Lower prices at the pump, whatever it takes. Elisabeth Borne announced, Sunday, October 16, an extension of the current discount of 30 cents per liter of fuel “until mid-November”, haswhile the price of unleaded 95 rose by more than seven cents and diesel by nearly 12 euro cents last week.
The two weeks of additional rebates (this aid was initially to be reduced to 10 cents on November 1) will cost the State nearly 440 million euros, according to The echoes. Since April, nearly 7.6 billion have already been budgeted to finance this boost (18 cents discount per liter from April to August, then 30 cents since September).
Faced with the cost of this measure, voices are raised: could not the taxpayers’ money have been better spent? On Twitter, Michel Magniez, deputy mayor in charge of the environment and sustainable development in Saint-Quentin (Aisne), takes out the calculator: “To finance the purchase of fuel by motorists for a few months, the State has spent the equivalent of everything it invests in the rail network for two and a half years!” Does the budget devoted to the fuel discount really represent the equivalent of several years of investment in rail or other alternative mobility, as this elected official asserts?
A quick calculation shows that:
To finance the purchase of #fuel by motorists for a few months, the State has spent the equivalent of everything it invests in the network #railway for two and a half years! pic.twitter.com/3SyhOF6JVL— Michel Magniez (@MichelMagniez) October 16, 2022
In his remarks, Michel Magniez refers to a statement by Clément Beaune, Minister Delegate for Transport, to the Senate October 12. Asked about the modernization of rail transport, the Minister explained that a “extremely important budgetary effort”numbered at “2.9 billion per year over 10 years”, is well planned by the government. A commitment made under the performance contract signed between the State and the SNCF, which sets the amount of public investment devoted to the renovation of the rail network for the period 2021-2030. The 7.6 billion euros that have been used to finance the fuel discount for several months, compared to this budget, effectively represent the equivalent of 2.6 times the sum of annual investments in rail.
But beyond rail transport alone, the billions dedicated to the rebate could have made it possible to finance other types of transport. For example “fifteen years of an ambitious bicycle plan, at an annual cost of 500 million euros”, according to Valentin Desfontaines, responsible for sustainable mobility for the association Réseau action climat. According to the calculations of Worldwith such an envelope, it is also possible to build tens of thousands of kilometers of cycle paths or hundreds of photovoltaic parks.
“This budget of 7.6 billion is also the financing of one million conversion bonuses, amounting to 8,000 euros, for the acquisition of a less polluting vehicle”, points out Valentin Desfontaines. According to a study by the Climate Action Network (page 36, in PDF) published on October 18, a bonus of such an amount, added to the current system of ecological bonuses and local aid, would allow a household with modest incomes to acquire an electric city car for only 1,000 euros. “If we had taken action earlier to transform mobility, we could have reduced dependence on the car” heat, regrets Valentin Desfontaines, listing the projects that could have been financed with the fuel discount budget. “This would obviously have limited the impact of rising fuel prices on households, but also on the state budget.”
But faced with the urgency of the energy crisis, did the government have any choice but to subsidize fuels? “To fight against inflation, most European countries have implemented a tariff shield”, concedes Anna Creti, an economist specializing in energy issues. Germany and Spain, for example, have introduced a reduction in taxes or a subsidy enabling prices at the pump to be reduced by around 20 centimes per litre.
“The message is not that aid should not be provided, but rather that low-income households should be targeted”, makes a point of specifying Valentin Desfontaines. If the fuel discount has been “extraordinarily expensive”according to Mireille Chiroleu-Assouline, it is “because it has benefited everyone. Wealthier households could have adapted very well and used their vehicles less”, assures the economist, environmental specialist. According to a note from the Economic Analysis Council (in PDF) published in July, the fuel discount benefited the wealthiest French households twice as much as the poorest households (18.50 euros against 9.50 euros). The government is also considering more targeted aid from January 2023.
The rebate on fuel can in any case only be considered as a solution “short-termist”emphasizes Anna Creti. “Granting a bonus on fuel does not provide any long-term benefit”, unlike investments in alternative transport. The price of oil will also remain at a high level, warns the economist, due to “Russian oil embargo and OPEC production cut”. Without a strategy to mitigate dependency on fuel consumption, “there will therefore be a time when we will be caught in the face of an increase in prices”predicts Anna Creti. “Everyone will also understand that we cannot permanently retain a measure which is also an incentive to consume fuel, therefore fossil fuels”, has already warned Bruno Le Maire at the microphone of BFMTV on October 17. Currently, the end of the fuel subsidy scheme is set for December 31.