German Economy Minister and Vice Chancellor Robert Habeck speaks to the media after the announcement of the gas levy at Federal Ministry for Economic Affairs and Climate Action, in Berlin, Germany August 15, 2022. REUTERS/Annegret Hilse

A government intervention that creates as many problems as it solves and is full of contradictions has a hard time convincing the public of its worth. That was the crux of the gas surcharge from the start.

The traffic light trips itself again with miserable communication. Is it primarily a question of rescuing indispensable suppliers such as Uniper, of relieving the burden on families whose existence is threatened, or of control effects in the energy transition?

It is said that the levy is necessary so that the energy supply system in Germany does not collapse. Companies like Uniper have committed to supplying gas at certain prices, including to public utilities.

Because of the war, they can only buy gas at a multiple of the guaranteed price. They need help to survive until the contracts allow the pass-through prices to be adjusted.

Hence the levy. However, they should only pay the households that use gas – i.e. about half. In the economy, it hits the sectors particularly hard that are dependent on gas and cannot switch to other energy sources, such as the chemical and glass industries, as well as anyone who needs cooling for production and distribution, such as pharmaceuticals and food.

A partial failure of the gas supply would be felt by everyone. So why isn’t saving the system seen as a task for society as a whole that everyone is helping to finance? Why is it only affecting gas customers?

The anger of those affected is certain. You haven’t done anything wrong. Changing governments had praised gas as a good choice at a reasonable price and as an indispensable bridging technology into the age of renewables.

The price jump is steep. A year ago, a kilowatt hour cost less than six cents. The levy alone means an increase of almost half. In comparison, the EEG surcharge for the expansion of renewables as a share of the electricity price was “peanuts”.

The gas surcharge also comes “on top” of the market prices, which have doubled or tripled because of the Ukraine war. Why does the state have to increase the pain in the wallet? Thanks to skyrocketing prices, the “control effect” has long been guaranteed even without a surcharge.

Are there other ways? Absolutely, of course they also lead to contradictions. In other emergencies, such as the global financial crisis and the pandemic, the state used tax money to save systemically important corporations, in return taking over company shares and later selling them at a profit when the companies were back in business.

Good examples are Lufthansa, Tui and Adidas. Things weren’t going so well for Commerzbank, the state still holds shares hoping to later get rid of them without losses.

The state also took over 30 percent of the shares in the gas supplier Uniper for survival aid. But why only Uniper? Why doesn’t the state make the offer to all relevant suppliers who are in existential difficulties?

That would send the wrong signal, say defenders of the levy. In contrast to the bailouts in other sectors, there is no wish at all for the gas suppliers to continue their business as it was before the crisis. Consumers should only use the surcharge to finance a bridging.

Which leads to two more contradictions. Experts expect gas prices to fall in 2023. German consumers should pay the levy by March 2024.

And: Whoever concludes a new gas contract in these months commits himself to the currently high prices and has to pay them when they fall again on the market. Many gas companies, now suffering from the lag in passing on higher prices, will make excess profits if prices fall.

Instead of the surcharge, would it have been better to have state aid for gas suppliers with the condition that the falling prices be passed directly on to consumers in 2023 and 2024 instead of making maximum profits? That would be a more effective intervention to prevent overprofits in the gas industry than an overprofits tax, which has many questions about its calculation.

Social politicians at the traffic light and the associations associated with them bring additional irritation to the discussion about the gas surcharge. Up to what income limit must households be helped, and from what limit can people be expected to pay the new high prices, even if it hurts?

When the President of the Tenant Protection Association, Lukas Siebenkotten, draws the line for needing help with an available net household income of 5,000 euros, one can ask for his reference to reality. And expect the government to audibly disagree. Around 80 percent of households, including so-called higher earners, have a lower net income. Supporting them all overwhelms the state.

The reverse formula is more realistic: the neediest 20 percent of society can expect help. 80 percent will have to endure the price pain and can only hope for relief through inflation compensation in the tax rate. All three parties to the traffic light should also communicate this.

Because if the traffic light aims for a broad understanding of the gas levy, it needs better answers than before.