Gas price cap: concepts, problems and advantages at a glance


heating costs
Politicians discuss gas price caps: where opportunities and problems lie

The last digit of the m3 display cannot be seen on a gas meter due to motion blur

Gas customers in Germany are threatened with an expensive autumn and winter

© Jens Büttner / DPA

Gas prices threaten to put a heavy financial burden on many households in Germany. That is why there are different proposals for a gas price cap. Answers to the most important questions.

It is demanded not only by the Union - but also by trade unions, economists and the left: a gas price cap, which makes the high expenses more bearable for consumers. Economics Minister Robert Habeck (Greens) rejects such a concept - the government refers to its relief packages. Questions and answers on the gas price cap:

What is the problem?

Even before the Ukraine war they were gas prices high in wholesale, since the invasion they have continued to increase. Currently, the drastic cuts in deliveries by Russia are causing problems. The gas has to be procured elsewhere at higher prices, for example from Norway. The gas levy will be added by November at the latest, with which energy suppliers can pass on a large part of their additional costs.

Consumers have to shoulder price increases and the additional surcharge. Those who are currently not getting any increases are threatened with a rude awakening with the next annual statement. Therefore, demands are being made that a basic need for gas remains affordable. The need is high: In Germany almost every second apartment is heated with gas.

What suggestions are there?

Already in March, a few weeks after the beginning of the war, the economist struck Sebastian Dullien and the economics professor Isabella Weber proposed capping an annual requirement of 8,000 kilowatt hours - that is about half the consumption of a 100 square meter apartment - at 7.5 cents per kilowatt hour, i.e. at the price at the end of 2021. The price determined by the market would have to exceed this be paid.

In the meantime, other numbers are assumed and it is proposed to vary the basic amount according to household size, as Dullien, scientific director of the Institute for Macroeconomics and Business Cycle Research (IMK) of the Hans Böckler Foundation, explains. So could 5000 kilowatt hours as a base and 2000 kilowatt hours for each additional family member - capped at 13 cents per kilowatt hour. That is "close to the current average price". The variation would relieve families more than "singles in large old buildings".

Other models are similar: The German Federation of Trade Unions estimates a basic requirement of 8,000 kilowatt hours for 7.5 cents per unit - households with more people should receive a higher proportionate cap. The left assumes 8,000 kilowatt hours for the first and 4,000 kilowatt hours for each additional household member. Verdi is demanding that the costs for the normal consumption of a family of four be capped at 12,000 kilowatt hours at the 2021 level. Also under discussion is a base amount of 80 percent of the previous year's own consumption.

The Federation of Consumer Organizations, which advocates a reduction in gas prices at EU level, argues differently, right at the point of purchase. The argument goes that the EU could use its market power on the international spot markets to set a price limit for the exporting countries in a coordinated action.

What are the advantages of a price cap?

Dullien mentions three aspects: The reduced costs lower the measured inflation - which in turn stabilizes inflation expectations, reduces the risk of a price-wage spiral and calms collective bargaining conflicts. In addition, "households with gas heating would be relieved in a targeted manner". Third, the incentives to save remain in place as prices remain high above the capped basic needs.

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What are the disadvantages?

On the other hand, a cover must be financed - according to the concepts by the state. That could mean costs in the tens of billions per year, which taxpayers will ultimately have to shoulder. In addition, reference is made to a high level of bureaucracy.

tkr/Claudia Horn
AFP



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