Why is petrol more expensive in Germany than most places in the EU?

Why is petrol more expensive in Germany than most places in the EU?

The ongoing conflict in Iran has driven up fuel costs throughout Europe, but Germany’s situation stands out. Recent data shows petrol prices in Germany have surged by nearly 5% in the last few weeks, surpassing the EU average. This stark contrast is evident when comparing neighbouring countries, where increases range from 2% in France to just 0.1% in Slovakia and Hungary.

The European Commission’s weekly Oil Bulletin highlights the sharp price surges in Germany, the Netherlands, Denmark, and Finland. While Dutch drivers face the highest petrol costs in Europe, averaging €2.17 per litre last week, Germany remains close behind at €2.08. Finland also falls within the higher range, notable for its costly diesel alongside petrol.

Experts point to national tax and duty structures as the primary factor. Germany imposes higher energy taxes on fossil fuels, both to support environmental goals and fund infrastructure. Additionally, its CO2 consumption charges add to overall costs. As a result, Germans face steeper price hikes during periods of rising fuel prices. In contrast, many other European countries have structurally lower VAT and oil-related levies.

Some nations have taken action. Croatia and Hungary have introduced price caps at petrol stations, aiming to curb rapid increases. Croatia’s cap will limit prices to €1.50 per litre starting 23 March, while Hungary sets petrol at €1.51 and diesel at €1.59. However, these measures apply only to residents, leaving tourists with foreign licence plates to pay more.

In Austria, petrol stations are restricted to one daily price increase at noon, but reductions can occur at any time. This system enhances transparency, though its effectiveness in lowering prices is debated. Germany’s task force, led by Sepp Müller, has accused oil companies of “price gouging” and called for stricter oversight.

“Really high profits are being made here,” said Berlin-based economist Ferdinand Fichtner, citing a Handelsblatt study. The research suggests oil firms often exploit crises to rapidly raise prices, with margins unchanged since the Iran war began. Fichtner’s findings prompted the task force to seek expanded powers for the Cartel Office to address excessive pricing.

Industry representatives pushed back against the criticism. Christian Küchen, managing director of the Fuels and Energy trade association, argued that profit margins have stayed stable, questioning the need for stricter antitrust laws. Several groups, including the Bundesverband Freier Tankstellen and Zentralverband des Tankstellengewerbes, warned against political interference in pricing, emphasizing that more than half of the fuel cost is already tied to taxes.

The task force meeting included BP and Shell executives, along with Federal Cartel Office president Andreas Mundt, industry associations, consumer groups, and the ADAC. Despite the criticism, oil companies defended their practices, with Küchen noting that the proposed changes could disrupt market dynamics.