Fuel and gas records increase pressure on the EU to tax energy profits

Fuel and gas prices in Europe have reached unprecedented levels, increasing demands on European Union governments to take intervention measures.

Among the proposals put forward is the introduction of a tax on the windfall profits of oil and energy companies. Germany has asked the European Commission to examine this possibility, while several member states have taken measures to ease the burden on citizens and businesses.

German Finance Minister Lars Klingbeil has called on the European Commission to draw up proposals on how to tax the profits of oil companies. He argued that some of these companies are benefiting significantly from rising energy prices.

“Several member states have been asking for models for a long time,” Klingbeil said during a meeting of EU finance ministers in Dublin. He called for the proposals to be presented next month.

EU Economic Commissioner Valdis Dombrovskis said the Commission currently has no plan to create a tax mechanism that would apply across the European Union. However, he said he was open to discussions and stressed that member states could adopt tax measures at national level.

Rising fuel prices come at a time when energy markets are facing new shocks and uncertainty over international supplies.

Oil futures have climbed back above $100 per barrel, around 50% higher than in the period before the escalation of the war in Iran. The increase in attacks in the Middle East has heightened concerns about supply corridors, while derivatives markets indicate that prices could remain high even in the short term.

Within the EU, petrol has become around 24% more expensive than a year ago, while diesel prices have risen by around 38%. Jet fuel costs more than twice as much as it did a year ago.

Gas prices have also recorded a sharp increase. Benchmark contracts are trading near €81 per megawatt-hour, around 150% above the price a year ago, while analysts do not rule out another increase.

According to ADAC, Germany’s largest automobile club, the average price of diesel in the country has reached €2.45 per litre. Petrol has risen to a record €2.31 per litre.

In the Netherlands, prices are even higher: petrol costs around €2.73 per litre, while diesel is selling at an average of €2.78 per litre. Further records have been recorded for petrol in Denmark and diesel in Finland. In some of the EU’s largest economies, rising fuel prices have now become an important domestic political issue.

French President Emmanuel Macron has called on ministers to commit the government to securing supplies and limiting the impact of high fuel prices.

French authorities are also working to secure supplies from international markets and have called for the “peaceful reopening” of the Strait of Hormuz, one of the world’s main oil transport routes.

Rising prices have also sparked protests. On Thursday, French fishermen blocked access to two ports and a fuel depot in the south of the country. Diesel used for fishing has risen to around €2.37 per litre, very close to the record of €2.38.

After talks with the government, the protesters agreed to remove the blockades. In return, they were promised interest-free loans for businesses facing liquidity problems, as well as support measures linked to fluctuations in fuel prices.

French Prime Minister Sébastien Lecornu has also decided to extend emergency fuel subsidies for the agriculture, fishing and construction sectors until the end of the year.

In Italy, Giorgia Meloni’s government has announced measures aimed at reducing the financial burden on motorists.

Starting next year, the road tax is expected to be abolished for around 14.5 million cars and motorcycles, at a cost of more than €2 billion. This measure will be added to the reduction in the diesel tax, which has so far cost the state around €2.8 billion.

Spain has doubled the diesel tax discount, raising it to €0.20 per litre from 1 September. The decision was made after diesel prices rose by 15.7% in July alone.

In Germany, Chancellor Friedrich Merz has promised further measures to ease the impact of record prices. Berlin had temporarily cut fuel taxes for two months in May, but the measure ended at a time when tensions in the Middle East were once again putting increasing pressure on prices.