Rising Fuel Prices: Diesel at All-Time High – Relief Measures from October?
After petrol, diesel has now also reached an all-time high price. However, exactly how the federal government intends to cushion the high prices remains unclear. Parliamentary group leader Frei has nevertheless indicated that swift relief is on the way.
So far there has been only a vague announcement: Chancellor Friedrich Merz signalled two days ago that relief measures to address high fuel prices were forthcoming. What specifically would be introduced and when – the Chancellor left open. But pressure is mounting. According to the ADAC, diesel has now joined petrol in reaching an all-time high. On Wednesday, the national daily average price per litre was 2.453 euros, surpassing the previous record set in April.
Parliamentary group leader Thorsten Frei believes a quick decision on relief measures is achievable. "I think if we move swiftly on this now, it could work by 1 October," the CDU politician said on the ARD programme Maischberger. This was ambitious, but it had been done before, Frei noted, pointing to the fuel price discount introduced in spring. "If we work closely together, including in parliament, then there is a chance."
Frei Proposes New Fuel Tax Discount
The CDU/CSU parliamentary group leader in the Bundestag also commented on possible options. Frei mentioned a renewed reduction in energy tax along the lines of the fuel price discount in May and June, as well as a cut in VAT on fuels.
Before Frei, Economics Minister Katherina Reiche had already called for a temporary reduction in VAT. The tax on fuels should be cut from 19 to 7 percent, the CDU politician said on the sidelines of the G20 energy ministers' meeting in Houston, USA. This would take effect directly at the pump and provide relief for citizens and the logistics sector.
SPD Has Different Ideas
This would cost the state several billion euros. The approach is therefore contested within the coalition. The SPD favours a so-called windfall profits tax on oil companies – that is, skimming off the exceptional profits generated by high prices. The additional revenue could be used to finance relief measures.
Another proposal from within the SPD ranks: the introduction of a fuel price cap. Under this option, binding maximum prices for petrol, diesel and heating oil could be set based on price developments in international markets. Economics Minister Reiche has rejected both options, however.
Economist Advocates Direct Payments
The CDU politician has instead renewed her proposal for direct state payments to low-income earners. This has met with approval among experts. "It would be far more sensible than the fuel price discount," said Georg Zachmann, economist and energy expert at the Brussels think tank Bruegel, on the Tagesthemen programme. "Direct payments to people who genuinely need them mean that fuel prices nonetheless remain high. This means people drive less, less of the scarce fuel is consumed, and that is far more economically sound than the fuel price discount."
The latter had cost "very, very much money" in May and June and had not reached the right people. The same applied to a cut in VAT. This was the "little sister of the fuel price discount," as it came with the same problems. "I think that direct payments are by far the most economically sensible option," said Zachmann.
