TotalEnergies extends cap on fuel price at French pumps

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TotalEnergies is set to extend price caps at its petrol stations in France into 2024 as fuel distributors in the country come under pressure from the government to help rein in energy costs. 

Petrol and diesel prices are back on the rise amid tightness in the oil market and constrained refining capacity. Crude prices rose last week to more than $90 a barrel for the first time in 2023, driven by output cuts from Saudi Arabia and Russia. 

Total said on Tuesday its cap on fuel prices of €1.99 a litre, a measure introduced in February that was initially planned to continue until December, would now last “as long as prices stay high”.

The company has come under repeated pressure from Paris to curb prices, including with other discounts it introduced at forecourts in 2022. French ministers also have food producers and retailers in their sights as they call for efforts to help bring down inflation.

Prices at many petrol stations outside the Total network, one of the largest in France, now stand at more than €2 a litre, according to government data. Inflation in France ticked up again in August, largely driven by energy costs, while consumer prices in Germany and Spain also remain stubbornly high. 

Like many oil producers, Total reported record profits last year on the back of soaring commodities prices, exposing it to windfall taxes imposed at EU level and in the UK. Prices spiked particularly high following Russia’s invasion of Ukraine in February last year but had until recently subsided again. 

French finance minister Bruno Le Maire last week urged Total to extend its price cap and called on other distributors such as supermarket groups to also “make an effort”. 

Retailers Leclerc, Intermarché and Système U were among those now also pledging to sell fuel at delivery prices, or for no extra profit, energy minister Agnès Pannier-Runacher said on Tuesday. 

“I’ve been in contact with oil groups and distributors in recent days . . . to call on their solidarity,” Pannier-Runacher told RMC Radio. 

Broadening such measures would help avoid some competitive distortions after discounts at Total petrol stations last autumn exacerbated a run on its supplies at a time when strikes at refineries created fuel shortages. 

But the appeal to distributors also comes as the French government phases out state support introduced even before the Ukraine war to try and shield consumers from Europe’s energy crisis.

France spent €7.6bn last year on broad subsidies for fuel and earmarked another €1bn in 2023 for more restrained support targeted towards households with modest incomes. 

Le Maire has ruled out reintroducing such a measure and is diminishing other support, including for electricity prices. The government is trying to rein in public spending and rebuild its credibility with rating agencies after narrowly avoiding a downgrade from S&P Global Ratings in June.