The Optimal Reset-Hour of a Once-Daily Petrol Price Increase Limit

Technical Deep Dive: The Optimal Reset-Hour of a Once-Daily Petrol Price Increase Limit

Overview

The study examined the optimal timing of a proposed policy that would limit petrol stations in Germany to only one price increase per day. The goal was to determine the reset-hour that would lead to the lowest average price throughout the day.

Problem & Context

• In March 2026, the German government proposed a policy that would allow petrol stations to increase prices only once per day, while allowing unlimited price decreases.
• The motivation was to mitigate the impact of rising crude oil prices and petrol-station prices on consumers.
• The key question was: At what time should the price reset be allowed in order to lower price levels the most throughout the day?

Methodology

• The study used a simple spatial-competition model to infer the hourly share of price-sensitive consumers (λ_t) from observed petrol station prices.
• It then evaluated every possible reset-hour (r = 0 to 23) to determine the resulting equilibrium price path under the once-per-day increase constraint.
• The optimal reset-hour was selected by minimizing the traffic-weighted average price across the day.
• A theoretical result showed that reset-hours inducing a flat equilibrium price path (i.e., no intraday price discrimination) yield the lowest possible average price.

Data & Experimental Setup

• Petrol price data: Weekday E5 prices from 15 days in February 2026, sourced from the Tankerkönig data portal.
• Traffic data: Hourly passenger-car counts on German federal roads in February 2025, from the BASt institute.
• The analysis focused on weekdays, as commuter demand is less flexible than weekends.

Results

• The optimal reset-hour was found to be 11:00.
• This resulted in a flat equilibrium price path throughout the day, with an average price of 180.67 cents/liter.
• Other reset-hours led to non-flat price paths and higher average prices, up to 180.88 cents/liter.
• The flat 11:00 reset eliminated the ability of petrol stations to engage in intraday price discrimination.

Interpretation

• The 11:00 reset prevented stations from lowering prices in the evening to compete for price-sensitive consumers, while also raising prices in the morning to extract more from price-insensitive commuters.
• This led to a constant intermediate price that benefited price-sensitive evening consumers but harmed price-insensitive morning commuters and firms.
• The theoretical result showed that inducing a flat price path is optimal for the regulator, as it removes the stations' ability to exploit differences in demand composition across hours.

Limitations & Uncertainties

• Hourly petrol sale quantities were not available, so passenger-car traffic was used as an imperfect proxy.
• The model assumed no substitution of purchase timing by consumers under the new price paths.
• The analysis focused on weekdays; the optimal reset-hour may differ for weekends.

What Comes Next

• The study could be extended with more precise hourly sales data to refine the quantity weighting.
• Incorporating station-level heterogeneity and spatial competition could improve predictions for specific locations.
• Empirical evaluation of the policy's actual effects once implemented would be valuable.