German Chancellor Friedrich Merz has expressed concern over rising energy prices in the wake of the Iran war, warning that the impact could ripple through to Germany's broader economy. Speaking in Berlin on Monday, Merz said he was "concerned" about the developments and acknowledged the potential knock-on effects. "And that is why we are doing everything to increase our independence in energy policy and to reduce energy prices in the longer term through an improved supply," Merz said.
The Chancellor was careful to manage expectations, noting that resolving the energy challenge would not happen overnight. He added that the task could not be completed "within a few days," signalling that any meaningful relief for consumers and businesses would require sustained policy effort rather than immediate intervention.
On the question of a potential fuel discount, similar to the one introduced during the energy crisis triggered by Russia's invasion of Ukraine, Merz declined to commit. He said he did not want to give "a final statement" on the matter at this stage. The government was monitoring prices "very intensively," he said, adding that the Federal Ministry of Economic Affairs and the Federal Cartel Office had "entered into an investigation." Merz made clear he did not want to pre-empt the outcome of that review.
The previous coalition government introduced a fuel tax discount in June 2022, in the wake of Russia's invasion of Ukraine. Under that measure, energy tax on fuels was temporarily reduced to the minimum level permitted under EU rules for a period of three months. Including VAT, the tax on diesel fell by 16.7 cents per litre and on premium petrol by 35.2 cents per litre. According to a study by the RWI Leibniz Institute for Economic Research, the relief was "substantially" passed on to drivers by the fuel companies.
Economists have spoken out against repeating the fuel discount measure in recent days. Ifo Institute president Clemens Fuest told the newspaper Welt that the rise in fuel prices was a signal of oil scarcity. "It is important that drivers feel this price signal and change their behaviour accordingly, as far as they can," Fuest said.
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