German politicians call for relief, windfall tax amid record fuel prices

German chancellor Friedrich Merz said that the government would introduce relief measures to help deal with record-high petrol prices due to the Iran war and the closing of the Strait of Hormuz – a major shipping route for oil, reported public broadcaster ARD. Merz said that the exact measures have not yet been finalised, but the government would make a proposal very soon.

Merz's statement came as politicians at the state and federal level called for a swift government response to soaring prices at the pump. The question of how to support citizens and companies that struggle with rising petrol and diesel prices due to international crises – while ensuring the transition away from the climate-damaging fossil fuels – has occupied the government for years. High fuel prices can encourage lower consumption and falling carbon emissions, and make EVs more attractive to those who can afford them. But many people on lower incomes or small businesses who cannot afford to switch to an electric vehicle struggle to cope. 

Economy and energy minister Katherina Reiche rejected calls to reintroduce a fuel discount, citing budget constraints, and said in an interview with RTL/ntv that the government should instead consider targeted relief for low-income households.  

Reiche said that her ministry proposed a direct payment as part of a package of measures already at the start of the crisis, but the government had opted for a fuel discount. She added that the government should also look at where energy taxes could be lowered, though she cautioned that cutting electricity tax "doesn't help someone standing at the petrol pump." 

At a press conference, chancellor Merz did not confirm that direct payments to citizens would be the government’s choice instrument, but said that the finance ministry is currently working on enabling them. The state has so far lacked a corresponding central interface with all citizens that would make such payments possible. 

A spokesperson for the German finance ministry said that minister Lars Klingbeil would push for a European decision on a windfall tax on "excessive profits" made by oil companies during the crisis to help provide targeted relief to those most affected by high fuel prices at an upcoming meeting of European economy ministers. Klingbeil had called for such a measure together with other European finance ministers earlier this year. However, the European Commission would have to initiate it, the spokesperson said. 

Chancellor Merz, however, said that he currently sees “no sufficient factual basis, nor any legal basis, for taxing so-called excess profits.” The conservative politician argued Germany has “a strong interest in retaining refineries in Germany, and we will not achieve this if we now impose an additional tax on these companies, which are themselves facing considerable difficulties in the market.” Merz added that the windfall tax from 2022 is still being contested in court.  

The state premier of Saarland, a state in Germany's southwest, Anke Rehlinger, told the Rheinische Post that the federal government should "unleash" the country's cartel office and introduce subsidies modelled on neighbouring Luxembourg’s support scheme to curb prices. Meanwhile, Germany’s biggest automobile club, ADAC, called for more transparency around the price hikes, stating that rising oil prices could only partly justify petrol and diesel prices, ZDF reported.

Germany's government previously introduced two months of temporary tax cuts for petrol and diesel to "quickly provide relief to households and businesses" to deal with rising petrol prices linked to the war. But critics slammed the scheme for failing to help those truly in need, saying it would also do little to reduce the country's fossil fuel dependence.

Sustainable mobility advocates said the German government was "drawing the wrong lessons" from the Iran war by continuing to support fossil fuel use. They said it should instead use the crisis as an opportunity to invest in e-mobility, arguing that this was the only way to protect people from high fuel prices in the long term. 

Environmental NGOs criticised the debate about renewed fossil fuel subsidies, instead arguing for solutions to lessen dependence on oil and gas. The last fuel price discount cost the state around 1.6 billion euros and a significant proportion of this relief did not reach consumers, but went to the oil companies, said Sebastian Bock from the Nature and Biodiversity Conservation Union (NABU). “Rather than making fossil fuels attractive again, we need a strategy to overcome our dependence on oil,” he said, calling for investments in affordable e-mobility and public transport.

In May, Germany launched a digital portal for applications for an electric-car subsidy programme, offering up to 6,000 euros to lower-income households buying or leasing new e-cars. In April, price comparison website Verivox found that the increase in fuel prices linked to the Iran war had pushed the cost advantage of driving electric vehicles over combustion-engine cars to a record high. Interest in purchasing EVs has surged in Germany and other countries since the beginning of the war. From January to August 2026, 26 percent of newly registered cars were battery electric vehicles (BEVs), up 53 percent compared to the same period last year, said motor authority KBA.