Fuel Soon to Be Sold at a Loss

After selling at cost price, a new step is about to be taken with the authorization of selling fuel at a loss.

The bombshell was dropped by Elisabeth Borne herself. The Prime Minister spoke in an interview with our colleagues from Le Parisien to announce this measure aimed at fighting the surge in fuel prices. “I realize how difficult it is for the French to endure the inflation that has lasted for months”, explains the Prime Minister.

The government is therefore preparing to lift the ban on selling at a loss, a legal provision dating from 1963, in order to achieve “tangible results for the French, without subsidizing fuel.” As announced for several weeks, it will be up to large groups and distributors to make an effort to support the purchasing power of the French. Furthermore, no tax reductions are planned. The switch is a temporary measure to ease pressure on public finances, but what will be the effects of this decision?

TotalEnergies anticipates

With its position as a key player in the sector, TotalEnergies already announced at the beginning of the week that it will maintain a cap of 1.99 euros per liter for gasoline and diesel at all its stations. Unless competitors implement significant discounts, they are unlikely to go into a bidding war. Fuel sales are, of course, a part of the activity of major stations, especially highway stations, but what would be the impact of selling at a loss on other activities such as takeaway food, accessories, and catering?

Legitimate misunderstanding among independents about losing money on each sale. “Can we do it? I say no because fuel is our core business. This is an incomprehensible situation,” commented on BFMTV Francis Pousse, president of the professional union Mobilians, which encompasses 5,800 traditional service stations.

In mass retail, the margin on fuel is around 1 to 3% per liter, but most stores already sell gasoline at cost price, making it an entry product.

The Mirage of Cheap Fuel

One thing is certain: for such a measure to be implemented, it must comply with European regulations, which is far from being the case at the moment. It will then have to pass through parliamentary debates to be adopted. No immediate wow effect is expected in the coming days. Moreover, in a context where energy transition is a global priority, this measure concerning fossil fuels will face strong opposition.

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