Robert Habeck, the German economy minister, is currently spending a good chunk of his working time acting as a warning voice, and he says a phrase that sounds a bit like Angela Merkel at the beginning of the pandemic. “It’s serious. Take it seriously too”, said the former chancellor in March 2020, when people still thought that the Corona crisis was a matter of weeks or at least a few months. “We’re in a serious situation. It’s about time that everyone understood that.” said Habeck recently in the “Tagesthemen”.
He means: the gas crisis. Experts predict that, in the worst case, down payments from gas heating customers in Germany could triple. These are additional expenses that Porsche owners in Munich’s single-family housing estates can easily put up with, but which can bring a single mother hairdresser to the brink of bankruptcy. Chancellor Olaf Scholz recently spoke of additional costs of around 300 euros, but he may have named the best-case scenario. During a visit to the Bad Lauchstädt energy park in Saxony-Anhalt, Habeck specified the information, not without warning and admonishing beforehand. Germany is in the “biggest energy crisis” that has ever existed.
For a single-family household, the sum could be between 300 and 1000 euros
Habeck speaks of “a few hundred euros per household” that gas could become more expensive from October. According to Habeck, additional costs in a range of 1.5 to 5 cents per kilowatt hour are expected. With a consumption of 20,000 kilowatt hours, that occurs, for example, in an average single-family house that is not highly energy-efficientthis results in a total of between 300 and 1000 euros per year.
The gas is becoming more expensive because energy companies have to pay much more for their imports to Germany. Because only a small part of the gas comes from Russia, but from the Netherlands or Norway. Subsidies are more expensive there. From October onwards, the gas suppliers will be able to pass on 90 percent of these higher import costs to the end consumers, i.e. companies and private households. This even applies to current contracts that customers actually signed to protect themselves against rising gas prices. By ministerial decree is intended for this Paragraph 26 of the Energy Security Act come into force: The difference between the current tariffs and the extra costs of the importers can then be estimated by the suppliers and distributed equally among all customers, government officials say. The actual costs will be billed afterwards.
Gas consumption in Germany must fall by between 15 and 20 percent
The traffic light government says it won’t be clear until the end of August exactly how expensive that will be. The fact that it is becoming more expensive and that consumers are also feeling this is politically desirable in order to achieve savings. These are necessary to avert a gas emergency. According to Habeck, gas consumption in Germany must fall by between 15 and 20 percent compared to previous years in order to get through the winter well. This roughly corresponds to the savings target that the EU – albeit with numerous exceptions – decided at the beginning of the week. According to the Economics Minister a few days ago, Germany is currently saving around 13 to 14 percent compared to the previous year. However, a large part of this is due to the warm winter and spring. An extremely cold November or December this year can ruin the balance sheet.
Habeck emphasizes that there must be targeted relief for low-income households. “Targeted relief means that we as a state cannot bear all the costs. But the people who are really being led into poverty by the higher energy prices must be protected,” said Habeck.
The traffic light government has different ideas about relief
The Economics Minister cannot go into detail. Because there are different ideas in the traffic light government. While FDP boss and Finance Minister Christian Lindner favors tax cuts, many Greens are more in favor of direct payments to people with low incomes.
Marcel Fratzscher, President of the German Institute for Economic Research (DIW), has in the Rheinische Post Proposals for a relief package made: The social benefits would have to be increased immediately by 100 euros per person per month. Households with incomes of less than 40,000 euros should receive a similar sum by the end of 2023. In addition, the gas price for low and middle incomes must be capped for 80 percent of basic consumption. That would cushion social hardship but still make savings worthwhile.