Increase in fuel: five minutes to understand how prices at the pump are calculated in France

“An increase of a few cents,” warned the Minister for Energy, Maud Bregeon, on BFMTV and RMC. The price of fuel at the pump is expected to increase this week, a consequence of the ongoing conflict in the Middle East. According to government data consulted by Le Parisien, increases have already been observed at service stations in France. On average, unleaded 95 increased from 1.772 euros/L on Sunday to 1.813 euros/L on Tuesday. Diesel went from 1.722 euros/L to 1.805 euros/L.

Rise in the barrel of Brent

Pump prices depend on several factors. First of all, the price of the raw material, crude oil. To determine its price, we use the barrel of Brent as a reference, named after a North Sea oil field which serves as a global reference. Its value is determined by markets which fluctuate according to supply and demand and are very sensitive to crises.

The barrel of Brent has particularly increased since the start of the conflict between Iran and Israel and the United States, going from 70.91 on February 26 to 81 dollars this Wednesday evening. “Every time the barrel increases by a dollar, it’s an additional cent per liter at the pump,” explains Philippe Chalmin, economist specializing in raw materials markets, who does not exclude that the barrel will pass the 100 dollar mark “at the beginning of next week”.

To this price is added the refining, that is to say the treatment to convert the oil into gasoline or diesel usable in vehicle engines. The latter can be carried out directly in French refineries or abroad. The price of crude oil and refining account for approximately 30% of fuel prices.

Few distributor margins

Concerning distribution at service stations, the Minister of the Economy Roland Lescure indicated that controls would be put in place to ensure that fuel prices remained “reasonable” compared to those per barrel. An announcement effect for Philippe Chalmin. “Two thirds of the sale of fuel is made by mass distribution which sells almost at cost price,” explains the founder of the Cyclops circle, highlighting, however, an excess of margins in certain stations, particularly on the motorways.

Thus, it is difficult for the State to influence the price of gasoline other than through taxation. Taxes constitute on average 60% of the price according to the government website Vie Publique. In addition to VAT at 20%, the State levies excise on petroleum products (ex-TICPE), worth around 40%. The latter varies depending on the type of fuel and may also differ slightly depending on the region. It is notably lower on diesel, which partly explains its more attractive prices at the pump.

The RN once again called for lowering VAT to 5.5% on fuels and reducing the TICPE. A proposal deemed “inconceivable” by Maud Bregeon for whom it would constitute a hole of nearly 20 billion euros in the state budget.

No risk of shortage

Beyond the rise in prices which should remain “contained and limited” in the short term according to the minister, can we fear a shortage of stocks? “No risk” indicated Maud Bregeon. An observation shared by Philippe Chalmin. “There is no point in going and filling jerry cans to stock up on gasoline,” explains the economist. “There is more than enough to cover our needs,” he adds. “A real problem would arise in the event of a much longer blockage of the Strait of Hormuz.” A situation dependent on the evolution of the conflict and therefore impossible to predict for the moment.

But France, which imports 99% of its black gold, can boast of having considerably reduced its dependence on oil from the Middle East, which will only represent 12% of imports in 2024, according to the annual energy report. North America has become the leading region of origin for imported crude oil, ahead of sub-Saharan Africa, notably Nigeria and Angola. Then comes North African oil, notably imported from Algeria and Libya.