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French Fuel Prices Set for ‘Large’ Tax-Lead Increase, UFIP Says

Feb. 5 (Bloomberg) -- Fuel prices at the pump in France are set to rise “significantly” starting next year as a planned carbon tax and other levies take effect, according to the country’s oil lobby.

“There will be a very large increase,” Jean-Louis Schilansky, head of the Union Francaise des Industries Petrolieres, or UFIP, said at a press conference today in Paris. The rise would be the result of fiscal measures even if the price of crude stays steady, he said.

Customers can expect the price of diesel, the most widely used fuel in the country, to rise next year, adding 8.5 euro cents a liter by 2016 compared with this year, according to UFIP. The increase will amount to 7.7 cents a liter over the same period for gasoline.

Fuel prices have proved to be a prickly political issue for successive French governments. President Francois Hollande’s administration was forced to suspend a planned trucking levy last year due to a protest that started in Brittany and gathered support across the country.

The government will collect 4.2 billion euros ($5.7 billion) in additional funds through 2016 from the taxes. These include an increase in a carbon tax to 22 euros a ton from 14.5 euros in 2015 and 7 euros this year, Schilansky said today at the press conference. There will also be a rise in the general sales tax and an energy-savings certificates system.

French diesel consumption rose an estimated 1 percent last year to 38.5 million tons while that of gasoline fell 3.1 percent to 7.1 million tons, according to UFIP. Overall, demand for transport fuel dropped 0.5 percent.

Hollande was elected in 2012 vowing to ease the burden of higher energy costs on consumers. In August that year he decided a temporary cut in an oil tax to lower fuel costs at the pump while at the same time imposing a one-time charge on inventories that cost refiners and other holders of stock about 550 million euros.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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