France mulls energy saving measures

29th October 2004, Comments 0 comments

PARIS, Oct 29 (AFP) - French Finance Minister Nicolas Sarkozy announced a campaign Friday aimed at persuading drivers to cut petrol consumption by at least 10 percent to offset surging oil prices that threaten economic growth.

PARIS, Oct 29 (AFP) - French Finance Minister Nicolas Sarkozy announced a campaign Friday aimed at persuading drivers to cut petrol consumption by at least 10 percent to offset surging oil prices that threaten economic growth.

The campaign is to be financed entirely by the government and calls for petrol stations to distribute pamphlets encouraging more efficient driving habits, as well as television and radio advertisements from November.

Petrol prices have risen 8-15 percent since the beginning of this year, but Sarkozy said about a dozen "simple gestures", such as not using air conditioning or maintaining proper tire pressure, could allow drivers to compensate for these increases on their own.

"This is what we must collectively explain to them," Sarkozy told a round table meeting with officials from France's major petrol distributors and refiners.

"I know that it is not very natural for petrol station operators to campaign for measures that would lower their sales, but I think that over the long term, we all have an interest in lowering the current consumption trend, because it is not sustainable," Sarkozy said.

He added that recent petrol price increases would weigh on household spending in the coming months, which could lead to lower consumer sentiment "and thus pose a risk to French growth that we must not overestimate, but which is genuine."

Earlier Friday, the French statistics office Insee reported that consumer sentiment fell to an indexed minus 19 in September from minus 17 the previous month, and below consensus estimates for a decline to minus 18.

Nicolas Claquin, an economist with CCF in Paris, said high oil prices played a role in the confidence decline, since French consumers "pay close attention to oil prices, which have a strong psychological impact."

Sarkozy said most of the increase in oil prices reflected fundamental trends in the energy industry, where demand will continue to grow even as production rates begin to decline.

But in order to limit the impact on consumer spending, Sarkozy called on petrol refiners not to use oil price increases as an excuse to raise profit margins, even if they must pass on the higher production costs to consumers.

After the meeting, oil group Total's managing director of refining operations, Jean-Paul Vettier, told journalists he would respect the government's request, "which calls for modesty in passing the higher oil prices to the petrol pump, and a gradual application of these price hikes over time."

Renault chief executive Louis Schweitzer, also present at the round table, said French auto constructors already produce some of the most fuel efficient models available.

But Sarkozy said it was too early to respond to a proposal by Peugeot chief executive Jean-Martin Folz, also present at the meeting, who called for tax credits on the purchase of fuel-efficient cars.

He said the government would evaluate its options for reducing petrol consumption, and planned to announce specific measures in two weeks.

Sarkozy has already promised that a part of tax receipts generated by the government's TIPP tax on oil products would be returned to consumers, but he said he would not give tax breaks to every sector hurt by rising oil prices.

"In the case of taxis, for example, the government favours an increase in fares," he said. The new measures are aimed at reaching the government's goal of reducing French dependence on oil, which includes a target of raising renewable energy sources to six percent of the French total.

A finance ministry official said later that no date has been set for reaching this level.

© AFP

Subject: French News

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