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01 Jun 2022, 13:45
Benjamin Wehrmann

Fuel price rebate in Germany takes effect, observers expect oil companies to cash in

WDR

A new controversial fuel price rebate took effect in Germany on 1 June as part of a government package aimed at cushioning the financial impact of the Ukraine war on citizens. Through reducing the energy tax on fuel to the EU-wide minimum level for three months, prices at the pump on average dropped below 2 euros per litre, about 30 cents lower than peak prices reached repeatedly in recent weeks. However, critics said the fuel price rebate will ultimately benefit oil companies and wealthy citizens the most and on top of that will harm the climate more than other possible measures to reduce cost pressure on motorists who depend on their car. “There’s no legal obligation to pass on reduced taxes to customers,” energy economist Claudia Kemfert told public broadcaster WDR. “In the end, a lot of public money is going to end up in the hands of oil companies,” she argued. Unlike on international trading markets, prices have not fallen recently in Germany, meaning companies have already been scooping off “massive” margins from customers in the past weeks, Kemfert said. Germany’s antitrust authority, the Bundeskartellamt, said it so far had not detected an abuse of market power by oil companies but stressed it would closely monitor developments in the coming months. “The main problem is that companies quickly react to each other’s actions and use this time to increase prices as well,” Bundeskartellamt head Andreas Mundt told WDR, meaning direct collaboration to influence prices could not be proven easily. He said his department would be prepared to pose “inconvenient” questions to oil retailers like BP, ExxonMobil, Shell, Total and ConocoPhilips, but also pointed out that these are not obliged to pass on tax rebates. Oil industry association MWV said it “assumes” that price reductions will ultimately also benefit customers. However, this could not happen right away, as storages are still filled with regularly taxed fuel. “This needs to leave the petrol stations first,” MWV spokesman Alexander von Gersdorff said.

Environmental groups have firmly rejected the rebate advocated by German finance minister Christian Lindner of the pro-business Free Democrats (FDP), arguing the fuel price subsidy plan is much more costly and harmful than alternatives like cheaper public transport tickets, speed limits to reduce fuel consumption and support for buying bikes, e-bikes and cargo bikes. However, the government is under pressure to quickly find solutions to the rapid rise of energy costs that pushes inflation levels in Germany and Europe. 

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