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French Government Will Ask Fuel Industry To Sell At Cost

The French government will ask the fuel industry to sell fuels at cost in a bid to cushion the blow of higher oil prices on end consumers, President Emmanuel Macron said this weekend.

"The Prime Minister will bring together all the players in the sector this week and we will ask them to sell at cost price, that is to say that no one makes a margin," Macron told French media, as quoted by Reuters.

To limit the impact on the poorest workers who drive to work, Macron said the government would grant them compensation of up to 100 euros per car per year.

The French president went on to argue that freezing prices at current levels was not as effective as selling at cost.

Reuters notes in its report that there had also been ideas to force fuel marketers to sell below cost, which the industry rejected categorically. Be that as it may, Bloomberg notes that Macron left the option of forcing them to sell at a loss on the table while Prime Minister Elisabeth Borne discussed the other idea with fuel sellers.

The sell-at-a-loss proposal was going to be temporary, lasting for 60 days, and would require the repeal of a 60-year-old law. It was quickly abandoned, however, when small fuel retailers railed against it, arguing they would be unable to compete with bigger fuel marketers, even though Finance Minister Bruno Le Maire promised help from public coffers.

Besides, commentators noted, if fuel retailers and supermarkets were forced to sell at a loss, they would make up for that by raising the prices of other products.

Last year, during the last oil price surge, the French government tackled the sensitive issue of fuel prices by subsidizing them heavily. This year, Macron admitted there is no money for that. He also said the government could not afford the cut fuel taxes to cushion the price surge blow because it needed the money to finance the energy transition and the welfare state.

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France’s latest budget involves a substantial increase in planned transition spending, from 33 billion euros, or about $35 billion, to 40 billion euros, which is equal to about $42.6 billion.

By Irina Slav for Oilprice.com

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  • Mamdouh Salameh on September 25 2023 said:
    When French President Macron feels the urgent need to ask the French fuel industry to sell at cost in a bid to cushion the blow of higher oil prices on end consumers, it speaks volumes about the state of the EU’s second largest economy. France’s economic growth in 2023 is a mere 0.8% and is projected to rise to 1.3% in 2024.

    The EU’s largest economy, Germany, is in even worse shape than France with economic growth in 2023 just 0.4% and with its industrial sector declining fast.

    When we look at the EU as a whole, it isn’t faring better than Germany and France either.

    I can offer three major reasons for this state of economic decline. The first is the EU’s flawed and hasty green policies that have plunged it in a disastrous energy crisis from which it has yet to recover. The second is helplessness of the EU in the face of American pressure on it to impose sanctions against Russia causing energy prices to soar and inflict more damage on its economy. The third reason is robust global energy demand sending prices on an upwards trajectory which could last for years.

    Compare the state of the EU and to some extent the United States with that of the China-led Asia-Pacific region which is vibrant, growing steadily with an extremely low inflation. A major reason for this is their refusal to be drawn into the Ukraine conflict and impose sanctions against Russia.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert
  • Bucky Barkingham on September 25 2023 said:
    In spite of M. Macron's history in business it seems he has forgotten that businesses that do not have a margin (profit) do not stay in business for long.
  • Hugh Williams on September 25 2023 said:
    Sell at cost: That opens the door for costs to jump.

    100 Euros of aid for high gasoline prices....a PR stunt?

    These proposals somehow sound useless.

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