German justice minister criticizes draft fuel price cap as ineffective, warns of "dead law"

Stefanie Hubig (SPD), Federal Minister of Justice and Consumer Protection. Source: Fabian Sommer/dpa

Federal Minister of Justice and Consumer Protection Stefanie Hubig (SPD) has sharply criticized the draft bill by Economics Minister Katherina Reiche (CDU) for a fuel price cap and is demanding improvements. A study found: "If the fuel price cap is designed as proposed, it will remain dead law," Hubig told the Neue Osnabrücker Zeitung ("NOZ"). "In the end, it must not become a paper tiger."

Doubts Over Compliance with Coalition Agreement

The minister expressed doubts as to whether the current draft does justice to the coalition agreement. "Consumers need an effective law that makes a noticeable difference at the pump," Hubig said. For this reason, "a bit more fine-tuning" will be necessary.

Hubig is particularly critical of the high hurdles for the instrument to take effect. "I don't fully understand why the cap should only kick in after there have been three weeks of price increases that clearly exceed the EU average," she told the "NOZ."

Reiche's Plan: High Hurdles and EU Price Coupling

Reiche plans high hurdles for the fuel price cap. One prerequisite is that price increases for diesel or petrol must, over three consecutive weeks compared with the previous week, exceed the price increase of the average of the remaining EU countries by more than five percentage points.

In addition, the maximum price regulation is to be limited to a maximum of three months. If security of supply is threatened, the price cap is to be able to be suspended.

Background: Tank Rebate and Coalition Decision

In September, the coalition committee of the Union and SPD decided to reintroduce the tank rebate from October 1. Reiche wants to link the fuel price cap agreed in the coalition to price developments abroad. Accordingly, a legal basis is to be created for a price cap that would not, however, be introduced automatically.

According to the draft, various exceptions are also planned for the fuel price cap. A state maximum price must "remain strictly limited in time," Politico quoted from the draft. The law would not automatically introduce a price cap but would initially create the legal possibility to do so.

Price Cap Would Not Apply in Case of Supply Problems

In addition, the federal and state governments should be able to suspend the price cap if supply problems threaten. The states could also generally deviate from the nationwide maximum price, both upward and downward, including for individual districts or smaller areas.

Finance Ministry Also Pushes for Tightening

The Finance Ministry of SPD leader Lars Klingbeil is also pressing for a tightening of the planned fuel price cap. What matters is that it actually takes effect and prevents rip-offs at the pump caused by excessive price jumps, the German Press Agency learned from ministry circles. Consumers must feel an impact.

dpa/saha