By the end of the year, more than 4,000 stations are expected to implement this measure, forcing distributors to cut back on their margins.
The government ended up obtaining action from fuel distributors in the face of soaring prices. After rejecting the sale at a loss, proposed by the executive, they were brought together on Tuesday, September 26, by Elisabeth Borne, alongside oil operators and representative federations. At the end of this meeting in Matignon, the major brands “are committed to carrying out operations at cost price” to support the purchasing power of the French. Franceinfo returns to this announcement in five questions.
1 Why was this measure taken?
The government wanted to act as prices displayed at the pump have continued to rise in recent months. Elisabeth Borne recalled on Wednesday that the price of a barrel had risen to “over 90 dollars [environ 85,5 euros] today for 73 dollars [environ 69,4 euros] end of June”. Wanting to help “the French to face inflation”the executive pleaded so that the players in the sector “mobilize and take their fair share” – that is to say, cut back on their profits to reduce the bill for motorists.
Elisabeth Borne had initially encouraged distributors to sell their fuel at a loss, but this measure was largely shunned by the companies concerned. The idea was finally buried by Emmanuel Macron, who called on the protagonists of the sector, during his intervention on Sunday on France 2 and TF1, to sell the fuel “at cost”therefore without making a profit.
Signs as System UIntermarché or Leclerc had already implemented this measure on certain weekends. Guest of franceinfo on Wednesday, Michel-Edouard Leclerc, president of the E.Leclerc group assured that this initiative had not been imposed on him by “Public powers”. ” We proposed it to Ms. Borne”he promised.
2Which brands will apply it and how?
Elisabeth Borne welcomed Tuesday that “nearly 120,000 operations at cost price” in total were going to be carried out “in 4,000 stations until the end of the year”. But the measure will be applied differently by representatives of mass distribution. It will thus come into force “every day” from Friday in the 750 stations of the E.Leclerc group, “until New Year’s Eve”, Michel-Edouard Leclerc declared on franceinfo. This operation will apply in the same way in “all [les] hypermarkets” Carrefour, the group said.
Other distributors have opted for more one-off measures: the Cora and Intermarché brands will sell their fuel at cost price during two weekends per month. Same thing for the Casino group, which had announced before the meeting with the government that it would set up this operation every weekend until October 22.
In the stations of the Auchan and Système U groups, the cost price operation will take place one weekend per month. Kick-off is planned “the first weekend of each month, starting October 6”, detailed Dominique Schelcher, CEO of Système U, guest on RTL on Wednesday. The latter specified that his group would “take the opposite view of this operation” by offering a discount “every 15 days” of “almost 10% off the entire store”, “from October 20”provided however that you have the brand’s loyalty card.
For its part, Total Energies, which manages a third of French service stations, announced the maintenance of the capping of its price at 1.99 euros per liter of gasoline and diesel, made possible by “the overall good health of [la] company”.
3What reductions can you expect at the pump?
This operation at cost price should only result in a reduction of “a few cents” in the stations which will apply it, because mass distribution already sells its fuel with a low margin. Representatives of the sector believe that the government’s measure will represent savings for motorists “between two and six cents per liter“, either “one or two euros per tank“, judged Michel-Edouard Leclerc. THE president of the E.Leclerc centers assured that “such deviations” would move “the public”.
The boss of Système U, for his part, mentioned “a small impact” caused by this measure at the pump, his group generating profit margins “2 cents on average per liter”. “Making cost price here is not going to be spectacular since we are already at low prices all year round”, insisted Dominique Schelcher, who is counting on a reduction of around one euro per full tank. For greater readability, the government refers to the site prix-carburants.gouv.fr where, Matignon guarantees, these cost price operations will be listed “in real time”.
4How much will this operation cost distributors?
Forgo profits on fuel fill-ups “ is a real effort”assured Michel-Edouard Leclerc at the franceinfo microphone. “Fuel is 10 billion in turnover. When you move the cents, it makes the meters explode”developed the CEO of the group E.Leclerc.
🔴 Fuel at cost price ➡️ “There are 50 to 60 stations for which it is difficult,” recognizes Michel-Edouard Leclerc. “It’s a real effort. Fuel is 10 billion in turnover. When we move the cents, it makes the meters explode.” #8h30franceinfo pic.twitter.com/279N7R6qKh
— franceinfo (@franceinfo) September 27, 2023
This heavyweight in mass distribution has also called on refiners to get more involved, particularly to support independent stations. The latter do not depend on the large French distributors, affected by this system, but rather on foreign operators like Esso or BP, who will continue to sell at the market price, and therefore more expensive.
“The gap will widen” between the 2,400 small stations present in the territory and large groups, in terms of price and attractiveness, warns Francis Pousse, president of Mobilians, the employers’ organization responsible for defending the interests of automobile distribution and services companies in France. Also a member of this professional union, Sébastien Petitpas, owner of a service station in Luisant (Eure-et-Loire) told France Bleu that he was afraid of witnessing “balance sheet filings” as well as the implementation “At unemployment” of staff.
5 How will the application of this measure be monitored?
For several weeks, the government has been calling on refiners for greater transparency on prices, in order to better assess their evolution in recent months. At the end of the meeting with stakeholders in the sector, Elisabeth Borne called for “all transparency be made on costs and margins” of all companies.
As such, the Prime Minister announced that she would task the General Inspectorate of Finance and the General Inspectorate of the Environment and Sustainable Development with carrying out a mission on the formation and transparency of fuel prices. The costs of refining, transport, distribution as well as the amounts of net margins of all companies will have to be dissected.
The government expects the results by December. It was also at this deadline that the Prime Minister gave a new meeting to the participants summoned to Tuesday’s meeting, in order to look again, collectively, at the situation at the pump at that time.