Gasoline and diesel in Germany have never been as expensive as they were this April. According to the website Clever Tanken, diesel prices in Germany’s 100 largest cities rose to an average of €2.43 (about $2.80) per liter, while the price of Super E10 (unleaded gasoline with 10% ethanol) rose to more than €2.18. Even during the oil crisis of the 1970s, fuel prices in Germany – adjusted for purchasing power – remained well below €2.
In the context of the US-Israeli war over Iran, this is no surprise. According to the International Energy Agency, the current war in the Middle East has dealt a far bigger blow to global fuel supplies than the oil embargo imposed by Arab OPEC members in the 1970s. At the time, supply disruptions affected only countries that had aided Israel in the 1973 Yom Kippur War.
Today, rising global market prices of oil and liquefied natural gas affect almost all countries, but to varying degrees. To provide relief from rising prices, many countries have released some of their national oil reserves, with limited effect. Around the world, governments have responded with varying strategies.
Europe
In Germany, the government has agreed to reduce the fuel tax by €0.17 and is predicted to result in a tax reduction of €1.6 billion (about $1.8 billion). In addition, German employers are encouraged to give employees a one-time, tax- and duty-free relief bonus of €1,000 this year.
Following major protests against rising energy costs in Ireland, the government in Dublin has approved a sweeping package worth half a billion euros. As part of this package, approximately 500,000 low-income households will receive heating subsidies. At gas stations, taxes of €0.22 per liter of diesel and €0.17 per liter of gasoline will be waived until the end of May.
In Türkiye, a sliding-scale fuel tax has been in place since 2018 that decreases as prices increase. This allows the government to automatically compensate for fluctuations at the expense of tax revenues. Recently, Finance Minister Mehmet Simsek warned that the system is financially sustainable only on a temporary basis, but not if market prices remain high for a long time.
Asia
Many Asian countries are directly affected by the blockade of the Strait of Hormuz as they obtain a large portion of their oil from the Gulf region.
In the case of Philippines this figure is more than 90%. Diesel and gasoline prices have doubled since February. However, so far the government has limited itself to suspending the tax on liquefied petroleum gas, which is needed for cooking in most Filipino homes. A standard 11-kilogram cylinder, which costs around €14, will become just €0.50 cheaper.
Japan and South Korea have reacted by curbing fuel prices. The government in Tokyo is allocating more than €4 billion to keep the average gasoline price at around €0.91 per liter. According to preliminary calculations, the allocated budget will only last for less than three months.
Seoul set the price cap at the equivalent of around €1.19 per liter of fuel in March, but raised it to €0.14 shortly after. The government estimates it will cost refineries and wholesalers about €3 billion to recoup their losses. The South Korean government plans to allocate the same amount again to aid middle- and low-income families with up to €350 per person.
China is much less dependent on oil and natural gas than its two eastern neighbors. Like renewable energy, coal also plays a huge role. As a result, energy costs have increased marginally. But this makes little difference to the pump. Although the state controls prices, it can mitigate the impact of global market trends only to a limited extent. As a result, fuel prices in China are also about 30% higher today than two months ago.
India has reduced its fuel tax by €0.09 per litre, which is about 10% of the price. It has also increased export taxes on diesel and jet fuel to keep more of it in the country.
Pakistan has taken a completely different approach: among several other measures, the government has instructed employers to have 50% of office staff work from home. Civil servants now work only four days a week, and government agencies must cut fuel use by 50% for two months.
Africa
Many countries in Africa also control fuel prices. For example, in Kenya, the relevant authority sets the maximum price. Despite rising prices in the global market, it kept this price stable for a long time. It was not until April 14 that the higher price ceiling was implemented along with a three percent cut in value-added tax. The bottom line is that the price of gasoline is now about 16% higher, and the price of diesel is 24% higher. Both are now at around €1.36 per litre.
In South Africa, the relevant authority sets fuel prices once a month according to a strict pricing formula that takes into account, among other factors, world market prices and exchange rates. Since February, prices for various types of gasoline have increased by about 20%, while diesel prices have increased by 40%. For the month of April, the government reduced the fuel tax by approximately €0.16 per liter, making gasoline currently priced at €1.27 per liter and diesel at approximately €1.35.
In Ghana, the National Petroleum Authority (NPA) sets a minimum price which gas stations use as a guide in the otherwise free market. Since the end of February, the NPA has increased the recommended price of gasoline by 27% to €1.02 per liter and of diesel by almost 50% to €1.32. So far, the government has announced plans to reduce the tax burden, but it has not been followed through yet.
of America
In Mexico, the government has reached an informal agreement with most gas station operators on a price cap of about €1.18 per liter for gasoline and €1.37 for diesel. In return, approximately €250 million per week flows into the oil sector through the energy tax. According to President Claudia Sheinbaum, without these measures, prices would be up to 25% higher.
In Argentina, the strictly market-oriented government has set strict limits on subsidies. Instead, it has agreed with state-owned oil company YPF to keep fuel prices stable for 45 days, after prices had already risen by about 15%. In return, more ethanol can now be blended into gasoline, and a planned increase in the oil tax is to be postponed. YPF had previously benefited from market liberalization of the current government.
In the US, the government hoped in vain that the price of gasoline would remain below the magic mark of four dollars a gallon (about €0.97 per liter) – a 35% increase from the end of February. So far, the federal government in Washington has not artificially lowered prices. However, some states have suspended the gas tax. For example, in Indiana, drivers are currently paying €0.04 less per litre.
This article was originally written in German.