A burden on families: expensive energy despite the relief package

Status: 05/20/2022 12:04 PM

The Federal Council today approved the reduction of energy costs. According to comparison portals, they do not halve the current price hike. Meanwhile, gas stations are warning of jams.

Despite the federal government’s relief package, rising energy costs are placing a significant burden on citizens, according to calculations by comparison portal Verivox and the Taxpayers Association. Accordingly, the annual energy costs of a typical family of four with two children between April 2021 and 2022 increased by 2,408 euros to 6,269 euros. This corresponds to an increase of 62 percent. The basis is energy prices for April, which have been assumed for the whole of 2022.

Today the Federal Reserve approved a relief package to ease energy price hikes. According to Verivox, this mitigates the price hike for the model family by just €1,035, which is less than half. On the agenda of the final consultations of the federal states on several legislative projects of the Traffic Light Coalition, there were measures aimed at achieving financial relief in taxes, energy, and transportation. Families should also be exempted.

Heavy burden on families

Part of the set of laws is, among other things, the now-approved 9 euro ticket, a reduction in the energy tax on fuel to reduce the sharp rise in fuel prices and a fixed energy price of 300 euros, which workers have to receive in the fall. An increase in passenger allowance and a so-called base premium is also included, reducing the tax burden – and a reduction in so-called EEG surcharges to lower electricity prices. Finally, private payments to families were also discussed.

Critics consider the relief package insufficient. According to a recent study by the Hans Böckler Foundation, it only helps to a limited extent. For example, single parents with a net income of €2,600 will be exempted by the government from €629 for the whole year. However, higher energy and food prices mean additional costs of 330 euros for them from January to April only. Even for couples with two children, where one parent works, the extra costs by April amount to more than half the relief for the whole year.

The package was also met with criticism from social organizations. “The relief package not only demonstrates significant social disruption, but is also counterproductive in terms of climate policy,” said Ulrich Schneider, director general of the Joint Association, Rheinische Post. The higher the energy consumption, the greater the relief. Amount, the same applies to the tank discount.

Heating oil price increased by 144%

The Taxpayers’ Association is also demanding more tax breaks for citizens than previously planned. “The government should make significant improvements and adjust the 2022 income tax rate for inflation in such a way that tax authorities do not become inflation winners,” said President Rainer Holznagel. The tax brackets had to be changed in such a way that higher rates were due only if the income was higher than before.

The Verivox comparison portal assumes a family of four with an annual heating requirement of 20,000 kilowatt-hours (kWh), a 4,000 kWh electricity consumption and an annual mileage of 13,300 km. Finance Minister Christian Lindner and Economy Minister Robert Habeck recently emphasized that the country could not absorb the economic consequences of Russia’s aggressive war against Ukraine, but only mitigate them.

“The consequences of the Corona epidemic and the Russian attack on Ukraine have caused energy prices to rise sharply around the world. Whether it is electricity, gas, heating oil or fuel: all types of energy are scratching or even exceeding their high levels,” Firefox Energy said. Expert Thorsten Storck dpa. Heating oil customers in particular suffer from price development. The increase is 144 percent. Gas prices doubled throughout the year and electricity prices rose 30 percent.

Jams in pumps can not be ruled out

Motorists are also burdened by high prices at petrol pumps. According to Verivox, the cost of gasoline has gone up 35 percent over the course of the year. 56 percent more should have been paid for diesel. Therefore, the so-called reservoir discount should help. The energy tax will be reduced for three months from June 1.

As a result, the gas station industry is preparing for potential bottlenecks at petrol pumps. Dred El White, president of the Federal Federation of Free Gas Stations, warned in the Rheinische Post that “high demand by motorists will meet the shortage of supply.” At Aral, he said, “We are ready, the logistics chains are strong, so it is also possible to deliver to gas stations on short notice.” The Consumer Advice Center in North Rhine-Westphalia advises that due to impending jams on June 1, “no one should empty their tank almost completely beforehand”.

The director general of the Fuel and Energy Association, Christian Kochen, told the newspaper that the sharp cut in energy taxes presents a double challenge for gas station companies. On the other hand, they will try to reduce their inventory by June 1st so that they can sell as little taxable fuel at the cheapest possible price from June onwards. On the other hand, motorists are expected to drive to the petrol pumps en masse from June 1 at all times to fill up empty tanks. “Therefore, temporary jams at stations cannot be completely ruled out,” Cushing said.

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