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German Households Will Foot The Bill For New Gas Tax

A new natural gas tax designed to keep importers afloat amid an energy crisis prompted by Russia’s invasion of Ukraine is set to cost German families, who will have to foot the bill for the tax, an extra $500 a year.

Starting on October 1st and running through April 2024, according to Reuters, the new natural gas tax aims to help German utilities, most notably Uniper, recoup costs related to replacing supplies from Russia. 

The tax will reportedly cover approximately 90% of new costs faced by providers. 

On Monday, Trading Hub Europe, an association of gas pipeline operators, set the price per kilowatt hour at 2.4 euro cents, the Associated Press reported, a rate that German families will see on their utility bills in the fourth quarter. 

The new tax is now forcing Berlin to examine ways to assist some German families financially, with German Chancellor Olaf Sholz tweeting on Monday that steps would be taken to ensure that poorer families are not overwhelmed. 

"It will get more expensive — there is no getting around that. Energy prices continue to rise. But: we are already unburdening citizens to the tune of €30 billion," the Chancellor tweeted, adding, "And we are working on a further relief package. We will leave nobody alone with these increased costs."  

Russia's natural gas supplies to Germany have been significantly curtailed in recent months, with local importers forced to pay higher costs for alternative sources. Until now, and only beginning in October, Germany companies have been prohibited from passing on the higher costs associated with acquiring alternative natural gas supplies.

The new levy comes as Germany announces it has succeeded in filling its gas storage facilities to a level of 75% weeks ahead of a self-imposed deadline. It also comes amid another surge in natural gas prices amid a heat wave engulfing Europe.  

By Charles Kennedy for Oilprice.com

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