Mats Kahl published in Energy Economics
2024-08-27
In 2022, Europe faced an unprecedented energy crisis in the 21st century. Following the recovery of the European economy in 2021, energy demand rose sharply. At the same time, the expansion of the Russian war of aggression in Ukraine and the resulting sanctions against Russia caused a shortage of fuel supplies and a further rise in prices.
In order to alleviate the impact of the sharp rise in fuel prices on consumers, governments across Europe implemented relief packages with tax breaks and other measures. In Germany, in addition to the 9-euro ticket, the gasoline tax reduction – publicly known as the fuel tax discount (German Tankrabatt) - was introduced, which reduced the energy tax on fuels for three months. The German fuel discount was in force from June to August 2022.
In the article "Was the German fuel discount passed on to consumers?" Mats Kahl analyzes whether German petrol stations have passed on the full fuel discount to consumers. The study results show considerable fluctuations in the pass-through rates over time and in different geographical regions.
On average, the pass-through of the tax discount was very high but remained incomplete for all fuel types. A full pass-through would have implied a price reduction of just under 17 cents per liter of diesel and a good 35 cents per liter of petrol. In fact, an average of just under 15 cents per liter of diesel and a good 31 cents per liter of petrol were passed on to consumers.
If the annual consumption were divided by the German vehicle stock, then, according to the empirical study, the three-month fuel discount would have resulted in a total saving of €35 per diesel vehicle and €53 per petrol vehicle. If the fuel discount had been passed on in full, a saving of €39 per diesel vehicle and €60 per petrol vehicle would have been expected. The pass-through rates were lower in rural regions and in the south of Germany in particular.
With this study published in Energy Economics, Mats Kahl provides valuable insights into the effects of tax policy on the fuel market and highlights how economic policy measures can have different effects over time and space.
The full study is available under an open-access license at:
https://doi.org/10.1016/j.eneco.2024.107843