A policy introduced in Germany to protect motorists from surging fuel prices amid escalating tensions in the Middle East has instead led to higher average petrol costs, according to economists.
The measure, introduced in March by Economy and Energy Minister Katherina Reiche, required petrol stations to limit price increases to once per day at midday.
The intention was to cushion consumers from volatility triggered by a sharp disruption in global oil markets following a conflict that reportedly saw Iran restrict roughly a fifth of global oil and gas supply in response to US-Israeli strikes.
However, new findings suggest the policy has had unintended consequences.
Economists from the ZEW Institute and the Düsseldorf Institute for Competition Economics, who analysed pricing data from around 15,000 petrol stations, found that the regulation has effectively increased retailer margins by between five and six cents per litre.
Instead of stabilising prices, the study shows that fuel costs now tend to spike at midday—when price adjustments are permitted—before gradually easing and reaching their lowest point the following morning. This pattern, the researchers argue, has reduced the number of times drivers can access lower prices throughout the day.
READ ALSO: Petrol Prices Surge by 87% in One Year, Diesel Follows Suit — NBS
“The reform was successful in increasing price transparency but failed to reduce price levels. If anything, it had the opposite effect,” the economists noted.
They further explained that the new system has made low-price windows more predictable but also more concentrated, resulting in systematically higher prices during peak midday periods.
Smaller petrol stations and independent operators appear to have benefited the most, recording stronger margins compared to larger competitors.
Interestingly, the study found no significant impact on diesel prices. Researchers suggested this could be linked to weaker demand patterns, faster initial price adjustments during the crisis period, or the psychological price ceiling around €2.50 per litre.
The development adds pressure on the government of Chancellor Friedrich Merz, which is already grappling with a sluggish economy and internal disagreements between coalition partners in the Christian Democratic Union (CDU) and the Social Democratic Party (SPD).