PETROL prices have been dropped across the country for the next three months as the government announced immediate reductions of up to six centimes - with half the cost coming from the state and half from the oil firms.
Economy Minister Pierre Moscovici revealed the cut as the average price for diesel reached its highest price ever in France, at €1.4592 a litre, and he said a 25-litre fill-up would cost drivers about €1.50 less on average.
Total said it had cut its price by two centimes across the majority of its stations and by three centimes on autoroutes. Added to the government's three centimes reduction and its 2,000 service stations were between five or six centimes cheaper for a litre.
Chief executive Christophe de Margerie said the three centimes cut meant the company was selling "at a loss" but he added that global oil prices were continuing to rise. The impact on fuel prices in France would depend on the buying price plus the exchange rate between the euro and the dollar.
Fuel prices have risen by about 10 centimes over the past months and Thierry Damien, president of the Familles Rurales federation, told Nouvel Observateur that many people would not really notice the cut. "Total made €12billion in profits and the three centimes cut costs them just €300m. They're on another planet."
Supermarkets Leclerc and Système U have already promised to sell fuel at cost price.
However, increasing fuel prices are forcing drivers to drive less and national statistics agency Insee says that since 1998 motoring has taken up 12.3% of French households' budgets - and this has stayed constant with rising prices, meaning cars are being used less.
During his election campaign President Hollande promised a three-month freeze on fuel prices and Moscovici said he could only cut prices by cutting the TICPE fuel tax - with each centime of tax reduction costs the state €1.4million a day in lost tax revenue.
Each litre of fuel is taxed at about 50% and this brings in about €34bn to the government each year in TICPE and VAT.
He said the present three-month cut would give time to look at longer-term measures and to call on OPEC to increase production and bring global oil prices down.
Find the cheapest fuel in your area with the government price website - although heavy usage may slow the site down
Photo: Vojtech Vlk - Fotolia.com