German economist calls fuel rebate plan a bad mistake
20.09.2026, DPA
A member of Germany's Council of Economic Experts has said the government's decision to introduce a fuel rebate is a cynical way to try to solve a problem with a short-term solution that will lead to frustration among younger voters, the Kölner Stadt-Anzeiger newspaper reported on Sunday.
Veronika Grimm, whose panel advises the government, said "opportunistic politics" was being used to try not to alienate voters "but in the end it only leads to many voters turning away from the established parties in frustration because they are simply not doing their job."
She said the plan would subsidize cars with internal combustion engines at the expense of the younger generation.
"In this case, that affects both those who reject the climate impact of this measure and the entrepreneurs who can only shake their heads at this short-sighted guiding principle for action," Grimm added.
Because politics focused on the short term, it had "no strength for the really important structural reforms," she added. "This is likely to mean a greater loss of prosperity for citizens than temporarily higher fuel prices."
The agreement between the federal and state governments on a relief package to counter high fuel prices had previously drawn criticism from consumer advocates, social associations and the opposition in parliament.
The renewed fuel rebate was not targeted and, like the planned fuel price cap, would only help for a short time, they said.
New German fuel subsidy riles parties, consumers and environmentalists
19.09.2026,
The new fuel relief package agreed by the federal and state governments in Germany has come under fire from consumer advocates, social organizations and the opposition in parliament.
Critics argue that the renewed fuel discount - set to start on October 1 - is poorly targeted and, like the proposed fuel price cap, will only offer short-term relief amid rising global fuel prices due to the war in Iran.
To ease the burden on citizens and businesses, the energy tax on petrol and diesel will be reduced by 14 cents ($0.16) per litre until the end of the year.
Combined with the value-added tax (VAT), this gives a total relief of 17 cents per litre. The federal and state authorities are allocating around €2.5 billion ($2.86 billion) for the measure.
A previous fuel discount on petrol and diesel had provided the same level of relief from the beginning of May until the end of June.
In addition to the fuel discount, a fuel price cap is planned to take effect by January 2027 at the latest, although it is intended as a temporary crisis measure rather than a permanent fixture.
Critics: Another broad-brush approach
Consumer advocate Ramona Pop criticized the government for again resorting to a "watering-can" - or broad-brush - approach. "This is expensive, short-sighted and poorly targeted," the executive director of the Federation of German Consumer Organizations told the Rheinische Post newspaper.
Pop argued that relief is needed primarily to reach low- and middle-income households, with a focus on the upcoming heating season, and that dependence on fossil fuels must be consistently reduced.
The SovD social welfare association was pleased that the government is taking action, but SoVD Chairwoman Michaela Engelmeier told the Funke Media Group that a fuel discount is not the right solution, as it also provides relief to those who do not need the support. She thinks a fuel price cap is a better measure.
Greenpeace expert Marissa Reiserer called the measure an "ineffective discount." Instead of wasting billions in tax revenue through a broad approach, she said the root problem remains the dependence on oil.
For the Green Party in the Bundestag, or lower house of parliament, the fuel discount represents "yet another expensive gift to the oil corporations," according to co-parliamentary group leader Katharina Dröge. She advocated for an excess profits tax instead and a directly paid "energy bonus," which people could then spend according to their own needs.
Meanwhile, The Left party parliamentary group leader, Heidi Reichinnek, attacked the oil companies and slammed the government for coming up with nothing better.
"The robbery at the nation's petrol pumps by oil monopolies must finally be stopped," she said. Only an excess profits tax could tackle the issue at its root, said Reichinnek.
Sahra Wagenknecht, leader of the left-wing populist BSW party, called the 17-cent relief a joke: "A relief of one euro, not 17 cents, would be appropriate."
The BSW is demanding a fuel price cap of €1.50 per litre, said Wagenknecht, arguing that this would be feasible because more than half of the fuel price consists of taxes and duties.
Resistance to 'planned economy' with price cap
Conversely, Wolfgang Kubicki, chairman of the pro-market Free Democratic Party (FDP), views the planned fuel price cap as an instrument of a "planned economy" and a wrong move from Chancellor Friedrich Merz.
He told dpa that Merz "has once again caved in to Finance Minister Lars Klingbeil" of the Social Democrats (SPD) and undermined his economy minister, Katherina Reiche, also of the CDU. She is against a price cap and warned of a potential weakening of the medium-sized refining industry.
Meanwhile Germany's oil industry is willing to talk about a price cap but says the size of the German market makes such a policy unwieldy.
"Unlike the manageable markets in Belgium and Luxembourg, which are cited as models, state price regulation in the German market with its 14,000 petrol stations would be highly complex and involve considerable additional bureaucracy," said Christian Küchen, chief executive of the Fuels und Energie industry association, in an interview with the Sunday edition of Die Welt newspaper.
"If a price cap is set too low, it could jeopardize security of supply in the worst case."
The government has said additional targeted measures for citizens and companies affected by the crisis could be launched at the beginning of 2027 "if necessary." Steps would be taken to ensure that the state can transfer money directly to citizens - adjusted according to how much an individual earns.
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