Fuel price surge, Merz admits: Many citizens can no longer cope

Record fuel prices in Germany have forced the government coalition to start discussions on possible interventions. The executive is examining two different approaches to lower the cost of fuel for consumers.

Chancellor Friedrich Merz (CDU) admitted on Tuesday in Berlin that the financial burden has become unbearable for a large part of the population. “For many citizens who need their vehicle daily, the limit of tolerance has already been exceeded,” he emphasized, adding that the government is conducting in-depth discussions with regional governments to find concrete solutions. Merz promised to present a plan in the near future, even though Wednesday’s cabinet meeting is not expected to bring formal decisions; however, sources close to the executive indicate that the issue will be addressed at least informally.

In the ruling camp, two contrasting strategies have emerged. On one hand, the SPD proposes setting a price ceiling and taxing the large profits of oil corporations. The Ministry of Economy, on the other hand, views this approach with reservations. Sources within the ministry warn that both administrative control of prices and the excess profits tax are accompanied by major challenges and legal risks.

Economy ministry officials argue that the scheme followed in Luxembourg cannot be copied in Germany due to different market sizes and specific economic conditions. Moreover, setting a maximum price could provoke legal problems and burden the state budget. As an illustration, they mentioned the cases of Poland and Austria, which tried similar measures but abandoned them after only a few months.

The Social Democrats take an example from Belgium, where authorities determine an upper limit for fuel prices daily, based on crude oil fluctuations and market costs. Points of sale can offer lower rates, but are not allowed to exceed that maximum. Deputy Armand Zorn emphasizes that this mechanism protects buyers from uncontrolled increases without causing costs to the budget.

However, Economy Minister Katharia Reiche defends an alternative path. She proposes direct financial aid for households with modest incomes, which would be administered by the Ministry of Finance. “We already have such a mechanism,” said the conservative politician. “This would allow us to offer immediate and targeted relief for groups that really pay no taxes or pay very little.” According to the minister, this approach guarantees that aid reaches where it is most needed.