German Diesel Hits Record €2.45 Per Litre as EU Weighs Windfall Tax

Diesel prices in Germany reached a record average of €2.45 per litre on Wednesday, September 18, as Middle Eastern supply disruptions push crude above USD 100 per barrel. The SPD-led Bundestagsfraktion issued a 14-day ultimatum to oil companies to impose a voluntary price cap or face government intervention. EU finance ministers are simultaneously debating a bloc-wide windfall tax on energy firms to fund relief for drivers across the continent.

Record fuel prices strain German motorists

German diesel hit €2.45 per litre on September 18, the highest on record, while petrol reached €2.31 per litre, according to the ADAC motoring association. Across the EU, diesel prices are up 38% year-on-year and petrol is 24% higher. In the Netherlands, petrol eclipsed €2.73 per litre and diesel reached €2.78 per litre. Brent crude futures moved above USD 100 per barrel on September 9 as attacks on oil shipping in the Middle East intensified supply concerns.

SPD demands oil firms cap prices within 14 days

The SPD-Bundestagsfraktion issued an ultimatum to German oil companies to introduce a temporary price cap within 14 days, rolling back refinery margins to pre-crisis levels. If oil firms refuse, the SPD will push the federal government to impose a state-mandated price cap. Finance Minister Lars Klingbeil backs a windfall tax on oil company profits to fund relief. However, Economy Minister Katherina Reiche (CDU) rejected both approaches, citing damage to Germany’s mid-sized refinery sector and citing failed price caps in other EU states.

Government considers multiple relief options

CDU General Secretary Franziska Hoppermann stated on Thursday that relief of 21 to 25 cents per litre would be “noticeable.” The government is weighing a value-added tax cut on fuel, which could take effect in early October if approved. The ADAC and German transport groups are pushing for a revival of the fuel tax subsidy instead, which would directly reduce the energy tax on diesel and petrol. Economy Minister Reiche also proposed direct payments to low-income earners, though these could not begin until early 2027 due to missing banking data.

EU finance ministers debate windfall tax

Germany’s Finance Minister Klingbeil called on the European Commission at a Dublin meeting on September 18 to propose a bloc-wide windfall tax on energy companies. Six member states, including Austria, Italy, Portugal, Poland and Spain, have backed the proposal. Klingbeil demanded Commission proposals by next month. A windfall tax would capture excess oil company profits and fund relief for citizens. The EU imposed a similar tax in 2022 as an emergency response to energy price spikes from the Ukraine war.

Supply disruptions fuel crude price surge

Refinery margins in North-West Europe exceeded USD 100 per barrel in early September, nearly double pre-war levels, as Saudi Arabia’s East-West pipeline shutdown restricts crude flows. The pipeline, which carries 4 to 5 million barrels daily, links Saudi oil fields to the Red Sea port of Yanbu. Attacks on shipping in the Strait of Hormuz and Bab el-Mandeb Strait have forced rerouting through the Suez Canal. Saudi Aramco has cancelled or delayed at least three European refiner cargoes to November, forcing Poland’s Orlen to source from North Sea grades and US WTI as replacements.

Final Thoughts

Record diesel prices at €2.45 per litre have forced Germany’s hand. With the SPD demanding action within 14 days and the EU exploring a windfall tax, relief measures are likely by October, though disagreement over method persists. Investors in European energy firms should monitor political developments closely.

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