EU Finance Ministers Punt on Bloc-Wide Windfall Tax as Fuel Prices Hit Fresh Records

Since the Iran war escalated in late February and oil climbed past $100 a barrel, European governments have burned through months of emergency patches, fuel discounts, diesel duty cuts, price freezes, without settling on a lasting answer. This week the argument moved to Brussels, and it did not get settled there either.

At a meeting of EU finance ministers in Dublin on Friday, September 18, Germany's Lars Klingbeil called on the European Commission to draw up options for a bloc-wide windfall tax on oil company profits, with a deadline of next month, according to The Guardian. Klingbeil accused energy firms of "exploiting the situation" in the Middle East, saying they were "overcharging and significantly increasing their profits."

The European Commission is not there yet. Economy commissioner Valdis Dombrovskis said the Commission has no plans "at this stage" for an EU-wide taxing mechanism, though he said Brussels is "ready to engage in discussion" and noted individual member states remain free to impose their own levies, per The Guardian.

The numbers driving the panic

Brent crude is trading above $100 a barrel, roughly 50% higher than before the Iran war began, according to The Guardian. German diesel hit a record €2.45 a litre on Wednesday, September 16, with petrol at €2.31, according to figures from the ADAC motoring association. Dutch petrol topped €2.73 a litre the same day, with diesel at €2.78.

Across the EU, petrol is up 24% year over year, diesel up 38%, and jet fuel has more than doubled, The Guardian reported. Benchmark European gas is trading around €81 per megawatt-hour, up 150% from a year ago, with some analysts quoted by The Guardian saying it could reach €100.

An aggregated account from Archynewsy, citing Deutsche Welle's reporting on the International Energy Agency, claims the current supply shock is larger than the 1973 Arab oil embargo, since it hits liquefied natural gas and oil markets globally rather than targeting specific countries. That comparison comes from IEA analysis relayed through DW's coverage rather than a direct IEA statement in the sources reviewed here.

Berlin can't agree with itself

Germany's own government is split. Chancellor Friedrich Merz rejected a windfall tax outright at a Berlin press conference on Tuesday, September 15, saying "at the moment, I see no sufficient factual basis nor any legal basis for taxing so-called excess profits," according to Reuters, as reported by bdnews24.com. Merz argued Germany can only tax companies based domestically anyway, limiting what a national levy could accomplish.

That puts Merz directly at odds with his own finance minister, who was pushing the opposite position in Dublin the same week. It's a genuine dispute inside one governing coalition, not a media narrative. Klingbeil wants collective EU action on excess profits; Merz says there's no legal footing for it and wants to look at other tools instead.

Economy minister Katherina Reiche has ruled out reviving a fuel discount, citing budget limits, and told RTL/ntv the government should instead target direct payments to low-income households, according to Clean Energy Wire. The catch: Germany lacks the administrative infrastructure to send direct payments to citizens quickly, Merz acknowledged, saying the finance ministry is "currently working on enabling them."

Merz's CDU faces a state election Sunday, September 20, in Mecklenburg-Western Pomerania, where bdnews24.com reports the party is bracing for what could be its worst result there ever, with fuel prices a central issue for rural voters who depend on cars daily.

The rest of Europe is improvising

Italy's Giorgia Meloni government, trailing in national polls ahead of elections next year, announced it will scrap road tax for 14.5 million cars and motorbikes starting next year, at a cost exceeding €2 billion, on top of a diesel duty cut that has already cost €2.8 billion, according to The Guardian.

In France, fishermen blockaded two ports and a fuel storage facility over diesel prices reaching €2.37 a litre, according to ua.news's account of the Guardian's reporting. The blockades ended after the government offered interest-free loans and other assistance tied to fuel price changes.

A regional dispatch from laveduta.news notes that any EU-level levy's design, whether it targets refining profits, wholesale margins, or import volumes, would determine whether it touches port and pipeline infrastructure like Trieste's Transalpine terminal, which feeds refineries in Austria and southern Germany. No such mechanism has been drafted yet.

Klingbeil's requested deadline for Commission proposals falls next month. Whether Brussels produces anything concrete, or whether Merz's legal objection kills the idea before it reaches a vote, remains open. So does the more immediate question for Merz: whether Sunday's Mecklenburg-Western Pomerania result forces his coalition to move faster on relief than it has managed so far.