Merz promises fuel relief as Germany grapples with record pump prices

On a Tuesday morning in mid-September, Chancellor Friedrich Merz stood before the German Foreign Trade Association in Berlin and acknowledged what every driver in the country already knew: people had reached their limit. The price of fuel had become unbearable, and something had to change. Yet even as he promised relief, Merz could not say what that relief would look like. The exact measures, he explained, had not yet been determined.

The numbers told the story of a country in crisis. In Berlin that morning, E10 gasoline sold for about €2.25 per liter, diesel for €2.37. At noon, when German gas stations are permitted to raise prices once daily, both jumped by roughly €0.20 per liter. At a highway station in southern Berlin, Super Plus reached €3.03 per liter—a record. For a driver filling a 60-liter tank, the arithmetic was brutal. Cross the border into the Czech Republic or Poland, and the same tank of E10 cost €31 less. Luxembourg offered savings of €28. Austria, €25. The Federal Statistical Office had done the math: gasoline was significantly cheaper in seven of Germany's nine neighboring countries. Only the Netherlands and Denmark charged more.

The anger was justified, but it fell unequally. In Berlin or Munich, a person could take the U-Bahn. In rural Germany, there was no alternative. A farmer, a tradesperson, a nurse commuting to a hospital in the next town—they had no choice but to pay. Some had already begun the calculus of cross-border shopping, driving to cheaper pumps in neighboring countries to fill their tanks. The government's own deputy spokesperson, Steffen Meyer, had tried to deflect blame. The problem, he said, was not Berlin's doing. It was the Middle East, the attacks on oil pipelines, the blockade of shipping lanes. But the ADAC automobile club had a different reading: yes, oil prices remained below their historical peaks, yet E10 gasoline had never been more expensive. The culprit, they suggested, was not just crude but the tax burden Germany imposed on fuel—and the profit margins oil companies were protecting.

Herbert Rabl, who represented gas station owners, was blunt about it. "They're raking it in," he told the Rheinische Post. "The oil companies aren't cutting into their profit margins at all." It was a problem that had circled through political debate for years, but the federal government remained divided on whether it could do anything about it. The coalition between the conservative CDU/CSU and the center-left SPD faced a harder constraint: the state coffers were empty. Taking on new debt to subsidize fuel prices was politically toxic and fiscally impossible.

The government had tried this before. In the spring, after war broke out in Iran, Berlin had introduced a temporary fuel rebate. From May through June, the energy tax on gasoline and diesel was reduced, lowering prices by roughly €0.17 per liter. Federal Economy Minister Katherina Reiche acknowledged the measure had worked: "We had a fuel rebate; we subsidized prices." But it would not happen again. "Together, we in the coalition have decided that we don't have the financial scope for that at the moment," she said. The conservatives were now exploring alternatives—tax relief for commuters, direct payments to low-income earners. It was not enough for the SPD. They wanted a price cap, enforced by government, funded by an excess profit tax on energy companies. They wanted immediate relief at the pump.

While the coalition debated, the calendar was working against them. Regional elections in two states were scheduled for September 20. In Mecklenburg-Western Pomerania, SPD Premier Manuela Schwesig was fighting to hold off the far-right Alternative for Germany, which was polling at 38 percent to the SPD's 34. The AfD had a simple platform: abolish the CO₂ tax on fossil fuels, cut the energy tax to the European minimum, reduce the value-added tax on fuel from 19 percent to 7 percent. Schwesig, on September 14, had criticized the chancellor's inaction. "The chancellor is just allowing this to drag on, and that is causing frustration." She pointed to Luxembourg as a model—a price cap paired with an excess profit tax.

Berlin was looking beyond its borders for a solution. Finance Minister Lars Klingbeil was preparing to push for an excess profit tax at a meeting of EU finance ministers in Dublin. Spain and Poland, he said, were allies in the effort. The idea was straightforward: use the windfall profits that oil companies were harvesting during the crisis to provide targeted relief for the people being crushed by high prices. But whether the coalition could move fast enough, whether Europe would act, whether any measure could bring prices down before the elections—these remained open questions. The driver filling up at a Berlin gas station at noon on September 15 had no answer, only the receipt.