The German government’s decision to introduce a fuel subsidy combined with plans for a price cap has elicited a divided response from economists and professional associations.
Sebastian Dullien, Director of the Institute for Macroeconomics and Business Cycle Research (IMK), offered strong support, stating that a winter fuel discount is a positive measure for the German economy, especially when paired with a price ceiling. He argued that the benefits extend beyond just drivers; companies would also be relieved as transportation costs decrease. This, he suggested, could prevent high diesel prices from feeding into supermarket food costs, thereby increasing the likelihood that inflation remains below 3% by the end of the year. According to Dullien, the relief could also avert financial trouble for logistics companies and lessen pressure on the European Central Bank to continue raising interest rates, ultimately securing jobs.
The logistics sector was also positive about the measure. Dirk Engelhardt, CEO of the Federal Association for Goods Transport, Logistics, and Waste Disposal (BGL), told “Bild” that 17 cents per liter could help cushion the current burden. He added that the government’s move to implement a 17-cent fuel discount (including VAT) and subsequently planning a price cap sends an important signal given current diesel prices. However, he cautioned that the relief must not be merely short-term.
The German Farmers’ Association responded with more restraint. Martin Dippe, its Secretary General, called the tax reduction “initially positive” but stressed that it does not constitute a permanent solution. Instead, he advocated for targeted approaches, such as an agricultural diesel specifically formulated like the Italian model, or the outright abolition of the energy tax. Dippe noted that a 17-cent reduction in the liter price would still leave the cost at the high level seen just weeks prior.
Conversely, criticism came sharply from Clemens Fuest, President of the Ifo Institute. He declared that the fuel discount was a “mistake,” arguing that the state expends considerable funds on the measure, much of which benefits drivers who are already able to afford high fuel prices. In his view, more targeted aid would be more sensible. Fuest suggested raising the mileage allowance for long-distance commuters and providing direct support to low- and middle-income earners, arguing that the government can only redistribute costs, not eliminate high energy prices, requiring careful and targeted deployment of assistance.
Ralf Dewenter, a professor of economics in Hamburg, expressed skepticism. While acknowledging that high-fuel-consuming industries might benefit, he questioned whether a price reduction limited to a few months would be sufficient to secure or create new jobs. He deemed the relief “too small and above all, too short-term.”
Tomaso Duso, Chairman of the Monopoly Commission, pointed to earlier findings, noting that of the total intended relief volume of 1.6 billion euros, at least 200 million euros remained with oil corporations. While some portion was passed on, Duso stated that “a relevant share was not.”
The competition economist was also critical of the planned price cap, warning that it would become a “bureaucratic monster.” Furthermore, he highlighted the risk of gas stations orienting themselves to the price ceiling, potentially leading to price hikes. Duso referenced studies from Belgium and Greece that demonstrated similar negative effects, warning also of potential market distortions and supply issues.
