Why Local Governments Need to Prepare for Fuel Volatility Now
Source: Brad Byrne | Senior Manager, Project & Infrastructure Advisory, BDO Australia
Fuel supply disruption is no longer just an operational inconvenience or a budgeting challenge — it has become a frontline risk to service continuity for councils across Australia.
Recent global instability, domestic supply pressures and transport market reforms are placing unprecedented strain on essential services that rely heavily on diesel-powered fleets. Waste collection services are particularly exposed, with dependence on fuel and AdBlue (DEF) creating immediate risks to collection schedules, contractor viability, and public health outcomes.
With approximately 90% of Australia’s refined fuel imported and limited diesel reserves available nationally, councils can no longer treat fuel disruption as a low-probability event.
Why Waste Services Are Uniquely Vulnerable
Waste management operations sit at the intersection of critical infrastructure, logistics and community health. Even short-term fuel disruption can have cascading impacts across the entire waste chain.
Diesel-Dependent Fleets
Heavy collection vehicles have limited short-term alternatives to diesel, making service continuity directly tied to fuel availability and affordability.
AdBlue (DEF) Supply Risks
Modern heavy vehicles cannot operate without DEF. A shortage can immobilise fleets even where diesel remains available.
Complex End-to-End Logistics
Fuel disruption affects more than kerbside collections. It also impacts:
- Transfer station haulage
- Landfill operations
- Materials recovery facilities (MRFs)
- Export logistics
- Contractor transport networks
Contractual Pressure
Many existing waste contracts were designed for relatively stable fuel pricing environments. Fixed-price arrangements or outdated escalation clauses can quickly become commercially unsustainable during prolonged volatility.
Understanding the RTCCO Changes
The introduction of the Road Transport Cost Contingency Order (RTCCO) on 21 April 2026 has added another layer of complexity for councils and contractors.
While in force, the RTCCO mandates fortnightly adjustments to transport costs tied to diesel price movements. This can override existing commercial pricing arrangements and may require councils to accommodate:
- Fuel levies or surcharges
- Base-rate adjustments
- Direct reimbursement mechanisms
The order remains active while national diesel Terminal Gate Prices (TGP) remain above $2.00 per litre.
For councils, this means that contract governance and cost-recovery processes must become more agile and auditable.
Immediate Actions Councils Should Consider
Councils should act now to strengthen operational resilience and reduce exposure to future disruption.
Short-Term Priorities (0–3 Months)
- Engage waste contractors regarding fuel and DEF exposure
- Review fuel escalation and force majeure clauses
- Confirm contractor business continuity plans
- Establish evidence and reporting requirements
- Brief executives and councillors on emerging risks
Medium-Term Priorities (3–18 Months)
- Modernise inadequate contract escalation mechanisms
- Develop formal disruption response protocols
- Coordinate resilience planning with neighbouring councils and regional organisations
- Incorporate fuel volatility into budgeting processes
Long-Term Priorities (2–5 Years)
- Build resilience requirements into future procurements
- Explore fleet transition pathways, including EVs and alternative fuels
- Align waste operations with broader energy resilience strategies
- Strengthen regional supply chain collaboration
Fuel Resilience Extends Beyond Waste
While waste services are among the most exposed, fuel disruption has implications across council operations, including:
- Civil works and road maintenance
- Parks and public realm services
- Emergency and community services
- Capital works delivery
- Contractor-dependent operations
Fuel access during compounded emergencies may become critical to maintaining essential community services.
From Forecasting to Resilience
Leading councils are shifting away from relying solely on forecasts and reactive crisis management. Instead, they are adopting resilience-based approaches that include:
- Scenario testing
- Pre-agreed operational protocols
- Commercial collaboration with service providers
- Integrated continuity planning
The goal is simple:
Keep operators viable, council budgets defensible and essential services running.
Need Support Navigating Fuel Risk?
BDO’s Project & Infrastructure Advisory team provides support across:
- Contract and RTCCO reviews
- Fuel and DEF exposure analysis
- Financial modelling and scenario planning
- Business continuity and resilience strategies
- Fleet transition planning
As fuel volatility continues to reshape operational risk, proactive planning will be essential to maintaining reliable community services.
Want to learn more?
BDO will explore this issue in more detail during a webinar. The session will be led by BDO Partners John Haggett and Simon Hawker, and Senior Manager Brad Byrne, drawing on current market insights.
Webinar details
- Date: Thursday 21 May 2026
- Format: 1‑hour webinar (webcast)