Lars Klingbeil (SPD) now also wants to make the oil companies pay more. In a letter to the Irish finance minister, whose country currently holds the EU Council presidency, the German finance minister, together with five European counterparts, is calling for an EU-wide framework for taxing so-called windfall profits. The trigger is high fuel prices as a result of the war with Iran and the rising profits of large oil companies.
Klingbeil is thus taking the side of consumers, but leaves out his own role. The state has cut off supply routes for political reasons, made Germany’s oil supply heavily dependent on individual importers and levies each litre with several additional taxes. It now treats profits generated in a tight market as moral misconduct.
It is difficult enough to set an objective limit for “enough”. For private companies, it apparently lies where profits become politically uncomfortable. For the state, by contrast, no such limit seems to exist. It presents new borrowing authorizations, additional revenue through inflation and ever greater access to economic activity as necessary policy.
Energy policy has helped ensure that Germany is particularly sensitive to such a shock. The state is not merely a bystander at the pump. It clearly shares responsibility.
Klingbeil turns the question of profits into a moral question
In his letter to the Irish finance minister, Klingbeil writes that the previous measures have not been sufficient to lower energy prices permanently. The winners of the crisis are now supposed to contribute more. The federal government has already adopted several interventions and has repeatedly floated a windfall tax. These include tougher monitoring of oil companies, a rule under which petrol stations may raise prices only once a day, and a temporary cut in the energy tax. The fuel discount expired at the end of June. Since then, prices at the pumps have risen again.
The political narrative is simple: oil becomes scarce, companies earn more. So the state should take part of the profits and distribute the money to households under pressure. Extreme prices are always a warning sign that something is wrong in the balance of supply and demand. A high profit also indicates that a scarce good is meeting a limited amount of demand, making additional deliveries, new refinery capacity and further investment more profitable.
The state would therefore first have to prove that a company had colluded on prices or abused its market power. The mere amount of profit is not enough. “Windfall profit” initially describes a political judgment, not an objective economic category.
The war with Iran is not the sole trigger
In fact, the current crisis is a genuine supply shock. If a large share of oil deliveries has to pass through the Strait of Hormuz, fails to arrive or becomes more expensive, the supply available worldwide inevitably falls. Germany cannot change that on its own. Germany’s dependence was politically created either way. In 2021, Germany obtained around 35 % of its crude oil consumption from Russia. The refineries in Leuna and Schwedt were directly connected to the Druzhba pipeline and largely geared to Russian crude grades. The country then voluntarily ended its pipeline imports at the end of 2022, before the EU embargo had fully taken effect – certainly the right consequence in view of Russia’s brutal and still ongoing war of aggression against Ukraine. Alternative supply has so far been able to cover only around 55 % of the capacity.
Sanctions may be justified for security-policy reasons, but they always intervene in the balance of supply and demand. Russian sources of supply do not simply disappear, but they are no longer available to the European market in the same way. Crude oil has to be sourced through other ports, longer routes and new contracts. These costs increase transport costs, put pressure on refinery margins and make a litre at the pump more expensive.
98 % import dependence has been politically accepted
Germany is not lucky enough to sit on large oil reserves and imports around 98 % of its mineral oil. Domestic crude-oil production amounted to 1.55 million tonnes last year, according to the German Association of Natural Gas, Crude Oil and Geoenergy. That covered only around 1.75 % of German demand. These figures make clear how little room for manoeuvre Germany has. The energy policies of the CDU/CSU and SPD did not merely inherit this dependence from the traffic-light government; they have accepted it for years and in some cases deliberately reinforced it.
Unconventional fracking is largely ruled out in Germany. The Federal Water Act generally prohibits the exploration for and extraction of crude oil or natural gas by fracturing certain rock formations. Only a few scientifically monitored pilot projects are permitted.
The missing domestic production would not have prevented the global oil price, but it would have reduced German dependence. In normal times, oil is supposed to disappear, yet in times of crisis it is still expected to be available and affordable at all times.
The state may make this conflict a political decision, but it cannot then blame the consequences solely on the oil companies.
The state makes each litre more expensive
The German state does not determine the international crude-oil price, but it has considerable influence on the price German drivers see every day at the pump, because it takes a substantial share. Fuels are subject to all manner of taxes, including energy tax, the CO₂ charge and VAT. The energy tax and CO₂ charge are calculated by quantity, while VAT depends on the final selling price. If the price rises, the state earns considerably more from it.
For 2026, the CO₂ price is in a range of 55 to 65 euros per tonne. The Environment Ministry estimates the possible additional burden compared with the previous year at up to 2.8 cents per litre of petrol and 3.2 cents per litre of diesel. The German state has thus created a considerable additional burden for consumers. If the energy tax were reduced, it could lower the price in the short term. A fuel discount does not create an additional barrel of oil, but merely distributes money and demand differently. That is not a sustainable solution.
Bracket creep also fits this picture: in 2026, the Federal Ministry of Finance is shifting the tax-rate thresholds so that inflation-driven wage increases do not lead entirely to a higher tax burden. That is sensible, but by no means a generous gift from the finance minister. The state is merely returning part of what it previously collected additionally through inflation and the progressive tax schedule. If I take less from someone, I am not giving them a gift.
Private profits have an upper limit, government spending does not
The federal government has put up to 500 billion euros in borrowing authorizations on the table for the Special Fund for Infrastructure and Climate Neutrality. In 2026, 48.9 billion euros is to flow from it. The state calls its debt-financed spending investment, while it calls high profits at private companies during a crisis windfall profits. Even at the linguistic level, this shifts reality.
A company can use a high profit to strengthen its balance sheet, repay debt, finance new facilities or build additional capacity and better prepare for future crises. The state can take on new debt and distribute the repayment among future taxpayers. Whether productive assets actually emerge from the spending will only be determined later. Calling it a “special fund”, which is factually incorrect, changes nothing.
Klingbeil therefore wants to define a moral upper limit for private profits, but no comparable limit for state revenue and spending – and thus for himself and the tax office. The state has no point at which it says: the energy taxes are enough, VAT is enough, the borrowing authorization is enough. For companies, this “enough” is suddenly supposed to be clearly visible.
That is precisely what it is not. A company bears the losses from a wrong investment itself. The state simply distributes the consequences of its wrong decisions through taxes, inflation, contributions and new debt. One profit ends up in a balance sheet; the other bill ends up with people who have not even been born yet. That is certainly not morally better.
A windfall tax weakens the response to scarcity
The term “windfall profit” is a powerful slogan, especially for left-wing politics. But it is not a powerful economic concept. To calculate it, the state would first have to determine which profit in the oil industry counts as normal. Previous losses, investments, financing costs, risks, inventories and different business models would have to be taken into account.
A company that ties up capital during a long period of weakness can achieve high profits in a later year of crisis. If only the good years are taxed while the state does not compensate for the bad years accordingly, the result is not a neutral tax system. It is a system that punishes investment.
The Scientific Advisory Board at the Federal Ministry of Finance already warned of exactly this problem in 2022. Rising prices and profit expectations create incentives to expand production capacity where scarcity prevails. A tax that retrospectively skims off these profits can weaken the incentive to expand capacity. The effect is seen primarily in investment decisions: capital flows where risks and potential returns still stand in a reasonable relationship. If the state politically limits returns but does not take on the losses, the location becomes less attractive.
A windfall tax therefore does not combat the cause of scarcity. It weakens the response to scarcity. Political reliefs often simply do not solve problems!
Protecting competition instead of state profit morality
If oil companies actually abuse their market power, procurement, refining, transport and distribution must be investigated. That is precisely why the European investigation of refinery margins is more sensible than a blanket special tax. A cartel can be demonstrated through agreements, market behaviour and robust margin data. A high profit alone is not enough. In a free market, profit is not evidence of fraud, but initially the return on the capital employed.
A market-based energy policy would therefore have to remove its own obstacles: keep supply routes open, speed up permits, avoid artificially restricting refinery and transport capacity, and make energy charges transparent. Technology neutrality does not mean approving every extraction method. It means not confusing bans with security of supply and regulating risks through liability, requirements and controls.
The state shares responsibility
Lars Klingbeil is right that high fuel prices burden households and companies, but once again draws the wrong conclusion. Not every high profit is a windfall profit, and not every crisis can be solved with a new tax. The war with Iran triggered the current price shock.
Germany’s high vulnerability is also the result of political decisions: less Russian oil, limited replacement routes, high import dependence, restricted domestic production and state charges on every litre.
Anyone who helps shape this policy cannot then posture as a neutral referee over the profits of companies.
