German petrol prices hover near record highs

Gasoline prices will remain just below record highs as prime vacation time begins in the German states of Hesse and Rhineland-Palatinate, the Hamburg energy information service EID reported on Thursday.

According to the EID, gasoline prices average €1.54 per litre, and diesel fuel averages €1.51 per litre across the country – just €0.02 short of the record high. EID editor Heino Elfert blamed the high cost of crude oil on the world market for the high prices, but said the strong euro is helping the Germans to avoid the crippling increases seen in the United States.

“In contrast to past years, there isn’t an accompanying demand for gasoline from the USA, because use is going down there,” said Elfert, adding that a worldwide increase in demand for diesel fuel does not coincide with the downtrend in the US, where drivers have been more strongly affected by rising fuel prices than in Germany.

Gasoline prices this year in Germany have risen by €0.16 – from €1.38 to €1.54 – an increase of 16 percent. In contrast, prices in the US have gone up by 33 percent, or three times more than in Germany. The difference lies in the strong euro, which has buffered prices before they reach German consumers since oil is denominated in US dollars.

Tax differences also effect the two countries differently. German gas tax is around 100 percent, while US petrol tax differs regionally at an average of 10 percent, which means changes in in crude oil costs reach the final gas prices in the US more quickly, he said.

Elfert said Thursday that in past years the US regularly imported oil from Europe because US refineries unable to fill demand. But recently demand has gone down, in addition to increased US refinery capacity.

“There are signals worldwide that demand for oil in quieting,” Elfert said, adding that developing nations have also been curbing their use because their governments can’t subsidize the high prices.


German government announces fresh relief package for high energy costs

With Russia's invasion in Ukraine exacerbating high energy and petrol prices, Germany is set to introduce a second relief package to limit the impact on consumers.

German government announces fresh relief package for high energy costs

The additional package of measures was announced by Economy and Climate Protection Minister Robert Habeck (Greens) on Sunday.

Speaking to DPA, Habeck said the wave of price increases throughout the energy sector were becoming increasingly difficult for households to bear.

“Extremely high heating costs, extremely high electricity prices, and extremely high fuel prices are putting a strain on households, and the lower the income, the more so,” he said. “The German government will therefore launch another relief package.”

The costs of heating and electricity have hit record highs in the past few months due to post-pandemic supply issues. 

This dramatic rise in prices has already prompted the government to introduce a range of measures to ease the burden on households, including abolishing the Renewable Energy Act (EEG) levy earlier than planned, offering grants to low-income households and increasing the commuter allowance. 

READ ALSO: EXPLAINED: What Germany’s relief package against rising prices means for you

But since Russia invaded neighbouring Ukraine on February 24th, the attack has been driving up energy prices further, Habeck explained.

He added that fears of supply shortages and speculation on the market were currently making the situation worse. 

How will the package work?

When defining the new relief measures, the Economics Ministry will use three criteria, Habeck revealed. 

Firstly, the measures must span all areas of the energy market, including heating costs, electricity and mobility. 

Heating is the area where households are under the most pressure. The ministry estimates that the gas bill for an average family in an unrenovated one-family house will rise by about €2,000 this year. 

Secondly, the package should include measures to help save energy, such as reducing car emissions or replacing gas heating systems.

Thirdly, market-based incentives should be used to ensure that people who use less energy also have lower costs. 

“The government will now put together the entire package quickly and constructively in a working process,” said Habeck.

Fuel subsidy

The three-point plan outlined by the Green Party politician are not the only relief proposals being considered by the government.

According to reports in German daily Bild, Finance Minister Christian Lindner (FPD) is allegedly considering introducing a state fuel subsidy for car drivers.

The amount of the subsidy – which hasn’t yet been defined – would be deducted from a driver’s bill when paying at the petrol station. 

The operator of the petrol station would then have to submit the receipts to the tax authorities later in order to claim the money back. 

Since the start of the war in Ukraine, fuel prices have risen dramatically in Germany: diesel has gone up by around 66 cents per litre, while a litre of E10 has gone up by around 45 cents.

READ ALSO: EXPLAINED: The everyday products getting more expensive in Germany

As well as support for consumers, the government is currently working on a credit assistance programme to assist German companies that have been hit hard by the EU sanctions against Russia.

As reported by Bild on Saturday, bridging aid is also being discussed for companies that can no longer manage the sharp rise in raw material prices.

In addition, an extension of the shorter working hours (Kurzarbeit) scheme beyond June 30th is allegedly being examined, as well as a further increase in the commuter allowance.