In an energy relief package announced on Thursday, the traffic-light coalition said it would support car owners with drastic cuts to energy taxes on fuel.
The tax cuts will see energy levies slashed to the minimum level allowed under EU competition laws, which equates to around 14 cents per litre of diesel and 30 cents per litre of petrol.
Currently, energy tax adds around 47 cents to a litre of diesel and around 63 cents to a litre of petrol, meaning drivers could see the prices of both go down by around 30 cents per litre.
The move is likely to be welcomed by the ADAC motorists’ association, who have been complaining of the high fuel prices in recent weeks.
But other commentators have suggested that plans could have a negative effect on energy use and encourage drivers to use more fuel.
The IfW think tank said they welcomed the government’s push to mitigate the price shocks, particularly for poorer households, but warned that the fuel tax reduction “lowers the incentive to save energy”.
Meanwhile, Germany’s Chambers of Industry and Commerce (DIHK) called the temporary tax cut a drop in the ocean, and said more targeted help was needed to support businesses.
“The historically high electricity and energy costs are threatening the survival of many German firms,” DIHK chief Peter Adrian said.
Industry under investigation
The prices of natural gas and oil have been rising steeply in recent months due to supply issues and the impact of the war in Ukraine.
But the government believes that some petrol stations and other energy companies may be using the current situation as an excuse to hike prices and accrue larger profits.
Economics Minister Robert Habeck (Greens) has argued that some large petrol station brands could be making “war profits” due to their powerful positions within the market.
In order to rule this out, the government wants to leverage antitrust and competition laws to ensure that lower taxes and falling commodity prices are passed on to the end consumers.
This will involve giving greater powers to the Federal Cartel Office to ask for company data and investigate potential profiteering.
The fuel price cut was just one of several measures revealed by the government on Thursday, with consumers also in line for cheaper transport tickets, an energy allowance and a child bonus for families.