the government wants to authorize loss-making on fuels

2023-09-17 13:40:00

Faced with soaring gasoline prices, the government wants to act quickly. In an interview with Le Parisien, Prime Minister Elisabeth Borne announced an unprecedented measure in principle, a temporary authorization granted to distributors to sell gasoline “at a loss”.

« Like some [enseignes] pointed out, they cannot lower their prices further, because the law prohibits them from reselling at a loss. Today, I am announcing to you that exceptionally on fuel and for a limited period […]we will lift this ban, which will allow distributors to further lower prices », Explains Elisabeth Borne.

Text on commercial renegotiations

A bill allowing it should even arrive ” very quickly “ in front of Parliament, Olivier Véran, government spokesperson, said this Sunday on RTL. “We are not saying that gasoline will drop to 1.40 euros at all stations for six months. It is said that there may be commercial operations”he added.

The text will thus be included in the bill on commercial renegotiations, announced last August by the Minister of the Economy Bruno Le Maire, and which should be debated by November. This project aims to accelerate the timetable for annual tariff negotiations between producers and distributors, which are currently imposed once a year in March each year. “In a period with inflation, with volatility in the prices of raw materials (…) this justifies allowing mass distribution to get back to the table with manufacturers”justified Olivier Véran.

Lower prices without subsidizing

The objective of this temporary authorization for selling at a loss is to allow distributors to launch one-off commercial operations, and therefore to lower gasoline prices, without subsidizing the price of fuel. The government has in fact rejected certain demands from the opposition, such as lowering taxes or introducing a rebate.

The government repeats it regularly: it has already done a lot to limit the rise in gasoline prices, it is time for distributors to take on part of the burden. At the beginning of September, Bruno Le Maire explained that a rebate of 15 to 20 cents would have cost “12 billion euros”. The principle of the subsidy is also increasingly contested as economies must accelerate their energy transition towards zero carbon.

The government might also have lowered VAT on fuel, with taxes representing nearly 60% of the final price paid by the consumer. But the cost for the state budget would be too high at a time when the cost of the debt is exploding. “Everyone must do their part. It’s normal to involve large industrialists. The State’s responsibility is also to reduce its deficit and its debt. explained Elisabeth Borne.

Gas stations excluded

Many distributors have carried out sales operations “at cost” in recent months but without going as far as selling at a loss, prohibited in France since 1963 (with exceptions, such as sales).

This measure of selling at a loss only concerns large and medium-sized stores, those concerned by the 1963 law. Clearly, other distribution networks, such as service stations, will not be able to benefit from this exceptional measure. TotaEnergies had already announced the capping of its prices at 1.99 euros per liter.

According to the government, the measure would have been discussed in advance with large retailers. Several brands, such as Système U or Leclerc, have complained in recent weeks regarding not being able to lower prices due to the law on selling at a loss.

Certain brands, particularly the most powerful, will thus be able to launch promotional operations, which should consolidate, or even increase, their market share. Everyone obviously thinks of the Leclerc group which appears to be the big winner of this period of inflation. The station networks (except TotalEnergies) are already crying out for distortion of competition.

(With AFP)