Victoria, Australia's Fair Fuel Plan: What it means for fuel retailers

On January 20, 2025, the government of Victoria, Australia, announced its new Fair Fuel Plan, aimed at improving fuel price transparency. Under this plan, fuel retailers are required to publicly report price changes a day before they take effect and lock in those prices for 24 hours. The initiative is part of a broader strategy to improve the cost of living and provide consumers with better price predictability.

While the intentions behind the policy are clear, the announcement has raised questions among industry stakeholders about its potential impact on competitive pricing. As a global leader in fuel retail analytics, Kalibrate has insights to help fuel retailers navigate this changing regulatory landscape.

Understanding the Fair Fuel Plan

The Fair Fuel Plan mandates that fuel retailers in Victoria must:

• Announce price changes at least 24 hours in advance.
• Not increase prices for a minimum of 24 hours after they take effect.

The policy aims to curb sudden and unpredictable price hikes, allowing consumers to make more informed choices. However, as highlighted by Mark McKenzie from ACAPMA, some industry representatives are concerned that these measures could inadvertently discourage dynamic pricing strategies, which are essential for maintaining competitive market conditions.

Tom Hatton, Kalibrate’s SVP of Pricing commented:

“Markets behave differently for a multitude of reasons, and the mandating of price transparency does not preclude how retailers will price. For example both France and Germany require retailers to declare price changes in advance, yet their pricing dynamics differ significantly..”

In France we typically see one price change per day that tracks the refined product price, whereas in Germany there a high volume of price changes per day with Edgeworth price cycles observed every day.

“The UK Government have announced a similar scheme called Pumpwatch following consultation with other governments, including some Australian States. Their research indicates that providing consumers with access to real-time price information, empowers them to make more informed decisions and encourages retailers to compete more effectively.”

Implications for fuel retailers

The requirement to lock in prices limits retailers’ ability to respond quickly to market changes, competitor activity, or shifts in demand. This constraint could lead to:

1. Reduced price flexibility: Retailers may lose opportunities to capitalize on favorable market conditions or mitigate losses during unfavorable ones.
2. Increased price uniformity: The regulation could reduce price variation across the market, potentially leading to less competitive pricing overall.
3. Operational challenges: Implementing systems to ensure compliance with the new rules will require investment in technology and process adjustments.

Kalibrate’s advice for operating in transparent markets

Kalibrate has extensive experience working with fuel retailers in markets where price transparency is enforced, either through government regulation or the growing influence of fuel price apps. Our insights can help businesses adapt to Victoria’s new pricing landscape:

1. Invest in advanced analytics: Use predictive analytics to anticipate market trends and competitor behavior. This allows you to set prices strategically, even within the constraints of a 24-hour lock-in period.
2. Enhance price optimization: A robust pricing strategy is crucial for balancing profitability and competitiveness. Leveraging Kalibrate’s price optimization tools can help retailers identify the optimal price points for their specific market conditions.
3. Focus on differentiation: In a market with limited pricing flexibility, non-price factors such as service quality, loyalty programs, and convenience become more important. Retailers should prioritize these areas to retain and attract customers.
4. Monitor compliance and adjust: Ensure your pricing systems are equipped to comply with the new regulations. Regularly review performance data to fine-tune your strategy and address challenges promptly.

The Fair Fuel Plan represents a significant shift for the Victorian fuel retail industry. While it aims to enhance transparency and consumer trust, the policy also introduces challenges that require thoughtful adaptation.

Fuel retailers who embrace data-driven strategies, optimize pricing, and focus on customer experience will be better positioned to thrive in this new regulatory environment. At Kalibrate, we’re here to support businesses with the tools and expertise needed to turn these challenges into opportunities. For more insights into navigating fuel price transparency, contact our team of experts.