Record high fuel prices: debate about caps, excess profits tax and relief

The energy crisis with its record-high fuel prices is weighing heavily on consumers - and is also putting politicians under pressure to act. At the beginning of the week, the price for a liter of E10 gasoline rose on a nationwide daily average from 2.273 euros to 2.286 euros, reaching a record level, as the ADAC announced. Diesel cost 2,412 euros and was therefore just four cents away from its peak in April.

According to ARD data, a liter of Super E10 also cost 2.27 euros in the morning and diesel 2.39 euros. This is the result of the latest SWR data analysis of all fuel prices at around 15,000 German gas stations. In view of the high prices, many possible measures are currently being discussed.

What is the federal government planning?

In view of the high fuel prices, the federal government is planning to provide financial relief for consumers in the short term. “Yes, we will react to price gouging,” said Chancellor Friedrich Merz at the BGA trade association’s business day in Berlin. “I am of the opinion that we have to act,” emphasized the CDU politician. However, it is not yet clear what measures will be taken. “But you can assume that we will present a proposal on this very soon,” said Merz.

The Chancellor pointed out that the Federal Cartel Office had been equipped with an abuse control system. “But we also feel, at least from the consumer’s perspective, that that’s not enough.” For many people who need a car every day, a limit has been reached. One possibility, for example, would be a fuel price cap.

What is a fuel price cap?

Calls for a fuel price cap, which is already being used in other European countries, are constantly appearing. In Luxembourg, for example, the state regularly calculates a maximum permissible sales price based on market developments. No gas station is allowed to charge a higher price. On July 1, 2026, Luxembourg also introduced another measure: by the end of the year, the price of fuel will be reduced by a further five cents per liter through a reduction in excise taxes. The relief applies when prices exceed certain thresholds: 1.43 euros per liter for Super 95 and 1.41 euros for diesel.

In Belgium, too, the government sets a maximum price for fuel prices. It takes a variety of factors into account, including a profit margin for the company. In the morning the price in Belgium is 2.10 euros for E5 and 2.05 euros for E10 fuel. Diesel costs 2.40 euros per liter.

In Germany, the SPD in particular is calling for a fuel price cap based on the Belgian model. Accordingly, a maximum selling price for diesel and gasoline in retail and wholesale should be set based on the oil price and processing and distribution costs.

This price should be determined using a transparent formula in negotiations between oil companies and the government. As can be seen from an internal paper, the international crude oil price, the costs of refinery, transport and distribution, a dealer margin as well as energy and VAT should be taken into account.

Berlin's Governing Mayor Kai Wegner also spoke out in favor of this: "We urgently need a fuel price cap, like the one that already exists in other European countries. The federal government must finally provide people with lasting relief," said the CDU politician on Platform

What ideas are still on the table?

The SPD also proposes a so-called excess profits tax. “If oil companies exploit a crisis to make excessive profits, skimming off these crisis profits is socially just,” the paper says. “The petroleum companies are currently filling their pockets on the backs of consumers,” said SPD transport politician Isabel Cademartori, a member of the Bundestag task force, to Bayerischer Rundfunk.

Cademartori also attributes the high fuel prices to the high world market prices as a result of the political situation in the Middle East. "Nevertheless, we are observing that in Germany the fluctuations in the price of fuel are being implemented particularly violently and particularly quickly. And above all, and this is very important, we know that the oil companies have more than doubled their profits this year," said the politician.

According to the SPD's wishes, crisis profits from oil companies should be taxed - the income should then be used to relieve the burden on citizens. A company's "normal" profit must first be determined, which is then compared with the actual profit. The difference would be subject to an excess profits tax. The problem here, however, is calculating a “normal” profit at all.

At the moment it doesn't look like the idea will catch on. Federal Economics Minister Katharina Reiche (CDU) favors a direct payment mechanism (DAM) as an alternative model to a fuel price cap and the excess profits tax.

How does a direct payout mechanism work?

A direct payment mechanism is intended to ensure that only those who pay little or no taxes can benefit from a fuel price reduction. Such a DAM already exists - the state initially determines who will benefit from such a reduction.

The Federal Central Tax Office can establish this link via the tax ID. The bank details, i.e. the IBAN, are then linked to the data without having to submit an application. But there is one problem: The system is in place, but not yet ready for widespread use.

But only around 19 percent of taxpayers have the necessary IBANs, as a spokesman for the Ministry of Finance said. “That means that a lot would still have to happen in order to be able to actually pay out such a benefit to all citizens and all taxpayers.” The question of financing is also open.

How do economists assess the proposals?

The Kiel Institute for the World Economy (IfW) warns of general government relief from the currently high fuel prices. You should “really be very cautious” with government intervention, said IfW economic expert Klaus-Jürgen Gern on Deutschlandfunk. You have to keep an eye on which groups of people have been really hit hard. “But you shouldn’t take such a general sip from the taxpayer’s pen like in the spring,” said Gern, referring to the fuel discount. Such a measure is extremely expensive and supports people who don't need it.

Claudia Kemfert from the German Institute for Economic Research (DIW Berlin) campaigned for “targeted relief for particularly affected households, for example through mobility money or climate money”. The energy economist warned of a “significant purchase price shock” due to high fuel prices. “In the short term, many people can hardly change their mobility behavior, which is why such price jumps initially have a direct impact on household budgets,” she told Handelsblatt. Commuters, households with low incomes and people in rural areas are particularly burdened.

The President of the German Savings Banks and Giro Association (DSGV), Ulrich Reuter, also rejects a fuel discount like in May/June. "I think repeating the same thing would be a quick shot that won't work in the end." Rather, politicians should react cautiously with manageable measures and help citizens “who actually need such relief.”

What does the oil industry say?

The Fuels and Energy Association (en2x) sees government burdens as the main reason for the high prices. Taxes, CO2 surcharges, organic quotas and VAT accounted for a good 50 percent of the final price for diesel and around 60 percent for gasoline.

“The discussion about gas station prices is currently not based on facts. The German fuel market also functions without government intervention,” said en2x managing director Christian Küchen. This makes it all the more important to objectify the debate. “Demands for price caps or a so-called “excess profits tax” deter investors and weaken the location.”

After deducting the government-related price components, the net price for diesel in Germany was, according to the association, on average below that of all neighboring EU countries plus Italy and Spain. “These figures refute the claim that the oil industry in this country took advantage of the crisis,” Küchen continued.

What measures have been taken so far?

From the beginning of May to the end of June there was a refueling discount on petrol and diesel, specifically it was about a reduction in the energy tax for petrol and diesel. It is controversial to what extent the reduction of around 17 cents was actually passed on at the pump. However, the fuel discount cost the federal government around 1.6 billion euros - even in view of the strained budget situation, a new edition seems to be questionable.

Politicians seem to agree on this. Both Minister Reiche and the coalition partner point out the high costs. Since April 1st, gas stations have generally only been allowed to increase their prices once a day at 12 p.m.

However, the rule is controversial because economists and consumer advocates have not yet seen any dampening effect on prices. The Federal Cartel Office also received more opportunities to take action against possibly excessive fuel prices. But the search process takes a long time.