The third digit in fuel prices

Origin: The Oil Crisis of the 70s

It all began with the oil crisis in 1973. At that time, crude oil prices rose sharply. Oil companies wanted to pass on the price increases as precisely as possible to customers while also taking advantage of the psychological effect.

• The competition factor: In a market where every tenth of a cent counts, gas station owners wanted to appear cheaper than the competition.
• The 9-psychology: Like in retail "psychological prices" (e.g., 1.99 €), 1.74⁹ € appears more attractive to our brain than a round 1.75 €.

Why exactly 9 tenths?

Previously there were even variations (sometimes 2, sometimes 5 tenths), but over time 9 became the industry standard. It is almost the "marketing one" of gas stations.

In Germany in 2013 there was actually an initiative by consumer protection ministers to legally ban the third decimal place to ensure more transparency.

• Result: The proposal was ignored by the federal government and not implemented. They feared the technical effort required to change pumps and cash systems.
• Current focus: Currently, German policy is more concerned with the frequency of price changes (up to 18 times a day), following Austria’s example, rather than the decimal places.

The projection for Germany

To understand what this tiny decimal place makes, let’s look at annual fuel sales in Germany:

• Sales: Around 17–18 million tons of gasoline and about 30–33 million tons of diesel are sold annually in Germany (as of 2024/2025).
• Conversion to liters: Since one liter of fuel is lighter than water, this roughly equals 60–65 billion liters of fuel per year.
• The 0.9 cent factor: If we assume that almost every gas station adds this 0.9 cent: 60,000,000,000 liters × 0.009 € = 540,000,000 €

The result

In Germany alone, the third decimal place adds roughly half a billion euros (about 540 million €) annually to the coffers of the oil industry. For individual station owners, very little remains. They usually earn a fixed amount per liter (often between 1 and 2 cents), regardless of whether the fuel costs 1.50 € or 2.10 €. The 0.9 cents are mainly a tool of the big strategists. For individuals, it is just 45 cents per 50-liter fill-up. Too little to get angry, but in total, it is a gigantic business. It is essentially the most successful crowdfunding project in the world – except we were never asked to join.

And the prices? What am I actually paying for? Who gets my money?

If you fill up today (early 2026) for about 1.74 € (E10) or 1.72 € (Diesel), most of it goes directly to the state.
Here is the current breakdown of why fuel costs so much:

1. The largest chunk: Taxes & levies (~55–60 %)

The state is your most expensive passenger. The charges consist of three parts:

• Energy tax (formerly mineral oil tax): A fixed amount per liter. Gasoline: 65.45 cents, Diesel: 47.04 cents.
• CO2 price (new for 2026): Since 1 January 2026, the CO2 price in Germany is up to €65 per ton. This currently adds about 18–19 cents per liter at the pump (including VAT).
• VAT (19%): The "tricky" part: The 19% VAT is applied at the end to the total amount – including the energy tax and CO2 price. A tax on the tax.

2. The "real" price: Cost of goods & contribution margin (~40–45 %)

These are the costs actually related to oil:

• Crude oil price & dollar rate: Oil is traded worldwide in dollars, so exchange rates play a major role.
• Logistics & refinery: Transport by tanker, pipeline, and truck as well as processing.
• Contribution margin (profit of the companies): Includes rent, personnel, advertising costs of the stations – and of course the oil company profits. Usually only 10–15 cents of the total price.

Example calculation (E10 at 1.73⁹ €)

Why does the price fluctuate so much?

You may have noticed that prices jump significantly during the day (up to 22 cents difference). This is not due to oil prices but algorithms.

• Morning (around 7 AM): Most expensive (rush hour).
• Evening (around 7–10 PM): Usually cheapest.

Interesting fact: At the turn of 2026, there was a small outcry because prices rose more than the CO2 price alone would justify. The Federal Cartel Office is already keeping an eye on this, as it is suspected that companies used the tax increase to slightly “enhance” their margin.

How cheap can it get?

To determine the "theoretically cheapest price," we have to assume a scenario in which crude oil costs 0 euros (as happened briefly at the start of the COVID pandemic in futures trading) and the companies demand no profit margin.

Even then, fuel in Germany in 2026 would not be free. Here is the calculation for the absolute "zero-euro crude oil" price (2026):

1. The unavoidable fixed costs (taxes & levies)

These amounts apply per liter, no matter how cheap the oil is:

• Energy tax:
• Gasoline: 65.45 cents
• Diesel: 47.04 cents
• CO2 price (minimum 2026 at €55/ton):
• Gasoline (E10): ~15.7 cents
• Diesel: ~17.3 cents
• Crude oil reserve contribution (EBV):
• A small contribution for the state emergency reserve, ~0.3 cents

2. The VAT trap

The 19% VAT is applied at the end to the total sum of goods value and taxes. Even if the goods value is €0, you still have to pay VAT on the energy tax and CO2 price.

Result: The theoretical minimum price 2026

If the oil were free and the gas station worked out of altruism:

Conclusion: Below roughly 97 cents for gasoline and 77 cents for diesel, the price in 2026 can never fall mathematically – even if the oil were free.

Why this will never happen

In reality, at least 20–40 cents are added for extraction, transport by tanker, the refinery (which consumes a lot of energy), and logistics by truck to the station. All in all: Anything under €1.30 for gasoline and €1.10 for diesel in 2026 would be an absolute economic miracle and would mean the oil companies would take a huge loss.