France govt plans to allow selling fuel at loss to curb inflation

The French government plans to allow gas stations to sell fuel at a loss, overriding a law from 1963, as it struggles to find new ways of containing inflation without adding to vast sums of public money already spent.

Prime Minister Elisabeth Borne said in an interview with Le Parisien that the law would be suspended for a limited period of a “few months.” Such a move would in theory allow greater competition between distributors, who could cut prices below costs and aim to make up lost margin with sales of other products and services.

“With this unprecedented measure, we will get tangible results for French people without subsidizing fuel,” Borne said.  She ruled out the government cutting fuel duties.

 

Fuel prices are an explosive political issue in France, where an increase in levies in 2018 sparked the Yellow Vest movement that spiraled into months of protests over living standards.  

While inflation has eased since the spring, energy costs pushed the rate back up last month. With prices at the pump rising in recent weeks following a resurgence in the cost of oil, the finance ministry already leaned on TotalEnergies SE to cap the cost of gasoline and diesel.  

Last year, the government directly subsidized fuel costs for households at a huge cost to public finances. Finance Minister Bruno Le Maire said earlier in September that reintroducing such measures would be an ecological, fiscal and diplomatic “aberration.”

“Everyone has to take their share. It’s normal to make big industrial firms contribute,” Borne said. “The state’s responsibility is also to cut its deficit and debt.”

The government’s plan has already provoked a pushback from the industry. According to Francis Pousse, whose lobby Mobilians represents 5,800 gas stations in France, it will be impossible for smaller vendors to sell at a loss as they can’t make up the difference with sales of other products.

“This is an incomprehensible situation,” Pousse said on BFM TV Sunday. “For the gas stations we’ve been trying to protect for years, this is the coup de grace.”

(Updates with comments from gas station lobby)