Soaring Fuel Costs Test German Coalition as Election Looms

Fuel prices at German gas stations have surged, creating a significant political and economic challenge for the federal government. In Berlin on the morning of September 15, E10 gasoline was trading at approximately €2.25 per liter and diesel at €2.37. By noon, when daily price adjustments are permitted, costs rose by roughly €0.20 per liter, with Super Plus reaching €3.03 per liter at a highway station in southern Berlin.

The affordability crisis is particularly acute for residents in rural areas who lack viable public transportation alternatives. Meanwhile, drivers near Germany’s borders have found cheaper options abroad. Data from the Federal Statistical Office indicates that filling a 60-liter tank with E10 was approximately €31 less expensive in the Czech Republic and Poland, €28 cheaper in Luxembourg, and €25 lower in Austria on September 7. Germany shares borders with nine countries, and fuel is notably cheaper in seven for gasoline and six for diesel, with only the Netherlands and Denmark charging higher rates.

Chancellor Friedrich Merz acknowledged the severity of the situation, stating that many daily commuters have reached their breaking point. Speaking at an event hosted by the German Foreign Trade Association (BGA), Merz affirmed that the government must act, though he noted that specific measures are still being debated within the coalition and with the federal states. Deputy Government Spokesperson Steffen Meyer rejected the notion that federal policy is driving the price hikes, attributing the sharp increases instead to escalating tensions in the Middle East, including attacks on oil pipelines and shipping blockades.

However, critics argue that domestic taxation plays a major role. The ADAC automobile club highlighted that while global oil prices remain below previous peaks, domestic E10 costs are at record highs, calling for greater transparency in refinery and wholesale markets. Herbert Rabl of the Gas Station Interest Group (TIV) accused energy companies of maintaining profit margins without passing savings to consumers.

The governing coalition, comprising the Christian Democratic Union (CDU), Christian Social Union (CDU), and the Social Democratic Party (SPD), faces financial constraints due to a depleted budget and high debt levels. Federal Economy Minister Katherina Reiche confirmed that a repeat of the temporary fuel rebate introduced in May and June 2026—which lowered prices by about €0.17 per liter—is not financially viable. Instead, conservatives are considering tax relief for commuters or direct payments for low-income households.

The SPD is advocating for a more interventionist approach, proposing a government-imposed price cap on fuel financed by an excess profit tax on energy companies, alongside temporary energy tax reductions. Finance Minister Lars Klingbeil plans to champion this excess profit tax at an upcoming EU finance ministers’ meeting in Dublin, citing support from large member states such as Spain and Poland.

As the federal government debates its response, the issue is impacting upcoming regional elections in Mecklenburg-Western Pomerania on September 20. The far-right Alternative for Germany (AfD) leads polls with 38%, challenging the ruling SPD. The AfD proposes abolishing the CO₂ tax on fossil fuels, reducing the energy tax to the European minimum, and cutting value-added tax on fuel from 19% to 7%. SPD Premier Manuela Schwesig criticized the federal government’s delays, suggesting they adopt measures similar to those in Luxembourg. With public frustration mounting, the coalition must quickly determine its strategy to address what Merz described as a critical burden on drivers.