Germany introduces fuel subsidy as pump prices remain high

German motorists began receiving lower fuel prices on Thursday after a government subsidy aimed at reducing the impact of higher energy costs came into force. The automobile association ADAC said average petrol prices fell by about 14 cents to €2.06 a litre, while diesel prices dropped by 15 cents to €2.20. The reductions followed sharp increases in fuel costs linked in the source material to disruption in Middle Eastern supplies.

Some motorists in Frankfurt said the reduction offered limited relief. Andrea Hoecker, a public-relations worker, described it as helpful in the short term but insufficient as a longer-term answer. Teacher Lorena Konle said prices remained unsatisfactory.

The subsidy is officially set at 17 cents a litre, although the amount reaching motorists can vary with oil prices and exchange rates. Motoring organisations have expressed concern that companies may not pass on the entire reduction. A spokeswoman for Auto Club Europa said the discount should reach consumers in full and should not again be retained partly by the oil industry.

The concern follows a previous subsidy programme in May and June, when the Monopolies Commission said energy companies kept about €200 million of the €1.6 billion paid by the government. Some economists also criticised the measure as poorly targeted. Clemens Fuest, head of the Ifo Institute, said it could redistribute support towards frequent drivers with larger cars rather than lower-income workers and pensioners.

Other European Union countries have adopted different responses to higher fuel costs, including tax reductions and direct payments to citizens.