As the Iran war has helped push benchmark oil prices over $100 a barrel, gasoline prices have become a pressing political issue for Merz, whose approval ratings have plunged to record lows. Earlier this week, the nationwide daily average price for a litre of E10 gasoline hit a record €2.286 ($10 per gallon).
On Sunday, the capital Berlin and the northeastern state of Mecklenburg-Western Pomerania, a sparsely populated and heavily rural region where many people rely on their cars for transport, both go to the polls in elections expected to see Merz's conservative Christian Democrats heavily punished.
The results will be particularly closely watched after the far-right Alternative for Germany party came near to winning an absolute majority in a separate election in the eastern state of Saxony-Anhalt on September 6.
In Mecklenburg-Western Pomerania, the incumbent state premier Manuela Schwesig has accused Merz's government of standing by while fuel prices surge, and called for a fuel price cap based on the Luxembourg model of a nationwide maximum.
However the move was criticised by opposition parties and the environmental group Greenpeace, which said it did nothing to reduce dependency on the oil industry.
"A fuel rebate is not targeted, is harmful to the climate, and a large chunk of it ends up as excess profit in the pockets of the oil companies," the group said in a statement.
Earlier this year, the government offered some relief to motorists by reducing the energy tax from May through June, effectively lowering petrol and diesel prices by around 17 cents per litre and there were widespread calls for the cuts to be extended.
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