German Petrol Price Control Law Backfires, Increasing Fuel Costs by 5-6 Cents/Liter
A German law meant to control petrol prices and protect motorists has increased fuel costs by 5-6 cents per liter. Introduced in March, the measure mandated daily noon price rises, but economists found it boosted retailer margins and elevated midday prices, reducing opportunities for cheaper fuel.
A German law introduced in March to control petrol prices has backfired, increasing the average cost of fuel, economists reported Monday. The measure, intended to shield motorists from spiking oil prices, mandated that petrol stations limit price rises to once daily at noon.
However, economists at the ZEW institute and the Düsseldorf Institute for Competition Economics found the law boosted retailers’ petrol margins by five to six cents a litre. Their analysis of wholesale versus pump prices at 15,000 petrol stations revealed that prices now spike at noon, then gradually fall, bottoming out the next morning. This leaves fewer opportunities for drivers to find cheaper petrol.
The economists stated, «The reform was successful in increasing price transparency but failed to reduce price levels. If anything, it had the opposite effect.» They noted that while low-price windows are more predictable, prices are systematically elevated during midday. Smaller and independent petrol stations benefited most from the additional five to six cents per litre. No robust effect was observed for diesel prices.