Gasoline and diesel prices have fallen by more than 30 cents per liter since October. There are four reasons why this trend will continue in 2023.

Motorists who are still feeling the shock of fuel prices shooting up by 60 to 80 cents from spring 2022 within a few days can hope for relief in 2023: Many signs point to relaxation at the petrol pumps.

Fuel in Germany is currently cheaper than it has been since January 2022: According to the latest ADAC data, a liter of E10 cost 1.67 euros on average across Germany on December 22, 2022, more than 50 cents less than the annual high. With an average price of 1.80 euros, a liter of diesel fell just as far from its peak of 2.32 euros. Drivers of a VW Golf – tank volume 50 liters – save a good 25 euros by filling it up once.

The trend continues to point downwards for both fuels. As data from the ADAC and the Federal Cartel Office show, motorists can hope for a continuation of these trends in 2023 for four reasons.

On the one hand, the falling oil price speaks in favor of this forecast: Since October, prices have been falling due to the slowing global economy. Even the production cuts by the producing countries, which include Russia, could not stop the effect.

Since experts in Germany and the world are predicting restrained economic development for 2023 – the Leibniz Institute for Economic Research Halle (IWH) expects zero growth for the Federal Republic – this effect is likely to continue. The declining demand for petrol and diesel since the end of the tank discount should also further reduce prices.

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Data from the Federal Cartel Office also suggest that the competition in the fuel market, which was undermined by the beginning of the Ukraine war, is taking effect again and pushing prices down: After the average margins of the refineries never rose above three cents per liter of petrol or diesel in 2021 and sometimes even slipped into the negative, they had skyrocketed in March 2022: 15 cents for petrol, 13 cents for diesel; some refiners earned more than 25 cents per liter.

The high margins that lasted for months drove gas pump prices to record levels; even drivers of small cars were suddenly paying a good 100 euros for a tank of fuel. However, because the price of oil rose much less over the same period, most of the inflation ended up at oil companies and refineries.

However, refinery margins have been falling since the fall. As a result, the price of petrol has recently “returned to normal levels after many months of exaggeration,” says Jürgen Albrecht, fuel market expert at ADAC. In December, motorists paid the same prices per liter as in January 2022 for the first time.

The price of diesel, which is particularly important, is far from reaching its pre-war levels. Because cheaper diesel makes it cheaper to transport food and other goods and thus lowers prices, falling diesel prices relieve everyone – including those who fill up with petrol or do not drive a car at all.

According to Albrecht Diesel, however, before the Ukraine war Germany imported larger quantities as a finished product from Russia. These imports are now gone and supply is falling. At the same time, many companies are buying diesel to replace expensive gas. So the demand is increasing. Both effects together keep the diesel price a good 20 to 25 cents above the level of January 2022.

Albrecht does not dare to predict when diesel will cost less than petrol again: “But compared to October it is at least going in the right direction.” A lot now depends on the Ukraine war, the global economy and the cold winter.

However, Albrecht also expects a “certain normalization” for diesel in the coming year. Short-term hopes of falling prices are fueled by the fact that the demand for diesel-like heating oil, which increased in winter, will soon fall again.

If fuel prices continue to fall in the coming years or at least remain at a similar level, that will also relieve people in Germany because wages will probably rise at the same time. The IWH expects a wage increase of 3.2 percent. This reduces the time employees have to work for a liter of petrol or diesel.

A long-term comparison shows how important this effect is: Despite the enormous price increases, Germans were already working shorter or hardly longer for fuel on average in 2022 than in 2012. At that time, the previous annual record prices for a liter of E10 rose to 1.59 euros and for a liter of diesel to 1.86 euros.

Then something happened that also seems likely in the coming year: petrol prices stagnated or fell, the average net salary increased – by more than a quarter since 2012. In 2022, people in Germany therefore work around 40 seconds less for a liter of E10 than they did a decade earlier, and only ten seconds longer for a liter of diesel.

Price E10:

Price diesel:

Of course, the long-term trend does not change the fact that the price increases in 2022 rob drivers of a lot of their disposable income. However, if wages rise and fuel prices fall in 2023, people will regain some leeway.