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New price formula may cut gas price

New formula to calculate prices discussed, as one-third of households say they cutting back on daily essentials

RISING gas and petrol prices have prompted energy minister Eric Besson to propose a new way of calculating prices, promising it would be less hard on consumers.

Just days after a 5.2% hike in the price of gas, which could be followed by another rise of 7.5% in July, Mr Besson said President Sarkozy and Prime Minister François Fillon would announce a new price formula in the coming weeks.

The change will be welcomed by hard-pressed consumers who saw the cost of living rise 1.2% in 2010 and were said in a poll by newspaper 20 Minutes to be cutting back on daily essentials to make ends meet.

In all, the CSA poll found
• 53% cutting their electricity and gas usage
• 49% were cutting down on petrol
• 33% were cutting food-buying
• 49% were cutting their trips away from home
Polling company director Jérôme Sainte-Marie said one-third of people in France were making cuts in their daily food bill “which is the sign of a major problem”. He added that after electing Mr Sarkozy as a “president for purchasing power” in 2007 it was likely the cost of living would play a major role in the 2012 election.

Plans to cut gas prices – and possibly also to impose a tax on oil companies – come after rising complaints about energy bills. At present, prices are worked out according to the price of oil and that has seen gas prices rise 20% in a year, and 60% over the past five years.

Speaking on Radio J, Mr Besson said he had asked the president and prime minister to suspend the present price calculator as it was harsh on people who had long-term contracts as it over-estimated costs. The present formula would lead to a new rise in July and he wanted to avoid that.

He added that the government saw "oil companies making a contribution" to reduce the cost of fuel, but did not say how this would be worked out. It was “technically difficult, if not impossible, to set up a 'social tariff’ for petrol for poorer households”. However, he thought oil firms could make a contribution.

See also: Gas, electricity bills set to soar

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