France releases strategic diesel reserves to lower fuel prices
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The French government began releasing a portion of its strategic diesel reserves on November 1 to provide relief to motorists.
The state plans to gradually put approximately 10 million barrels of diesel onto the market over a three month period. By selling this fuel to distributors at its original purchase price of 28 cents per liter, rather than the current market price of 1.10 euros, the government intends to lower prices for consumers.
Distributors are required to pass these savings on to the public. This action is expected to reduce fuel prices by 12 to 18 cents per liter. Because these reserves represent only one fifth of the total diesel consumption in France, the cost savings will be spread across all fuel sold. The remaining 80 percent of diesel will still be purchased at higher market rates. While this measure addresses immediate costs, the government must eventually replenish these stocks at current prices.
These reserves are intended to protect against shortages caused by natural disasters or wars, so using them now reduces the country's protection against future international crises.
