Fuel distributors in France are strongly opposed to a government decree that aims to cap their profit margins as the war in the Middle East continues to drive up prices. Leading retailers warn the measure is hasty and unlikely to bring consumers much relief.
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The draft decree, announced on Tuesday evening, is intended partly to avoid distributors reaping a windfall by capping their margins on petrol and diesel.
It is due to be examined by the National Consumer Council and the Conseil d’État, France’s highest court.
Fuel prices in France have risen sharply since the outbreak of war in Iran in late February and the subsequent disruption to traffic through the Strait of Hormuz, through which more than a quarter of the world’s oil transits.
The price of petrol has gone up by around 15 percent to an average of roughly €2 per litre, while diesel has surged by 34 percent to more than €2.30 per litre.
In a letter to the prime minister, seen by news agency AFP on Wednesday, the heads of France’s leading supermarket fuel distributors described the draft decree as “technically defective, economically unbalanced and legally fragile”.
Thierry Cotillard, head of the Mousquetaires retail group that owns the Intermarché supermarket chain, criticised what he called rushed policymaking.
“It is becoming unbearable to take decisions in a hurry, without consultation with economic stakeholders, and above all that will produce no results,” he told news channel Franceinfo on Wednesday, denouncing a “PR stunt”.
Disputed price calculations
Both Spain and Poland have cut VAT on fuel, and Italy has introduced a package to reduce excise duties by around 25 cents a litre.
But the cash-strapped French government, which is battling to get its 5.1 percent deficit down and cannot afford to lose tax revenue, has rejected calls to subsidise fuel prices at the pump, preferring targeted aid for certain sectors.
Under its proposal, the maximum authorised retail price would be calculated using a rolling average of wholesale petrol or diesel prices over the previous five days on the Rotterdam market.
However, retailers argue that mechanism is fundamentally flawed. Using a five-day rolling price would “disconnect the regulatory reference price from the actual cost of fuel in storage”, they said in the joint letter, potentially forcing them to sell at a loss.
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In the letter, signed by the heads of Carrefour, Auchan, Intermarché, Leclerc and Coopérative U, the companies warned the measure would represent a “disproportionate infringement” on their “freedom to conduct business”.
They also argued that a system of administered pricing “will slow down the passing on of price reductions to consumers – the exact opposite of the stated objective”.
Instead, the retailers are calling for a temporary suspension of France’s energy savings certificates scheme (CEE), which requires suppliers to finance initiatives aimed at reducing consumption. The cost is largely passed on to consumers, with retailers saying it adds between 15 and 20 cents per litre to fuel prices.
Minimal margins
Politicians have also criticised the government’s plan. Bruno Retailleau, leader of the conservative Republicans party, said the measure would have “no real effect” and that “the variation will be so small it would amount to just a few cents”.
While the president of the French Union of Petroleum Industries, Olivier Gantois, commended the plan for seeking to limit price fluctuations at the pump, he agreed that savings for consumers would amount only to “a few cents per litre”, with market forces continuing to drive overall trends.
Retailers insist their own margins are already minimal – “between one and two cents per litre, they barely cover operating costs”, they said in the letter.
They slammed refiners, who had captured “considerable gross margins” since the start of the Iran conflict, and are not targeted by the proposed decree.
Manuel Bompard, coordinator of the hard-left France Unbowed party, agreed. “[The decree] is missing the point, because excessive margins are not in distribution – they are in refining, upstream in the supply chain,” he told parliamentary new channel Public Sénat.
TotalEnergies caps petrol and diesel prices at French service stations
TotalEnergies, the only French oil company to also operate refineries in mainland France and therefore control the entire supply chain, has capped its prices at the pump for both petrol and diesel.
But the group has been singled out for making bumper profits by betting on Middle East oil. It recently made more than $1 billion (€830 million) after “buying up every cargo of crude oil produced in the United Arab Emirates and Oman to load in May that was available to buy in March”, a source close to the group told the Financial Times.
TotalEnergies’ reported annual profit was between €12 billion and €15 billion in 2025.
(with AFP)
