TotalEnergies, which pumps crude oil and refines it into gasoline, also has an extensive network of filling stations throughout France, where retail sales are usually dominated by supermarkets selling gasoline at or near cost in order to pull in customers. But as oil prices shot higher this spring due to the US-Iran war, the highly profitable company announced a cap of 1.99 euros per litre ($2.29 per litre, roughly $8.70 per US gallon), considerably less than national average of around 2.15 euros per litre -- and up to nearly 2.50 euros in others areas, including Paris. The cap, which has been in place intermittently for the past five months, has already cost the company 250 million to 300 million euros.
While it is a hefty expense, higher oil prices helped the French company double its first-half profit to 11.2 billion euros. TotalEnergies introduced the cap when political pressure was building to introduce a tax on windfall profits being made by energy companies. Prime Minister Sebastien Lecornu called on the company in May to put in place "a generous cap".
Its chief executive Patrick Pouyanne has made clear it will abandon the cap if a special tax is put into place. "There's nothing forcing us" to keep the cap in place, Pouyanne said recently. "If a tax is introduced, we'll draw our conclusions and TotalEnergies won't have any more price caps," he added.
With a presidential election seven months away and France's economic situation worsening, the government is keeping close watch. "Today, the public authorities are quite happy a private company is doing the job, perhaps in their place," said Jacques Goisque, head of the FF3C trade association that represents a thousand independent service stations. But their are limits how much relief TotalEnergies can provide.
The most recent jump in fuel prices has prompted calls to demonstrate reminiscent of the so-called yellow vest movement in 2018. At the time, a plan to increase fuel taxes sparked widespread protests from low- and middle-income workers who stood to take the biggest financial hit, snowballing into a challenge to the economic policies of President Emmanuel Macron. Macron called Wednesday on the government to tackle the questions about fuel supplies and prices.
Government spokeswoman Maud Bregeon noted that around one in ten filling stations in France lacked at least one fuel, with the vast majority of them TotalEnergies stations. She said the government would seek to ensure sufficient supplies and gain some regulatory flexibility on refineries. The goal is "to push prices down as much as possible, or at the very least to keep their increase under control", she said.
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