By on May 24, 2011

If you are a large company in Germany, there is no government agency that you fear more than the Bundeskartellamt. It’s the anti-monopoly police. Being audited by the Finanzamt, the German equivalent of the IRS, is considered paradise compared to being in the cross-hairs of the Monopol-Polizei. Europe’s large oil companies are in the cross hairs and are just about to be shot.

According to a three year study conducted by the agency, five large oil companies dictate the gasoline prices in Germany: Aral/BP, Shell, Jet, Esso and Total. Together, they hold 70 percent of the market and form a „market dominating oligopoly.”

Kay Weidner, speaker of the Kartellamt, confirmed to Auto Bild that the result of the study confirms “that there is such an oligopoly.”

The government agency does not allege price fixing – yet : „That is a different project,“ Weidner says ominously. According to the study, the big five have a price monitoring system. It makes price fixing superfluous. „Price fixing is against the law, copying prices is not,” said a manager of the oil industry.

Last month, a liter of super did cost €1.62, that’s $8.62 a gallon. There is pressure on the government to intervene, and the government seems to want to intervene.

Intervention begins at home: 57 percent of the price, that would be $4.91 a gallon, goes into the pockets of the German government as taxes.

Predictably, that was the answer of Big Oil: If the government wants lower prices, it should lower taxes, said Klaus Picard, Managing Director of the German Association of Mineral Oil Producers.

 

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32 Comments on “Big Oil In The Crosshairs Of The German Government...”


  • avatar

    Can five persons/companies really be an oligopoly? At what quantity of producers are we sufficiently diversified to not be suspected of monopolistic behavior?

    I think the government has a more legitimate argument in declaring new supervisory regulation rules than it does in attempting to decide which of the omnipresent price fixing is acceptable.

  • avatar

    Let’s also talk about tobacco taxes.

  • avatar
    Zackman

    I suppose financing all those six-weeks-a-year vacations and such cost lots of money.

    All joking aside, that’s one hefty tax bill. How much does the average German have to earn a year to have a similar standard of living to an “average” American who makes between 65-75K per year?

    Assuming taxes are larger on everything in Deutschland, there would be more benefits as well. A nice cost breakout would be nice to make an apples-to-apples comparison and be able to decide individually which system, our American or the German is the better one, strictly from a dollars-and-cents point of view, ideology not included.

  • avatar
    Canucknucklehead

    European countries tend to tax on consumption, not on income.

    Yes, gasoline taxes are high in Germany but the need to drive is lower. The country is tiny, about half the size of British Columbia. There is an excellent, reasonably priced rail network and every city has a comprehensive transit system.

    There is no reason to drive long distances. Last fall, I went from Frankfurt am Main to Weimar, about 400 km, in the ICE high speed train. Round trip for this was 58 Euro with advance purchase. That is $75 boys and girls. Instead of battling Rhur traffic, I sat back and enjoyed the countryside speed by. It was incredibly convenient; the train loaded right in the airport and sent non-stop to my destination. My hotel was a 10 min walk from the other end. Really civilized!

    Gas taxes pay for that convenience.

    • 0 avatar
      Zackman

      Many years ago, in the 50′s, Southern Pacific Railway had a billboard campaign (I believe – otherwise it was a poster) in southern California suggesting that you “Take it easy…Take the train”! The illustration showed an individual kicking back and relaxing on board, and the scene outside the window was a crowded, obviously slow-going, traffic-clogged freeway!

      Loved it. A copy of that poster is in the National Museum of Transport in suburban St. Louis.

      Oh well, back to reality!

  • avatar
    HerrKaLeun

    Zackman: I’m not sure if the % of taxes properly account for property tax (doesn’t exist in Germany) and social security etc.

    I’ve been in the US working for over 8 years in total and still haven’t figured out which government screws you more. Yes, German taxes may be higher but:
    - in Germany you get (almost) free college education and interest free student loan for living expenses. I gladly pay more taxes, but no student loan
    - the US borrows and prints more money… this will be paid by our children. with just printing money and moving that expense int eh future, it is easy to have less taxes (in the present)
    - universal health care makes you not lose your house when you get sick
    - there are actually good streets, railway etc. available.

    The world is not a black and white as you imagine by reading a % number.

    • 0 avatar
      Robert Schwartz

      Don’t worry, in the US we will soon be paying German style taxes, but not collecting German style benefits which we are far too broke to finance.

    • 0 avatar
      Zackman

      HerrKaLeun:

      Thanks for that! I hope to visit there, someday. Now if I only knew the story behind your avatar…

    • 0 avatar
      jmo

      I gladly pay more taxes, but no student loan

      Why? What difference does it make if you send $200 to SallieMae for 10 years or pay $200 more in taxes for life.

      - the US borrows and prints more money…

      Germany has far more gov’t debt than the US. 83% of GDP vs 58% in the US. In Germany’s case this is due to the staggering cost of reunification.

      • 0 avatar
        charly

        83% is all government debt. 58% is only Federal debt

      • 0 avatar
        jmo

        charly,

        Are you implying the German numbers include the debt held by the Lander? Not to mention the fact that the City of Berlin has more debt than the entire State of California.

        Though Berlin is certainly in a difficult situation with a debt burden of more than €60 billion, and with a debt service absorbing more than 20 % of its tax revenue

        http://www.voxeu.org/index.php?q=node/74

      • 0 avatar
        HerrKaLeun

        if my and my wife’s student loan was only $ 200 a month… I wouldn’t complain :)

        I’m not sure about all the debt % etc. but in fact, no government prints as much money as the US, which doesn’t add to debt. there are many dirty accounting tricks (like the federal reserve buying US debt..)

        On the other hand, at least most of US social security and pensions is funded. In Germany the retirement system has a reserve of 0.2 months of expenses. Pensions are not funded at all.

        I wasn’t in the navy, I’m just a lover of “Das Boot” and silent warfare.

        As I said, I haven’t figured out yet which government in the end is worse when it comes to wasting my taxes and putting leans against my future….

      • 0 avatar
        charly

        Total debt including lander and cities February 2011 is almost 2000 billion euro. GDP in 2009 was 2409 billion euro so 83% sound ballpark correct if that includes lander and local government. IIRC EU rules includes all debt from state to municipality.

        Berlin is special. Re-unification was very expensive for them. Not only in things to build etcetera but also in lost revenue.

      • 0 avatar
        HerrKaLeun

        it is a complicated topic since financing and borrowing of cities, states etc. is so different.

        One also should enter into the equation that the German people themselves have very high savings and not really much personal debt (compared to the US anyway)

        Here more links:
        http://www.creditloan.com/blog/2008/10/30/americans-debt-to-income-ratio-as-compared-with-other-countries/

        http://www.creditloan.com/blog/2009/06/05/gdp-vs-national-debt-by-country/

        unfortunately it isn’t standardized what they mean by national debt. In my opinion Germany has much more debt than on the books, since all the pensions are not funded. My Wisconsin retirement is funded and the money actually exists and is invested. a German pension doesn’t really exist, it is paid from current (and future) tax revenue, no money is actually saved or invested.

      • 0 avatar
        jmo

        a German pension doesn’t really exist, it is paid from current (and future) tax revenue

        We won’t even start on Germany’s demographic situation. As I understand it, with it’s current birth rate, Germany’s population will fall by 34% by 2050.

        From the good people at destatis the German Federal Statistics Office

        http://www.destatis.de/jetspeed/portal/cms/Sites/destatis/Internet/EN/Content/Publikationen/SpecializedPublications/Population/GermanyPopulation2050,property=file.pdf

      • 0 avatar
        charly

        Since this year the Polish and other Eastern Europeans are allowed to work in Germany so i would expect a fast growing population in Germany. There is also a big difference between West and East German demographics. East Germans demographics are much better which leads to a situation that when you take Germany as a whole the population in 2050 is much lower than the combined population of West and East Germany in 2050

        PS. 2050 is in 40 years. Half the people who life than haven’t even been born yet.

  • avatar
    jmo

    but not collecting German style benefits which we are far too broke to finance.

    Why does this myth persist?

    US Debt as a % of GDP 58%

    German Debt as a % of GDP 83%

    http://en.wikipedia.org/wiki/List_of_sovereign_states_by_public_debt#cite_note-0

    • 0 avatar
      MikeAR

      Remember one thing though, defense spending, that invalidates any comparison. Almost all German government spending can go to social programs while our budget has to be divided between social dn defense. So they can get a lot more bang for the buck than we do.

    • 0 avatar
      charly

      CIA Debt as % of GDP says something different

      • 0 avatar
        jmo

        We’re talking about debt held by the public. Germany keeps all their unfunded pension and healthcare liabilities off the books. We only keep some of ours off the books.

  • avatar
    dartman

    Slightly OT…seeing the signs for gas 1.45euro($2.04)/liter…made me remember back in the 70′s the big push to convert to the metric system–things were going fine with quick acceptance of one liter and two liter soft drinks, speedometers were being converted as were highway distance signs to km…and then the oil industry converted the pumps to liters and no one could figure out “how much a damn gallon of gas cost…” I am convinced this one obstacle effectively killed metric conversion in the U.S. for a long time…

    • 0 avatar
      WRohrl

      Clearly that would be to the oil industry’s benefit, as even if people can’t figure it out, they generally will still use it, bottom line the pice per unit looks lower, even if it’s mathematically not. In reality the actual total price would most likely go up.

      While I have no evidence to support it, I am of the firm belief that when the euro was introduced, prices generally rose in the affected countries. All costs/prices were translated to euro and then rounded up wherever/whenever possible to the next number ending in a 9 or 99. Wages however were translated at the exact conversion rate.

      • 0 avatar
        HerrKaLeun

        prices always are set by demand and supply… the effects you mention are short term. It also happened at that time that regular inflationary adjustments were done at that moment.

        Everything that was paid per contract (rent, loans, electricity etc.) was converted correctly

        Many of the scandalous prices (a cucumber 1 Deutschmark, and the next day 1 euro) didn’t stand up long since people didn’t buy them. All you had to do is not buy that damn thing in the first week.

        I was a poor student at that time and didn’t really feel a tangible increase in price (besides a few items that I just skipped). People just liked to complain….

  • avatar
    jmo

    a German pension doesn’t really exist, it is paid from current (and future) tax revenue
    note – moved this comment to HerrKaLeun as it didn’t format properly

    We won’t even start on Germany’s demographic situation.
    As I understand it, with it’s current birth rate, Germany’s
    population will fall by 34% by 2050.

    From the good people at destatis the German Federal Statistics Office

    http://www.destatis.de/jetspeed/portal/cms/Sites/destatis/Internet/EN/Content/Publikationen/SpecializedPublications/Population/GermanyPopulation2050,property=file.pdf


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