Fuels in Luxembourg“We fear a sharp drop in sales at the French border”
LUXEMBOURG – The announced substantial aid for fuel prices in France has worried the Luxembourg oil companies.
A liter of fuel will soon cost 1.50 euros in France with a discount of 30 cents in September and October 2022. The Luxembourg Petroleum Group (GPL) is not really reassured by the news. “Of course, a drop in sales volumes at the French border is to be feared, similar to what has happened at the German border in recent months. In May and June, the volumes there fell by 30 to 40 percent,” says Jean-Marczahlen, Secretary General of LPG.
“With the announced discount, we would be in France at the level of excise duty in Luxembourg. It is difficult to predict what impact this would have on the volumes sold in the country.” The fact remains that in Luxembourg, which sold 2 billion liters of diesel and 500 million liters of petrol in 2019, diesel sales in 2020 between Covid and CO tax are already 25 % melted and they’ve hardly been put back together since.
And the extension of the discount of 7.5 cents in August could only “limit the damage to the oil companies,” believes Jean-Marczahlen. “According to European regulations, Luxembourg was not allowed to go below 7.5 centimes when it came to excise duties. The last lever would be a reduction in the value added tax, which is also heavily regulated, or a direct subsidy, such as that granted for heating oil.
Difficult to imagine, because in order to reduce CO2 emissions by 55% by 2030, the government wants Luxembourg to sell less fuel. According to Finance Minister Yuriko Backes, the country would like “less foreigners to come to Luxembourg to fill up in the medium term”. The CO2 tax has shown the way. “Since 2019 it has become cheaper for professionals to fill up in Belgium,” continued the General Secretary of the GPL.
Nevertheless, the oil company reminds that it represents 3,600 jobs in the country, including a large part in the petrol stations. “This policy measure does not contribute to the climate goals, as it only shifts sales to neighboring countries and this could affect government revenues and employment in the sector,” Jean-Marc figures notes.
For him, a temporary closure of stations is threatened in the short term, “if the stations have to sell at a loss”. And in the medium term “stations could disappear. Although it depends on many factors, in particular the mutations already underway towards new forms of energy.” Another concern is the management of future demand in stations on the French side. “They are not designed to deliver very large volumes due to the number of tracks and the size of the tanks,” slips an industry professional.
Total makes discounts in France, not in Luxembourg
Total Energies has decided to increase its discount at the pump in all petrol stations in France. It will be 20 cents per liter between September 1st and October 31st, then 10 cents per liter between November 1st and December 31st.
And in Luxembourg? When maximum prices are set nationally, “it is not prohibited to sell below value,” the GPL states, but states that selling at a loss is prohibited. On the Total Energies site we indicate The essential that “the context is different in Luxembourg”, the question of applying a discount like in France “is not on the agenda”. There are also no plans to sell fuel below the legal maximum price. TotalEnergies Luxembourg states that it is closely monitoring the situation regarding the price impact in France. Station closures are not on the agenda.