French oil firm TotalEnergies and shipping giant CMA CGM have announced that they will be cutting down fuel prices due to government pressure to help consumers cope with high inflation.
TotalEnergies said it will reduce fuel costs at its service stations all over France from 1 September until the end of the year. CMA CGM announced a reduction in shipping fees of almost $760 per container for imports from Asia to France.
Despite countries like the UK and Italy imposing windfall taxes on companies with higher profits as the energy crisis and supply chain issues have caused prices to surge, France has refrained from doing so.
Instead, the government has asked these companies to voluntarily help customers cope during tough times.
French Minister of Economy, Finance, and Recovery of France Bruno Le Maire said: “There were intense negotiations that were carried out to lead to this decision, which is a fair decision, a strong decision.”
TotalEnergies announced a €0.2 per litre price cut until 1 November, followed by a €0.1 per litre price cut for the rest of the year.
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CMA CGM and TotalEnergies will not be providing information about the effect on their accounts, claiming they just want to support French households cope with the high cost of living.
Both companies had already provided reductions to the consumers, but Le Maire stated on Thursday that these were insufficient, and he left open the potential of new taxes in the 2023 budget if they did not go further.
Rodolphe Saade, CEO of CMA CGM, told the French Senate that more taxation would only make the business less competitive against overseas competitors, and the Finance Ministry should first ensure that discounts already granted were being passed on to consumers.
According to a survey by financial analysts Refinitiv of analysts’ expectations, high energy prices are driving energy corporations’ earnings to unprecedented highs, with TotalEnergies’ net income likely to reach about €32bn in 2022.
Meanwhile, rising container shipping rates have bolstered the profits of companies like Marseille-based CMA CGM.
Biraj Borkhataria, RBC Capital Markets analyst, said: “TotalEnergies offering discounts at fuel stations is in line with peers (e.g. Repsol in Spain) and is a way for the company to ease pressure on consumers and businesses in extremely challenging times.”