(de-news.net) – Germany has introduced a temporary fuel-tax reduction of about 17 cents per liter as energy costs rise, while political debate continues over direct household payments, a fuel-price cap and an excess-profits tax. The Federal Government has also ordered increased gas purchases for storage amid persistent geopolitical risks, prompting criticism over potential costs but support from municipalities concerned about winter energy security. Although household gas and electricity prices declined in the first half of 2026, they remained substantially above 2021 levels. Meanwhile, rising business price expectations and renewed energy-cost pressures point to continued inflation above 3 percent.
Germany’s second state fuel-tax reduction of the year took effect at midnight, cutting the tax burden on gasoline and diesel by around 17 cents per liter through the end of December. The measure comes in response to sharply higher fuel costs following disruptions in global oil markets associated with the Iranian conflict. Although the reduction formally applies only to fuel leaving refineries and storage facilities after midnight, it was expected to be reflected at most gas stations, including for gasoline and diesel that had already been delivered.
The timing of the measure underscores the government’s effort to provide immediate relief as energy costs put renewed pressure on households and businesses. The temporary reduction is intended to lower the price burden directly at the pump, while the broader effects of elevated fuel costs extend into transportation and other parts of the economy.
Dennis Radtke, chairman of the CDU’s social wing, called for the Federal Government to establish a system for direct payments to individuals in addition to the fuel-tax reduction. He argued that the state should be equipped to deliver such assistance rapidly during future crises and that motorists, particularly those in lower- and middle-income households, required immediate relief amid elevated fuel prices. The measure benefits consumers broadly, he noted, while higher gasoline and diesel costs are also placing substantial pressure on the logistics industry and can ultimately feed into prices elsewhere in the economy.
The proposal reflects a broader question over how temporary state intervention should complement longer-term mechanisms for crisis assistance. Radtke’s position is that a ready-to-use system for direct payments would allow the government to respond more quickly when energy or other costs rise sharply, rather than having to establish new arrangements during each crisis.
Germany steps up energy intervention as Schwesig demands lower fuel prices
Manuela Schwesig, the Prime Minister of Mecklenburg-Western Pomerania, welcomed the fuel-tax reduction but argued that further measures would be necessary to achieve permanently lower prices. She maintained that gasoline and diesel should again cost less than two euros per liter and emphasized that automobiles remain an essential means of transportation for many households, including for commuting, medical appointments and everyday activities. Schwesig therefore called for both a price ceiling and an excess-profits tax, arguing that consumers should not continue facing high prices while oil companies report record profits. The Federal Government plans to introduce a price cap by Jan. 1, while the SPD’s proposed excess-profits tax remains uncertain.
Meanwhile, Economy Minister Katherina Reiche (CDU) has instructed the state-owned energy company Sefe to increase its purchases of natural gas for storage, according to ministry sources. The decision, coordinated with Chancellor Friedrich Merz, marks a further tightening of the government’s approach after Reiche had already asked the state gas importer in September to purchase gas for storage without explicitly directing Sefe to do so. Although no supply shortages are currently anticipated, the latest intervention highlights Germany’s persistently low storage levels and the continuing geopolitical risks surrounding energy supplies.
The move also represents a shift from Reiche’s earlier, more careful position not to intervene more directly in the gas market. The Minister had previously maintained that instruments were available for different scenarios and that intervention could be undertaken if circumstances required it. The government now regards additional Sefe procurement as one of those contingency measures. At the same time, Sefe is expected to retain discretion over the quantities it purchases and the timing of storage.
Energy prices fall from 2025 levels but remain above 2021
The development comes as Germany faces renewed inflationary pressure. Preliminary data from the Federal Statistical Office indicated that the country’s inflation rate was expected to reach 3.3 percent in September. Consumer prices rose 0.6 percent from August, while core inflation, excluding food and energy, was estimated at 2.4 percent. Energy remained the principal driver, with prices rising 14.9 percent from a year earlier, compared with increases of 10.5 percent in August and 8.3 percent in July.
Regional figures similarly pointed to a marked acceleration from the national inflation rate of 2.9 percent recorded in August. Energy costs again accounted for a significant part of the increase. In North Rhine-Westphalia, gasoline prices were 34 percent higher than in September 2025, while diesel prices rose 49 percent. State-level figures pointed to a national inflation rate of roughly 3.2 percent to 3.4 percent, with inflation particularly elevated in several eastern states and major regions.
The gas-storage intervention also drew criticism from Green parliamentary leader Katharina Dröge, who warned that consumers could ultimately bear the cost of the government’s additional purchases. She argued that the latest procurement would increase Germany’s reliance on expensive imported gas and maintained that the government had not responded sufficiently to the risks facing winter supplies. From her perspective, reducing households’ dependence on gas would provide a more durable response to recurring concerns over supply security.
The German Association of Cities and Municipalities took a different view, supporting measures to ensure adequate gas-storage levels while calling for targeted assistance if municipal heating costs increase. Its president, Ralph Spiegler, stressed that predictable energy policy was important for consumers and businesses and that action was needed quickly as the heating season approached. He also emphasized that state procurement would not necessarily translate into higher gas prices for households or municipalities because the effect would depend largely on existing procurement contracts.
Nevertheless, higher energy costs could eventually affect the heating of schools, daycare facilities and other public buildings. For municipalities already operating under financial constraints, Spiegler argued, any additional burdens would therefore require targeted assistance. The issue illustrates how measures intended to strengthen national energy security can have differing financial implications for local governments depending on their individual purchasing arrangements.
Companies expect greater price pressure
Despite renewed pressure in energy markets, household gas prices declined during the first half of 2026. Private households paid an average of 11.58 cents per kilowatt-hour, a decrease of 5.3 percent from the second half of 2025 and 4.5 percent from the first half of 2025. Yet the longer-term comparison remained substantially higher: gas prices were 80.7 percent above their level in the first half of 2021. Electricity averaged 37.97 cents per kilowatt-hour, down 6.4 percent from the previous half-year but still 16.4 percent above the first-half 2021 level.
Electricity prices declined across household consumption categories, partly because lower network charges followed federal support for network operators. Gas prices likewise fell across consumption groups following the abolition of the gas-storage charge. The reductions therefore provided some relief compared with late 2025, even as energy costs remained considerably above their pre-crisis benchmark.
For non-household consumers, the picture was more mixed. Average gas prices rose 1.8 percent from the previous half-year, although they remained below their level a year earlier and substantially above 2021 prices. Non-household electricity prices declined overall, but they were still 18.4 percent higher than in the first half of 2021. The figures highlight the continuing difference between recent price movements and the much higher cost base that has developed since the energy crisis.
Businesses, meanwhile, became somewhat more inclined to raise prices. The Ifo Institute’s price-expectations index increased from 21.4 points in August to 22.7 points in September, suggesting that higher energy costs were increasingly being incorporated into companies’ pricing decisions. Expectations rose particularly sharply among energy-intensive industrial businesses and retailers, while service providers became marginally less likely to anticipate price increases.
The renewed rise in crude-oil prices, together with higher natural-gas and electricity costs, has reinforced expectations of continued inflationary pressure. Against this backdrop, the Ifo Institute projected that inflation could rise above 3 percent in the coming months as elevated energy expenses continue to pass through into the prices of goods and services. The combination of temporary fuel relief, intervention in gas storage and rising business price expectations thus reflects the broader challenges facing Germany as higher energy costs increasingly influence household budgets, municipal finances, and the wider price environment.
