Service station TotalEnergies will cap fuel prices until at least the end of the month, with nearly 2,000 stations seeing prices drop from tomorrow (March 13) as they have already reached above the incoming cap price.
A cap of €1.99 per litre of petrol and €2.09 per litre of diesel (gazole) will come into force across the group’s network, which consists of 3,300 stations across mainland France.
“The implementation of the diesel price cap will immediately benefit customers at 1,830 [stations],” where prices are already above these levels, said the group when announcing the cap.
Stations where the cap has not yet been reached are guaranteed not to go above this level.
“These measures will apply from March 13 at all TotalEnergies stations in mainland France, including those on highways and in rural areas… [before the company] reassess the situation in global oil markets at the beginning of April.”
It comes after supermarkets vowed to cut fuel prices by up to 30c per litre.
A release of 400 million barrels of reserve oil supply onto the market from countries in the International Energy Agency has not been enough to calm markets, with Brent crude oil still costing almost $100 per barrel.
All 32 countries in the Agency agreed to the release, including France, the UK, and the US.
Diesel sees higher cap
TotalEnergies previously offered a €1.99 per litre cap on all fuel types following the outbreak of the War in Ukraine in 2022.
However, a huge surge in diesel prices has seen the fuel – more recently cheaper than petrol – become the most expensive on the market after prices rose around 26c per litre in a week.
This is because diesel has wider use than petrol, fuelling boats as well as certain vehicles in the agricultural sector, and France has to import more of the fuel than it does petrol.
Around two-thirds of domestic petrol supply is refined in France (meaning cheaper crude oil can be purchased as opposed to already-refined final goods), whereas the majority of diesel needs to be imported.
Are fuel aids on their way?
Continuing uncertainty over the conflict in the Middle East and closure of the Strait of Hormuz is not helping calm nerves over a prolonged crisis.
Earlier this week, US President Donald Trump said the conflict was almost over – prompting a temporary decrease in costs – however there has been little sign of an end to hostilities and prices have again begun to rise.
In turn, global markets and suppliers expect that prices will rise further and are looking to stock up before another set of price increases.
Cheaper incoming fuel prices mean that drivers are likely to hold off on refilling vehicles until the weekend, although may look to stock up on additional fuel while it is at a cut price, potentially leading to shortages.
The effects of a long-term war on oil prices could be catastrophic to business in France, organisations have warned.
“If the situation continues, direct aid measures for businesses will have to be considered,” said the delegate of Organisation des transporteurs routiers (Road hauliers association) Jean-Marc Rivera to FranceInfo.
Up to 80% of transporters in France are small or very small businesses, and the sudden surge in prices is quickly deteriorating their financial situation.
“"Fuel costs represent 25% of the total cost of transport, making it one of the most significant expenses [for a sector] already weakened by two years of a very sluggish market.”
“Some companies may have to go under… the cost of business failures and unemployment must also be taken into account,” he added.
“Without heavy goods vehicles, you won't have fuel at your service stations.”
Sector leaders are set to meet with the government next week, where any fuel aid packages are likely to be discussed.
Direct fuel aids for motorists, such as rebates introduced in the wake of the outbreak of the War in Ukraine in 2022, seem unlikely.
A previous report by France’s Public Accounts office (Cour des comptes) predicted the cost of fuel and energy bill reliefs related to that conflict cost the state more than €70 billion.
France’s growing debt crisis means that there is a lack of budgetary capacity to offer direct relief, say government authorities.
“We must… not give in to measures that are as demagogic as they are useless, which would not only be ineffective for fuel prices, but also catastrophic for our public finances. What the French always end up paying in taxes,” Prime Minister Sébastien Lecornu is reported to have said in a cabinet meeting yesterday.
However, the prime minister is reportedly open to any other measures, if one can be found.
Calls from both the far-left – to introduce a cap on prices – and the far-right – to cut VAT on fuel from 20% to 5.5% – would cost the state billions, which would ultimately need to be found in the upcoming 2027 budget.
A potential cap on profits from suppliers is possible, however service station leaders say profits are so negligible, around 1c to 2c per litre, that this would be ineffectual.
This is also why they say they have not been able to stop rising prices from eating into profits, as the increase has outstripped profits.
Despite claims that the government is benefitting from a tax windfall in relation to the surge in prices, only the VAT on fuel is affected by higher prices (all other taxes are fixed).
If prices remain at this higher level for the rest of the year, less than €1 billion in additional VAT would be recouped.
