Fuel prices remained steady this weekend after a small reduction on Friday, April 10. This occurred despite previous government claims that drivers would see a greater reduction at the pump.
Diesel costs dropped from an average of €2.378 per litre on Friday morning to €2.332 on Saturday afternoon (April 11), which is a drop of around 4c per litre. Since then, however, prices have remained virtually unchanged, even rising slightly on Monday morning to €2.334 per litre.Petrol prices across the weekend remained almost the same, hovering just above €2 per litre for SP95. This comes despite sector leaders forecasting price drops of up to 10c per litre, following a ceasefire announcement in the Middle East last week, and the French government expecting service stations to lower their prices.
Good news for drivers: Resupply efforts have been largely successful, with only around 11% of service stations in France now facing shortages. At the start of last week, reports indicated that 20%-25% of stations were facing shortages.
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Resupply Efforts and Future Outlook
The government has authorised resupply efforts outside of usual hours to reduce the risk of shortages at some stations in the coming weeks.
Prices are heavily influenced by those offered by refineries, which depend on the prices of raw materials. Drivers will only see sustained price reductions when costs drop throughout the entire supply chain and remain lower for a longer period.
There is also a delay between cost reductions in the supply chain and lower prices at fuel stations, as fuel sold at stations would have been purchased before these reductions took effect.
Despite the ceasefire announcement, oil prices continue to fluctuate, and a potential breakdown in communications between the US and Iran could lead to further disruptions in the Strait of Hormuz. This has caused oil prices to rise above $100 per barrel.
What Can the Government Do?
While the government can request price reductions, it cannot control the global market and has limited power in this matter. The government has, however, been putting pressure on service stations through price checks to ensure that prices are not excessively high.
Calls for fuel tax cuts have been frequent, especially after the government announced €270 million in additional fuel tax revenues in March. However, tax revenues are expected to fall in April, potentially below typical levels due to fewer drivers filling up their vehicles.
Some small businesses in France have started encouraging employees to work from home to reduce fuel expenditure. The government claims that the windfall from fuel taxes is outweighed by billions lost in economic activity due to the conflict, with much of it allocated to assist struggling logistics companies and fishing vessels.
Prime Minister Sébastien Lecornu has stated that a windfall tax on energy company profits made during the conflict, proposed by several EU countries, is not off the table.
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