Berlin. Federal Minister of Economics Katherina Reiche (CDU) is planning high hurdles for the implementation of a fuel price cap in Germany. A draft bill from the ministry states that maximum prices represent a serious intervention in price formation that should fundamentally be avoided. They should therefore only be used “in extreme emergencies as a crisis instrument”.
The draft for the “Maximum Fuel Price Act” is available to the German Press Agency. It is in so-called early coordination - this is the first step of coordination within the federal government.
The coalition partner SPD reacted cautiously. Group vice-chairman Armand Zorn welcomed the fact that the Ministry of Economic Affairs had presented an initial proposal. "The decisive factor is what ultimately comes out for consumers. We will measure the final draft bill based on whether it effectively limits the margins of the petroleum industry and noticeably relieves the burden on people." Now it's the federal cabinet's turn. The aim must be for the fuel price cap to come into force before Christmas, if possible.
In mid-September, the leaders of the black-red coalition agreed to hold talks with the oil industry - with the aim of introducing a fuel price cap based on the example of Luxembourg or Belgium by January 1, 2027 at the latest. This should not be permanent and “crisis-related”, it was said with regard to the Iran conflict. It continued: "Security of supply must be guaranteed. Abusive price markups must be prevented."
The fuel discount expires at the end of December. This is intended to cushion price increases as a result of the Iran conflict, which is still ongoing.
The bill from the Federal Ministry for Economic Affairs and Energy stipulates that the federal government is authorized to introduce a fuel price cap - but only under certain conditions: price increases for diesel or gasoline in three consecutive weeks compared to the previous week in Germany must be more than 5 percentage points above the average price increase in the remaining EU countries.
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, state governments should be able to suspend the price cap.
Reiche had repeatedly emphasized that a price limit should not endanger security of supply. Shortly before the coalition committee's decision, she said that she thought a price cap was the wrong approach. Such a cap would weaken the medium-sized refining industry: “We urgently need our refineries because they produce diesel, gasoline, heating oil and kerosene in Germany.”
The ministry said about the draft law: "If maximum prices are set too low, fuel deliveries could become uneconomical. Imports could fail and supply bottlenecks could arise." The draft states that, for reasons of security of supply, a maximum price should not lead to “return expectations” being completely eliminated. “Rather, it must be chosen in such a way that basically all players can continue to operate profitably.”
Central cost components such as purchasing or transport costs could change significantly in a short period of time - which is why a maximum price must take cost reductions or increases into account and be adjusted regularly according to a calculation formula.
The fuel price cap should take into account the different regional market and supply conditions, as the ministry said. Procurement and transport costs as well as the competitive situation differed significantly within Germany. A nationwide maximum price could therefore have different effects regionally.
Countries should be allowed to set different maximum prices to take local conditions into account. Specifically, the draft states that the states should be given the right to set regional maximum prices “for individual districts, independent cities, postal code areas or parts thereof”.
“The fuel price cap sounds better than it actually is,” said Green energy politician Michael Kellner. An “excess profits tax” is clearly a clever instrument. The SPD is in favor of such an extra tax on crisis-related profits of the oil companies - Reiche is against it.
Criticism of Reich's plans also came from the German Social Association. “A fuel price cap that is intended to prevent excessive profits for oil companies must not have so many loopholes that it ultimately remains ineffective,” said CEO Michaela Engelmeier. But that's exactly what Reiche's plans are threatening.
