highly susceptible to disruption: geo-political tensions, terrorism, global pandemics. As the Maritime Union of Australia had previously stated about the agreement, this fast-track approach stockpiling is "fundamentally flawed" because it is difficult to source fuel quickly should it be required. These concerns have now taken on a much greater cogency.

The pandemic has taught us that we must be more self-reliant — particularly with respect to fundamental resources such as liquid fuel. Our dwindling fuel supplies and the volatility of international supply chains makes us highly susceptible to disruption.

We need to plan ahead and develop our own national strategic approach — consistent with the obligations we agreed to when becoming a member of the IEA.

It's difficult for Australia to source extra fuel quickly, because we're reliant on overseas production. ( Reuters: Jessica Lutz )

Good price to build our own reserve

The historically low oil prices we are now experiencing give Australia a perfect opportunity to accumulate and stockpile our own reserve, within our national boundaries.

Building internal liquid fuel resilience is consistent with the original objectives of the IEA because the fundamental rationale of the IEA mandate was that the stockpile would give each member a degree of independence in the event of global disruption.

The whole premise of stockpiling liquid fuel was to avoid the susceptibilities associated with import dependency.

From an economic perspective, developing our own stockpile and taking advantage of the global glut of oil would be a much cheaper option than leasing from the SPR in the US.

While holding oil reserves costs money, Australia has the capacity to develop appropriate storage options and these strategies need to be appropriately costed.

The liquid fuel review indicated that on average Australians use three times as much liquid fuel as we do electricity, so any disruption in international supply chains would be felt acutely. It would affect every aspect of our lives and cripple core industries such as agriculture and mining, both of which are highly dependent upon liquid fuel.

To date, the rather blithe assumption has been that any disruption Australia might experience could be remediated within a short timeframe; supply lines could be readjusted by IEA members, through a combination of increased production and the release of emergency stocks by the international community. COVID-19 has now shown this may not be possible.

As a geographically isolated island nation, that's not enough. Australia needs an internal liquid fuel stockpile that it can readily access. And there is no time like the present.

Taking advantage of the oversupply generated by COVID19 to achieve this is sensible and strategic in the current global framework.

Professor Samantha Hepburn is a Professor of Law at Deakin Law School.