Energy costs for German households rise considerably after 2020 slump

German households are spending some 18 percent more on their energy use than a year ago, calculations by comparison website Verivox show. Compared to 2020, when the coronavirus pandemic slowed economic activity and lowered energy prices around the world, costs for heating, petrol or diesel and electricity in Germany have increased so that an average household with a heat consumption of 20,000 kilowatt-hours (kWh), a power consumption of 4,000 kWh and 13,300 km driving distance pays around 600 euros more per year. It is the highest price increase since 2005 when the oil price rose to 70 US dollar per barrel, Verivox said. The costs for oil heating (+56%) and car fuels (+24%) in particular are considerably higher than the year before; costs for electricity increased by 5 percent.

The main reason for the price increase is the spike in global oil demand, which rebounded from a historic collapse as economies are powering up again after the end of lockdowns in response to the pandemic in many countries. In addition, Germans have to pay a CO2 price on transport and heating fuels since the beginning of 2021. Initially, emitters pay 25 euros per tonne of carbon dioxide. The price will increase to 55 euros per tonne by 2025 to induce consumers to switch to less CO2-intensive technologies, such as heat pumps and electric vehicles. To compensate citizens for rising fossil fuel costs, the government plans to lower costs for electricity at the same time.