The TotalEnergies group is, to date, the only oil company to have adopted such a measure. It consists of capping the price of fuels, diesel and gasoline at €1.99/l. To date, 2,600 TotalEnergies service stations out of 3,400 already apply this cap on at least one fuel. It must be said that fuel prices are – more or less artificially – high. For communication:
TotalEnergies welcomes the government’s support for this initiative and is delighted that the French appreciate its effectiveness in limiting the impact of rising prices on their purchasing power. TotalEnergies therefore announces that the cap at €1.99/L will be extended beyond the end of 2023, as long as prices remain high.
Why are fuel prices so high?
You may not know, but fuels are not purchased directly from a refiner. There is a fuel exchange, it is located in Rotterdam in the Netherlands. The Rotterdam Stock Exchange is what will directly dictate the price at the pump. Indeed, a long time ago, we looked at the price of a barrel of Brent, we converted its price in dollars into euros, then this gave an idea of the ex-refinery price. For a long time, a barrel at 80/90 dollars gave fuel leaving the refinery at 40/45 c€/l. It’s finish !
Now, even if the refiners release a product at 45 euro cents per liter, they sell according to the price on the Rotterdam stock exchange. And prices are uncorrelated with production since Covid and even more so the War in Ukraine.
Today, September 12, the barrel costs 90 dollars, but diesel in Rotterdam is 985 US dollars per tonne. A tonne of diesel is approximately 1176.5 liters which gives 84 cents per liter. We are far from the expected 50 cents!
Taxes don’t help matters
Obviously, in France, to these 84 c€/l we must add transport, the distributor’s margin, and state taxes. There is TICPE and VAT (aka tax on tax). The TICPE diesel is 60.75 E/hl (except Corsica at 59.40 and Ile-de-France at 62.64 €/hl). To the 84 centimes, we therefore add around 15 centimes for transport and distribution (i.e. €1 per liter of fuel excluding all tax), then 60.75 for a total of 1.6075 to which we add 20% VAT.
And this is how we arrive at diesel at around €1.90/l to this day. The worst ? When fuel costs 10 cents in Rotterdam, it costs at least 12 at the end of the line, at the pump, because of VAT.
Who’s got their pockets full?
Right now, those making huge margins are the refiners. It’s not necessarily the oil companies, but very often it’s them. TotalEnergies can therefore make a modest gesture on the one hand (a few hundred million euros at most), it knows that it will largely make up for it in refining (several billion euros).
But there is also the State! The State gorges itself with a VAT boosted by high prices. In fact, with diesel at €1.35/l, it’s 22.5 cents of VAT. On the other hand, with diesel at €1.90/l, VAT is 31.67 euro cents. Practically 10 cents more which ultimately represents around 4 billion euros in additional revenue (and this also applies to food prices, editor’s note). The State asks others to make an effort without making any effort itself. Surprising, right?
And the distributors? Some take advantage of this to recreate their margins. They know in any case that the French must roll. Summer consumption fell by only 1.7% according to the UFIP
and you have to go to work. This also allows them to carry out “cost price” operations which still work in marketing without reducing the margins averaged over the year too much.
Note
French Union of Petroleum Industries
