How does Pope Benedict XVI reconcile conscience and authority?

This is a great question. I see no one gave you a proper answer about what he personally thinks as opposed to what the Church as a whole (e.g. the Catechism) teaches. I recently read On Conscience: Two Essays by Joseph Ratzinger as well as a fair bit of material from Newman on the same topic (namely his letters and treatises from around the time of the First Vatican Council). Although I had to return those sources to the library, I can give you an answer from memory.

First, it is important to note that a 1967 monograph by Joseph Ratzinger does not contain the words or thoughts of Pope Benedict XVI, who was not elected until 2005. 38 years is a long time and Ratzinger's views surely evolved.

Let's begin with the tricky sentence:

Genuine ecclesiastical obedience is distinguished from any totalitarian claim which cannot accept any ultimate obligation of this kind beyond the reach of its dominating will.

The point here is that the Church, when She is genuine, recognizes the transcendence of the individual conscience in a way that totalitarian regimes do not. He is not saying that sometimes genuine obedience is disobedience. He is distinguishing two claims: the claim of ecclesiastical obedience, and the claim of totalitarian obedience. Totalitarian obedience is total and encompassing. It admits of no legitimate denial of its authority. Ecclesiastical obedience is different. When ecclesiastical obedience is genuine it cannot claim that it is due the total/encompassing obedience that totalitarian regimes demand.

As far as I can tell Ratzinger follows Newman on this topic quite consistently throughout his career. Newman's position was essentially that although conscience can legitimately "trump" ecclesiastical authority, the two are properly symbiotic and presuppose one another. That is, Christ's Church cannot be Herself without human conscience, and human conscience cannot be itself without Christ's Church. Their essence is bound up in looking beyond themselves and acknowledging a higher power, and it is the very same higher power that they both bow down to. Further the conscience requires a guide to form and tutor it, and the Church requires free human beings who worship "in spirit and truth." If conscience did not recognize the divine guide of Christ's Church, it would fall into error and malformation. If the Church did not recognize human freedom and conscience, it would be a totalitarian regime rather than a communio of worship.

Now, in Ratzinger's early years he emphasized conscience. In his later years he emphasized ecclesiastical authority. This was largely circumstantial. At different times he was confronted with different problems in the culture and in the Church, and thus emphasized different sides of the coin. As head of the CDF theological dissent was fomenting in the decades following Vatican II, and he felt that he had to take a strong stand against theological liberalism and the overemphasis on conscience. When he became Pope he moved away from such polarities and emphases and took more moderate, balanced stances.

I suggest you can ask Pope Benedikt XVI directly. You can write to the "Emeritus Pope Benedikt XVI, Secretariat of State, the Apostolic Palace, Vatican State". They DO read and answer all letters, one by one, and will forward it to him.

Ratzinger grew up in the National Socialism (Nazi) environment of his home country when he was a teenager (he was born in 1927) and saw how one own consciousness is more important in front of blind orders, however it would be obvious to point out that he knows perfectly that the Church is NOT a human creation nor a human ideology because it was created by Jesus in person.

In my opinion, no one can interpret anything and do whatever his/her "consciousness" says because Jesus was and IS very clear on what to do. Again, when the Pope (and so the Church) speaks officially about "things" of the Faith he does so because, it's Jesus himself speaking. So in case of doubt, just follow the official documents of the Church like the Catechism, as one person quoted here.

This might give you a deeper understanding of Ratzinger's development of thought on conscience. He gave a keynote address to Bishops in 1991 titled 'Conscience and Truth'. There is also a book 'On Conscience' Which contains both this address and an address he gave to in 1984 titled 'Bishops, Theologians and Morality'. He makes some very interesting points and asks some very interesting questions. He does say that we must follow our conscience but he also says we must form them well:

'It is never wrong to follow the convictions one has arrived at—in fact, one must do so. But it can very well be wrong to have come to such askew convictions in the first place, by having stifled the protest of the anamnesis of being. The guilt lies then in a different place, much deeper—not in the present act, not in the present judgment of conscience but in the neglect of my being which made me deaf to the internal promptings of truth. For this reason, criminals of conviction like Hitler and Stalin are guilty. These crass examples should not serve to put us at ease but should rouse us to take seriously the earnestness of the plea: "Free me from my unknown guilt" (Ps 19:13).'
— _{From a 1991 Keynote address titled 'Conscience and Truth' by Ratzinger at a workshop for bishops}

Obviously he writes here when he was Prefect of the Congregation for the Doctrine of Faith; I think this coincides pretty well with what the catechism states.