Such a choice had never taken such a lengthy time to be made. Beginning on March 1 in all TotalEnergies service locations, the cost of diesel and unleaded 95 will be limited to 1.99 euros per litre for the entire 2023. from the 2-euro establishment that we might be afraid of for the upcoming few weeks.
How has Total responded?
This is a business commitment that the energy industry has never seen before. Patrick Pouyanné, CEO of TotalEnergies, made the announcement on Wednesday that the price of diesel and gasoline 95 (standard and SP95-E10) will be capped at 1.99 euros for the entirety of 2023.
He explained on the TF 1 television news set that “this step for all protects our customers against too high prices.” The rule will go into effect on Saturday at the service stops along the highways and on March 1 at all other locations. In stations where the bar of 1.99 euros per liter has been surpassed, we can only anticipate a decrease in price. The more costly unleaded 98 and “Excellium” fuels are not included.
Why did Total decide to do this?
For several weeks, the tanker had been the target of censure. He had reduced state funding by 30 then 10 cents and applied a 20 then 10 cent discount to gas prices from September to December. The government requested TotalEnergies to make a “gesture” to lower the price at the pump, which has been rising sharply in recent months, after it disclosed a record profit at the beginning of February, but nothing has happened since then.
In a significant interview with Parisian, Patrick Pouyanné had already predicted that “TotalEnergies could carry out new targeted rebate actions at the pump if the liter of diesel surpasses two euros.” Tuesday at Rungis, Emmanuel Macron reiterated his demand for a “gesture” from the business. Nevertheless, a Total insider source tells us that the concept had been in the works for at least ten days. Four out of ten stations in our network, which consists of 3,600 stations spread across an 11,000-acre national forest, already sell one or even two products with a price per liter of more than two euros. Therefore, the moment was right to assist the French.
Can costs really increase past 2 euros?
Service stations already sell fuel for more than two euros per litre in a number of districts and along the highways. Might things get worse? According to projections, the price of a barrel of crude should remain around $80, says Cercle Cyclope founder and economist Philippe Chalmin. However, the expert highlights the danger of Total taking such a step: “There are a whole host of events, like the reduction in Russian imports or the resumption of greater imports in China, which means that we could quickly end up with a barrel above 100-120 dollars, with prices at the pump at that time exceeding 2 euros.”
Director of commodity management at OFI Invest AM Benjamin Louvet says, “In the near run, we are in a relatively calm period. Prior to the summer driving season, which is boosting consumption, most refineries will be in maintenance mode during the spring, which will result in slightly lower output. As a result, prices ought to hold steady for a few more weeks. On the other hand, the second half of the year might be more stressful. The reason behind this observation from another keen market watcher is that, in his opinion, Total is not presently taking on a lot of risk by setting the trigger threshold for its measure at two euros per litre. We won’t advance much further for some time.
Can other companies follow?
Even though it hasn’t been mentioned yet, one can picture Leclerc, Carrefour, or Auchan capping the cost of a liter of fuel at 1.99 euros. To the Ministry of Energy Transition, we explain that “all companies that can must do their share.” However, Total is the only integrated competitor in France. Oil is self-produced and refined there. Therefore, they have more space to move. Therefore, the government asks what to explain when actors from big distributions, for instance, choose not to use the device. especially given that their fuel margins are virtually zero.