Germany rolls out fuel subsidy for motorists as energy crisis bites

German motorists have begun benefiting from a government-backed reduction in fuel prices as authorities move to cushion households and businesses from the sharp increase in energy costs linked to the ongoing conflict in the Middle East.

The relief took effect on Thursday, with the average price of petrol falling by about 14 cents to €2.06 per litre, while diesel dropped by approximately 15 cents to €2.20 per litre, according to Germany’s automobile association, ADAC.

The measure comes as Germany, Europe’s largest economy, grapples with rising pump prices amid disruptions to fuel supplies from the Middle East.

However, the reduction has received a mixed response from motorists, with some saying the savings were too small to significantly ease the pressure on household budgets.

“It’s just a drop in the ocean,” Andrea Hoecker, a 33-year-old public relations worker, told AFP at a petrol station in Frankfurt.

“It helps in the short term, but in the long run I don’t think you can solve the problem with it,” she said.

Another motorist, Lorena Konle, a teacher, described the prevailing fuel prices as “unsatisfactory”.

“I have to be completely honest: with the prices we have, it doesn’t really make a difference,” she said.

The government has officially fixed the fuel subsidy at 17 cents per litre, although the actual reduction motorists receive at filling stations can vary depending on factors including global oil prices and foreign exchange rates.

Motoring organisations have also raised concerns over whether the entire value of the subsidy will be reflected in pump prices.

Their concerns are partly linked to an earlier fuel subsidy scheme implemented in May and June, when energy companies retained about €200 million from the €1.6 billion paid by the government, according to the Monopolies Commission, Germany’s competition watchdog.

“This new fuel discount must now finally reach consumers in full,” a spokeswoman for the Auto Club Europa association told AFP.

Part of the subsidy must not once again “get stuck with the oil industry”, she added.

Meanwhile, some economists have questioned whether the policy is sufficiently targeted at households most affected by rising living costs.

Clemens Fuest, head of the Ifo Institute, argued that the measure could disproportionately benefit motorists who drive frequently and own larger vehicles.

“The fuel discount leads to redistribution in favour of frequent drivers with large cars,” Fuest told the Augsburger Allgemeine daily.

Germany is not alone in introducing measures to shield consumers from the impact of higher fuel costs.

Several other European Union countries have adopted different interventions, including reductions in fuel taxes and direct financial support to citizens, as governments respond to the wider energy shock.

The measures come amid continuing uncertainty over fuel supplies and prices as the conflict involving Iran and the United States continues to disrupt energy flows from the Middle East.

(AFP)