Mathilde Panot, a member of parliament for the left-wing La France Insoumise (LFI) party, argued on French television channel LCI on Thursday, September 10, that the government should cap fuel prices at the pump, insisting the move would not cost the state "a single euro of public money."
Panot said the government was lying when it claimed it could not afford a price freeze, and argued that such a cap would only hit the profit margins of oil companies, not public finances.
Under France's commercial code, the government can, during a declared crisis, issue a decree to halt excessive price increases or decreases. Any such freeze must be justified by exceptional circumstances and cannot last longer than six months. The government used this provision during the Covid-19 pandemic to cap prices for hand sanitiser gel.
But is Panot's claim that the measure would have no effect on public finances accurate?
Finance Ministry warns of shortage risk
Panot's proposal could be carried out in different ways, and only one of them would genuinely avoid a direct budget cost. An administrative cap imposed on private companies, without any public compensation, would push the cost entirely onto the oil supply chain, distributors and operators, rather than the state. Under that scenario, only VAT revenue and taxes on energy products would be affected, and only if sales volumes fell.
The French Finance Ministry, commonly known as Bercy after the Paris district where it is based, has ruled out this option, warning it risks "organising a shortage." Officials argue that with oil prices rising because of the geopolitical situation, freezing pump prices could cause petrol stations and their suppliers to lose money, and they cannot be expected to keep supplying the same volumes at a loss. That, officials say, could push some operators to go on strike.
History of price freezes in France
France saw exactly that scenario in 1990, when the government tried to offset a spike in oil prices caused by the Gulf War by blocking what it called "abusive margins." Several fuel distributors responded by going on strike, which increased the risk of shortages.
Anémone Cartier-Bresson, a professor of public law at Université Paris-Cité, said in May that a nationwide price freeze was not without risk, including the risk of shortages if companies in the sector stopped operating.
That risk is what led the government to choose a different tool in 2022, when fuel prices hit record highs after Russia's invasion of Ukraine. Rather than impose an administrative price freeze, the Economy Ministry introduced a discount, funded directly by the state, of 18 centimes per litre. The rebate ultimately cost French public finances 8 billion euros in total.
Other costly options considered
A cut to fuel taxes, another option raised in the debate, would also directly reduce public revenue. The Rassemblement National party has called for VAT on fuel to be cut to 5.5%, a move Bercy estimates could cost the state between 8 billion and 10 billion euros a year, depending on the calculation used. That is roughly the same amount the state saved through spending cuts in 2024, making the measure difficult to reconcile with the state of public finances. It would also run counter to European Union law.
Industry pledges and profits
In summary, only a cap on prices or margins imposed without compensation could avoid a direct hit to the state budget, but Bercy considers that option too risky for the fuel supply chain. Instead, the ministry is encouraging companies to voluntarily cap their prices, as TotalEnergies already does at its own stations, without that stopping the company from turning a profit.
During a previous, similar initiative, Total put the cost of the discount at 200 million euros. Philippe Brun, the MP who led a flash parliamentary inquiry into the fiscal yield of rising pump prices, said that sum was small compared with the group's net profit, noting that Total's profits had risen 51% over the same period a year earlier.
