Limited to a maximum of three months: Minister Reiche is planning hurdles in the fuel price cap

Katherina Reiche makes no secret of the fact that she is skeptical about a fuel price cap. Now there is a draft from your Ministry of Economic Affairs in early coordination with other ministers. Various exceptions are therefore envisaged.

Federal Minister of Economics Katherina Reiche is planning restrictions on the planned fuel price cap. The draft law sets out “objective requirements” for the use of the instrument, according to the Ministry of Economic Affairs. The decisive factor should therefore be a price increase that is significantly above the European average over three consecutive weeks.

In addition, the maximum price regulation should be limited to a maximum of three months. If there is an impending threat to security of supply, their application could be suspended. The implementation proposal should create the basis for effectively using the agreed fuel price cap in the event of a crisis - and at the same time ensure the reliable supply of fuel to the population and the economy.

The draft is in so-called early coordination - this is the first step of coordination within the federal government. According to the portal “The Pioneer” and the “Handelsblatt”, the law is scheduled to come into force on January 1, 2027. The aim of the bill is to be able to effectively limit "extraordinary fuel price increases" that go well beyond European price developments, while ensuring the supply of gasoline and diesel at all times, it said.

Price cap should be “due to the crisis”.

The black-red coalition agreed in September that the Ministry of Economic Affairs should develop a price cap for the period from January. The fuel discount, which reduces taxes on petrol and diesel, is still valid until the end of the year. A lid should then ensure lower prices at the petrol pumps. The SPD in particular campaigned for this.

Economics Minister Reiche, on the other hand, made no secret from the start that she was not in favor of such a measure. Her ministry said that setting an appropriate price cap nationwide was hardly feasible. A cap that is too high could lead to higher prices, while a price cap that is too low could endanger security of supply in remote regions, for example, because business there would no longer be worthwhile.

The coalition's agreement explicitly states, with reference to security of supply, that the fuel price cap should be developed together with the petroleum industry. However, according to a report by “Politico” last week, she refused to cooperate. A coordination between associations and companies on this could be viewed as “inadmissible price fixing,” “Politico” quoted a letter from several associations to the Federal Ministry of Economics.

According to Politico, a further fuel discount is excluded in the draft due to the budget situation. An excess profits tax, as Federal Finance Minister Lars Klingbeil is calling for from the SPD at EU level, is "not legally secure in the short term and has an immediate effect on relief," it said.