German Finance Minister Demands Oil Firms Lower Fuel Costs Amid Price Shock
Government Response to Energy Price Shock and Oil Companies' Role
By Petra Wischgoll
Fuel Price Discount and Its Impact
BERGKAMEN, Germany, May 1 (Reuters) - Oil companies must pass on the benefits of Germany's fuel price discount to consumers, German Finance Minister Lars Klingbeil told Reuters on Friday, as his government seeks to cushion the effects of the energy price shock caused by the Iran war.
The government has temporarily cut Germany's energy tax on diesel and petrol by about 0.17 euros per litre, relief worth around 1.6 billion euros ($1.88 billion) as part of a package of measures to mitigate the fallout from soaring global prices.
The unprecedented energy price disruption is impacting many economies including Germany, Europe's largest, which was already struggling to regain momentum after the pandemic as high costs and competition from China strain its export-driven model.
Political Stakes and Public Sentiment
The stakes are high for Klingbeil. His Social Democratic Party took a drubbing in March state elections and, along with Chancellor Friedrich Merz's conservatives, faces a big challenge from the far-right Alternative for Germany, which is surging in the polls.
The energy tax cut took effect on Friday and will remain in place for May and June.
Accountability of Oil Companies
The oil companies must accept their responsibility, Klingbeil said in an interview.
"We in politics will be watching this closely, but these reductions must be passed on," said Klingbeil, who is also pushing for a windfall tax on energy profits.
Federal Cartel Office's Observations
The German Federal Cartel Office on Friday said the fuel price discount appeared to have been largely passed on to consumers, though it also said some petrol stations had actually raised prices.
"An astonishing development at noon today: Some petrol stations have increased their prices significantly, while others have not, or hardly at all," said Andreas Mundt, President of the Federal Cartel Office.
"The tax cut is intended to provide relief to consumers and the economy during a difficult period. The oil companies are, at best, custodians of this relief; it is not intended for them. It must reach the customers," he said.
Klingbeil's Stance on Broader Political and Economic Issues
Reforms and Coalition Dynamics
KLINGBEIL URGES TRUMP TO END IRAN WAR
Germany's ruling coalition is pushing to enact a series of reforms in the coming months to tax, pensions and health systems but has been shaken by internal squabbling.
Klingbeil played down the disagreements as part of the rough and tumble of democracy, and dismissed talk of the coalition being at breaking point.
"The main goal must be to modernize our country, to make Germany stronger than it has been in recent years, and to finally get back onto a growth trajectory after four years of weakness, and that was clearly evident here," he said.
Impact of the Iran War on Germany
But Klingbeil, who became finance minister a year ago, acknowledged how the Iran war "is affecting the mood again. Yes, economic growth is declining again; we had just hoped it would improve."
The Iran war, which Germany opposes, has also intensified a rift between U.S. President Donald Trump's administration and its European NATO allies, with relations already strained by disputes over defence spending, Ukraine and non-military issues such as tariffs.
"But right now, our message is to the U.S. government: end this war, focus on negotiations, and ensure that the Strait of Hormuz is reopened," he said.
Exchange Rate Information
($1 = 0.8508 euros)
(Writing by Matthias WilliamsEditing by Gareth Jones)
