Does the Fuel Shock Threaten the German Economy? 0 8

Gasoline prices are rising. German states are asking Berlin for help for drivers, but the federal government is currently refusing. The head of the Ministry of Economics, Katharina Reiche, stated that a return to the price control mechanism for gasoline is not being considered at this time.

They explain this by saying that there is no fuel shortage in the country. Yes, prices are fluctuating due to news from the Middle East, but there are enough oil and gas supplies. The government says they have a crisis action plan, but the situation is not serious enough to implement it yet.

Why is the government doing nothing about gasoline prices? Some experts say that the "price brake" did not help even in 2022, while others suspect that it is simply advantageous for the state when gasoline is expensive. Indeed, it has been calculated that at a price of 2.5 euros per liter, the treasury receives more than 1.2 euros from each liter. Of this, 50 cents is the energy tax, 15 cents is the environmental tax, another 15 cents is the CO₂ tax, and plus VAT (19% of the final price) adds about 40 cents on top.

It seems that the higher the price, the more money the government has. But in reality, it is the opposite: expensive gasoline quickly drives up inflation (as transportation costs rise), people start spending less, and factories produce less.

As a result, the economy slows down, and the country loses competitiveness. Thus, the immediate tax benefit turns into significant problems for everyone in the future. People who use heating oil are also feeling the impact of the situation. In the newspaper Bild, expert Gert Heinemann from the University of Lower Rhine even suggests that in the worst case, the price per liter could exceed two euros. In some places, diesel is already more expensive!

Many people at German gas stations seem to be trying to fill up their cars now to avoid paying more later. On social media, many are urging: "Please fill up and completely fill your tank."