Starting from midday local time on Wednesday, July 1st, drivers in Germany will face higher prices at the fuel pump. The national fuel tax discount is coming to an end, resulting in a price increase of 16.7 cents per litre. Carsten Müller, head of the German Free Petrol Station Association (Bft), anticipates a "rush to fill up" at service stations ahead of the adjustment.
Müller stated, "Prices will definitely rise because we cannot bear the tax burden for consumers. We have to pass it on." He explained that when petrol stations purchase fuel from refineries, the price already includes the tax component.
The German government had previously reduced the tax on petrol and diesel by approximately 17 cents per litre for a two-month period to cushion the impact of a sharp price surge. This surge was triggered by conflict involving the US, Israel, and Iran, followed by risks of a blockade in the Strait of Hormuz.
A government spokesperson described the fuel discount as a successful measure, stating the subsidy was largely passed on to consumers and helped cap price peaks. However, the governing coalition does not intend to extend the policy.
Calculations by the ifo Institute for Economic Research in Munich indicate that the tax relief on petrol was almost entirely passed on to motorists, but for diesel, only 73% of the tax cut ultimately benefited consumers. Economists concluded that without this tax relief policy, the average daily price of fuel in Germany would have consistently exceeded 2 euros per litre in June.
The price of North Sea Brent crude has fallen significantly to 63.40 euros per barrel. Although this is still about 20% higher than February prices, the price had doubled during the peak of the geopolitical tensions. If the US and Iran successfully reach an agreement, fuel prices are likely to return to more normal levels.
The German Federal Ministry of Finance currently cannot precisely calculate the tax revenue shortfall caused by this measure. Prior to the policy's implementation, the estimated revenue loss was 1.6 billion euros. This missing fiscal revenue will put pressure on budgets for other planned projects.
The coalition government does not currently plan further market interventions. However, a government spokesperson indicated that should the energy situation deteriorate again, alternative policies are prepared. These include options such as implementing a price cap on fuel, similar to the model used in Luxembourg, where the government would set maximum prices for petrol and diesel.
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