France: The government will look at the margins of the fuel sector

The cost of fuel continues to weigh on the wallets of the French. In an interview Sunday evening, Emmanuel Macron announced asking distributors to "sell gasoline at cost price". This Tuesday evening, Prime Minister Elisabeth Borne received the actors of the fuel sector. Announcements came out.

While the price of oil has been at peak levels for months, supermarket players are playing the game of selling at cost price until the end of 2023. AFP/Philippe Huguen

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The sales of gasoline at cost price are becoming clearer, particularly on the side of large retailers. As of this Friday, Carrefour and Leclerc will not make any margin on fuel. Casino, Cora and Intermarché have committed to carry out such operations two weekends a month, and one weekend a month for Système U and Auchan. This is in addition to the fuel cap by TotalEnergies at €1.99 per litre.

4000 stations are concerned by this sale at cost price on French territory, until the end of the year, and perhaps in extension in 2024. For the time being, it is impossible to know what the real price reductions at the pump will be.

However, the impact of cost prices is likely, by the sector's own admission, to be "quite marginal", because mass distribution only sells fuels with margins of "a few cents", says Patrice Geoffron, professor at Paris-Dauphine PSL University.

In addition, these operations at cost price could have perverse effects on the network of independent stations, which do not depend on large French distributors but on foreign operators such as Esso or BP, which continue to sell at market price, said Francis Pousse, president of the professional union Mobilians. On about 2,400 of them, "the gap will widen" in terms of price and therefore attractiveness and "we risk undermining part of the profession," pointed out Mr. Pousse. These independent stations get an additional five million euros for the compensation fund, a fund that allows them to prepare their transition to electric terminals.

In parallel, the government is launching an inspection mission on the margins of the fuel sector. Objective: more transparency on the costs of refining, transport and distribution. The results of this mission will be "delivered in early December" and discussions will continue on the additional "efforts" that could be made by each of the actors "upstream and downstream", said the government.

(With AFP)

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