Federal Minister of Economics Katherina Reiche (CDU) has detailed her vision for implementing a price cap on fuels, according to a report by the “Handelsblatt” referencing the draft law. The Federal Government and the states had agreed several weeks ago to introduce a nationwide limit on the high prices of gasoline and diesel, which have increased due to the Iraq war.
The crucial limitation is that the law does not automatically enact a price cap; rather, it merely establishes the legal framework. The price cap can only be activated by the Federal Government if prices for gasoline and diesel remain more than five percentage points above the average rate of increase in other EU countries for three consecutive weeks. The draft law states that it is set to come into effect on January 1, 2027, although the legal basis provided by the law is only intended to last for three months.
An insider noted that maintaining a guaranteed supply of gasoline and diesel at all times is necessary, stating that it would not be practical to promise specific relief amounts in cents. Consequently, the law also provides for federal and state governments to suspend the price cap if supply issues arise. Furthermore, the states generally retain the ability to deviate from the national maximum price, both upwards and downwards, even for specific districts or smaller areas.
Currently, the legislation is in a very nascent stage. According to information from the “Handelsblatt”, it has just entered the “early coordination” phase, marking the initial step for alignment among the various branches of the Federal Government.
