The fuel discount will no longer take the form of a tax reduction on mineral oil, but will be transferred directly to the oil companies in order to reduce bureaucracy.

This speaks in favor of it

The relief could be designed more precisely. With a tax cut, a component of the fuel price initially decreases. A direct payment, on the other hand, could be tied to conditions, such as: only for fuel actually sold, only for a specific period, only up to a certain price ceiling, or only if the relief is passed on to customers in full. This would theoretically allow the instrument to be more precisely tailored to the desired relief.

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The disbursement process could be technically quite simple. The government could, for example, bill based on reported fuel volumes. This would be particularly advantageous if an existing digital reporting system were used. The infrastructure for direct government payments via tax ID, created in 2022, demonstrates that direct government payments can generally be organized with minimal bureaucracy. However, this is not proof that payments to oil companies would automatically result in less bureaucracy. The specific billing model would need to be designed accordingly.

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Passing the savings on to consumers could be contractually or legally secured. The problem with the 2022 fuel discount was precisely that the tax reduction didn't automatically translate into a full reduction in pump prices. At the time, the federal government explicitly stated that pricing at pumps was the responsibility of the companies. With a direct payment, the government could, for example, stipulate: X cents per liter will only be paid out if the average end-customer price falls by at least X cents compared to a defined reference value. This would transform the subsidy to the company into a kind of performance-based relief.

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The measure could be limited to particularly affected sectors. Instead of subsidizing all motorists, support could be provided only to particularly fuel-intensive sectors, such as logistics, agriculture, trades, and public or commercial transport. This also aligns with the direction of current EU crisis instruments: The EU framework METSAF, adopted in 2026, allows for targeted aid for agriculture, fisheries, and transport under certain conditions, including compensation for additional fuel costs.

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This speaks against it

The claim of "less bureaucracy" is not automatically true. Administratively, a tax cut is relatively simple: the government changes the tax rate, and companies calculate their taxes accordingly. With a direct payment, however, the government would have to clarify, among other things: Who is actually eligible? How many liters were actually sold? At what price? What was the international price of crude oil or refinery oil? How much of the government payment was passed on to customers? What happens with gas stations that have multiple owners? How are false claims checked? How are overpayments reclaimed? The bureaucracy would therefore not disappear, but would potentially shift from tax administration to a subsidy and control administration.

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There is a risk that some of the subsidy will remain with the companies. However, the experience of 2022 is more nuanced than this assumption suggests: The Federal Cartel Office concluded that the tax cut at that time was largely passed on to consumers. At the same time, the Cartel Office observed significant discrepancies between crude oil, refinery, and gas station prices in 2022 and noted that oil companies generated high profits during the crisis. The office also emphasized, however, that high profits alone are not proof of anti-competitive behavior. This illustrates the problem with direct payments: The less competition there is in a market, the more difficult it is to ensure that a government subsidy actually reaches the consumer.

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The state would be directly subsidizing companies. With a tax cut, the state forgoes a portion of its revenue. With a direct payment, however, it actively transfers taxpayer money to companies. This can be politically and regulatoryly problematic if it is not simultaneously ensured that the companies provide the corresponding services in return. Furthermore, such payments may be relevant under EU state aid law. While the EU Commission does have crisis frameworks for state aid, these are subject to conditions and time limits.

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The measure could create perverse incentives. A permanent subsidy for gasoline and diesel reduces the incentive to consume less fuel, switch to public transport, buy more efficient vehicles, and transition to electric mobility. The European Commission therefore explicitly points out, with regard to current energy aid, that crisis measures should be targeted and temporary and should, where possible, include incentives for energy conservation.

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A direct payment does not solve the underlying problem of high oil prices. If the price of oil rises sharply internationally, Germany cannot permanently offset the world market price through subsidies. The Federal Ministry of Finance (BMF) also points out, in connection with the current energy tax reduction, that government measures cannot fully or permanently compensate for global price developments.

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