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Plans to force petrol price cuts

Government considers tough measures after report finds falling crude oil prices are not being passed on to drivers

PETROL stations could be forced by the French government to cut their prices, under new measures designed to pass cost savings on to drivers.

Finance minister Christine Lagarde said she would consider imposing price cuts on petrol distributors after a report found significant disparities between the changing cost of crude oil and prices at the pump.

The study by the French competition watchdog DGCCRF, leaked to Le Parisien this morning, claims that only half of the savings made by distributors from a recent drop in prices was being passed on.

Crude oil fell from $125 to $114 a barrel in the first half of May - a decline of 8.4%. This should have translated into a €0.06 per litre price cut for diesel and €0.04 per litre cut for unleaded, but prices at the pump fell just €0.03 for diesel and not at all for unleaded, according to the report.

Lagarde said distributors would be asked to explain themselves, adding: "If we do not get appropriate explanations that justify why petrol producers are not respecting the deal, we will take measures."

The Union Française des Industries Petrolières, which represents the French petrol industry, said it was "surprised" by the announcement.

President Jean-Louis Schilansky said the group's own research suggests that prices are falling in line with the drop in crude oil prices, once changes to dollar-euro exchange rate are taken into account.

Related stories:
Petrol reaches record prices
New formula may cut gas price

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