Key facts
- EU governments are discussing a bloc-wide windfall tax on energy companies.
- Germany's finance minister Lars Klingbeil called for proposals by next month to tax excessive oil company profits.
- Oil futures have climbed back above $100 a barrel.
- In Germany, diesel prices reached a record average of €2.45 a liter and petrol hit €2.31 a liter.
- In the Netherlands, petrol reached €2.73 a liter and diesel averaged €2.78 a liter.
- Across the EU, petrol prices are 24% higher than a year earlier, diesel is up 38%, and jet fuel costs over 100% more.
European governments are grappling with record-high fuel and gas prices, prompting discussions about a bloc-wide windfall tax on energy companies. The escalating cost of living is fueling public discontent and posing a challenge to leaders ahead of elections in several EU countries next year.
Germany's finance minister, Lars Klingbeil, urged the European Commission to propose methods for taxing what he described as the "excessive profits" of oil companies, stating that people can see "oil companies exploiting the situation." Oil futures have surpassed $100 a barrel due to Middle East tensions, and derivatives markets do not anticipate a near-term price drop. Pump prices have reached all-time highs across Europe, with Germany and the Netherlands reporting record levels for diesel and petrol.
Across the EU, petrol prices have increased by 24% year-on-year, diesel by 38%, and jet fuel by over 100%. Benchmark gas is trading at €81 per megawatt hour, up 150% from a year ago, with analysts suggesting it could reach €100.
The European Commission's economic commissioner, Valdis Dombrovskis, stated that while there are no current plans for an EU-wide taxing mechanism, the commission is "ready to engage in discussion," and member states are free to implement their own taxes.
In Italy, the government announced a €2 billion road tax cut for cars and motorbikes and a cut to diesel duty costing €2.8 billion, aiming to address rising fuel costs. France's President Emmanuel Macron has called for "full mobilization" on fuel supply and prices, including international efforts to secure supply routes. French fishers protested soaring diesel prices, leading to a promise of zero-interest loans and support measures for those with cashflow issues. France has extended emergency fuel subsidies for the agriculture, fishing, and construction sectors until year-end, though the government is hesitant about broad measures.
Spain has doubled its diesel tax discount to €0.20 per liter, and Germany's Chancellor Friedrich Merz has pledged action to alleviate record fuel prices, following a previous tax cut that lapsed as oil prices rose.