In the ongoing debate about cushioning the impact of high fuel prices, Marcel Fratzscher, president of the German Institute for Economic Research (DIW), has proposed a one-off financial injection for all citizens. The economist stated that he supports a subsidy that would be given directly “into everyone’s pocket.” Specifically, he urged the federal government to reintroduce an energy cost allowance, similar to the scheme from 2022, which provided 300 euros per person. While acknowledging that this would be a significant expenditure, Fratzscher argued that it would be a sensible strategy and send a clear signal right now.
Fratzscher emphasized that no entity in Germany can influence global oil prices, but the federal government has a responsibility to cushion the resulting effects. He insisted that a direct subsidy usable for personal spending is the most effective way to achieve this. In contrast, he labeled the fuel discount program, which the government used in May and June to subsidize gasoline directly at the pump, as “economically senseless and socially fundamentally flawed.”
Beyond direct aid to consumers, Fratzscher also advocated for a so-called “super-profit tax.” He stated that in principle, he supports this tax because oil corporations are accumulating substantial wealth due to a lack of fair and competitive conditions in this market. Although he cautioned that implementing a super-profit tax involves complex details, he noted that imposing a direct price ceiling would be even more difficult to put into practice.
