Key facts
- EU governments are discussing a bloc-wide windfall tax on energy companies.
- Germany will cut fuel taxes by 17 cents per liter as part of a €2.5 billion relief package.
- Germany's Finance Minister Lars Klingbeil urged the European Commission to propose a windfall tax on oil companies by the end of October.
- Oil futures surpassed $100 a barrel due to Middle East tensions.
- Across the EU, petrol prices are 24% higher than a year earlier, diesel is up 38%, and jet fuel costs over 100% more.
- Benchmark gas is trading at €81 per megawatt hour, up 150% from a year ago.
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.
Germany will lower tax on petrol and diesel by 17 cents per liter in a relief package worth €2.5 billion, the German government announced Friday. The measure, brokered between Germany's federal and state governments, is part of the package promised by Merz as fuel prices continue to climb in response to the war in Iran and the escalating conflict between Yemen's Iran-backed Houthis and Saudi Arabia. The Merz government also plans to introduce a temporary fuel price cap on petrol and diesel modeled on similar policies in Luxembourg and Belgium. Berlin aims to introduce the measure by Jan. 1, 2027.