France ready to use the 'stick' to lower fuel prices

13th September 2005, Comments 0 comments

PARIS, Sept 14 (AFP) - French Finance Minister Thierry Breton warned Wednesday that the government was prepared to get tough with oil companies if they did not ensure that lower crude prices led immediately to lower gasoline prices at the pump.

PARIS, Sept 14 (AFP) - French Finance Minister Thierry Breton warned Wednesday that the government was prepared to get tough with oil companies if they did not ensure that lower crude prices led immediately to lower gasoline prices at the pump.

"At the moment when there is a drop (in crude oil rates) I want it to be immediately passed on" to consumers, he told the LCI television network.

His comment came one day after President Jacques Chirac called on oil companies to commit themselves to lowering gasoline (petrol) prices at the pump and Prime Minister Dominique de Villepin announced a fiscal aid package worth EUR 30 million for farmers, who have been hit hard by the recent surge in oil prices.

Breton said France had entered the "post-petroleum era," adding that "everyone must be concerned, including the (oil) companies".

Asked if the government were prepared to use "the stick" against recalcitrant companies, he replied: "Certainly."

French president Jacques Chirac at a cabinet meeting Tuesday asked oil companies "to show strong support for the indispensable movement toward lower prices at the pump," according to government spokesman Jean-Francois Copé.

The president also praised an initiative by Breton to call a meeting of oil companies on Friday at a time when fuel prices are soaring.

Chirac asked "that everything be done so that these companies commit themselves quickly and strongly to investment in the development of non-polluting energies", Copé reported.

Breton last week threatened oil companies with an "special tax" in the face of rising oil prices and suggested that they lower their prices at the pump.

The finance minister on Friday expressed satisfaction with a subsequent decision by Total and BP to lower prices charged in their service stations from Saturday.

Meanwhile, the prime minister on Tuesday spoke to farmers at the opening of an agriculture fair in Rennes promising to help protect them from the recent surge in fuel costs.

"The increase in fuel prices penalises the farming industry, which cannot always pass on these higher operating costs. We must help them," de Villepin said.

The government is to raise its rebate for the TIPP tax on heating oil to five centimes per litre from four centimes, and increase its rebate on the TIPP for natural gas to 80 percent from 60 percent currently.

Villepin also announced a new 50 percent rebate for the TIPP on heavy fuel oil.

All these measures would be applied retroactively from September 1, he said.

The French premier also reiterated a promise made by Chirac in 2004 to cut property taxes on non-developed farmland by 20 percent, a measure that represents fiscal aid of EUR 140 million.

Finally, Villepin also said he would soon call for bids to build a 300 megawatt biofuel electricity plant, which uses agricultural waste as its energy source, and said his goal is for biofuel to represent 5.75 percent of France's total energy consumption by 2008, two years ahead of the target called for by the EU Commission.

By 2010, biofuel sources should generate seven percent of the country's electricity use, rising to 10 percent by 2015, he said.

Copyright AFP

Subject: French news

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