German Petrol Price Control Law Fails to Reduce Costs

Economists have indicated that Germany's petrol price control law has backfired, resulting in an increase in retail petrol margins by five to six cents per liter instead of lowering prices. The law was introduced to shield motorists from rising oil prices amid the Middle East conflict, particularly following the US-Israeli attacks that affected oil supply from Iran, which accounts for a fifth of the world's oil supply.

The analysis from the ZEW Institut in Duesseldorf revealed that the price spike occurs at noon, with a gradual fall throughout the day, leaving drivers with fewer opportunities to find cheaper petrol. The law's failure is evident as it has not reduced price levels but instead made price increases more predictable.

The current German government, led by Chancellor Friedrich Merz, is struggling to revitalize the sluggish economy, which has sparked discord with the center-left coalition partner, SPD. The law has had no significant impact on diesel prices, although speculation suggests that demand for diesel may decrease as prices approach the psychological threshold of €2.50 per liter.