Selling fuel at a loss, keep moving, there’s nothing to see

As expected, President Emmanuel Macron has shelved the project to legalize loss-leading sales of fuel.

The idea was nevertheless simple and cleverly devised to reduce motorists’ fuel bills as pump prices continue to soar. No need to tap into public funds; it was enough to allow oil companies to sell gasoline below their production cost. Of course, without touching taxes, because it wouldn’t do to lose out in the process. And who knows, cheaper fuel sells better, meaning even more tax revenue! But why wasn’t this thought of earlier?

The fuel war will not happen

Forgive us this ironic tone, but how could such a measure possibly be approved? Loss-leading sales have been legally banned since 1963 to protect small businesses from emerging large groups. It’s easy to kill a business by selling a product cheaper, even if it means losing some money that will be recovered later. The stronger players can afford to do this; the weaker cannot.

Distributors are not fools, and a few phone calls were probably enough to organize a common response. From oil companies like TotalEnergies to large retailers such as Intermarché or Auchan, common sense prevails. Okay to reduce margins and cap fuel prices, but losing money in the process is going too far.

And now?

The President has revived the idea of an ” €100 aid per car per year” for the most modest households. This aid is supposed to exclude households that don’t need it and luxury travel. In real life, this amounts to about a month’s rent for the most affordable models on the market such as Dacia Spring, MG MG4 and MG5, or FIAT 500. Loss-leading sales are not entirely forgotten, as the president assured “to keep it as a threat” to force distributors to sell fuel at cost price. Not sure it will scare anyone…

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