Rhein on Energy and Climate

The French government has decided to lower gasoline prices by six cents, about 4 per cent of present pump prices, to deliver on a campaign pledge by President Hollande to preserve the purchasing power of French households.

Oil companies and the French Treasury will share the € 600 million revenue loss of what is meant to be a temporary measure.

Like elsewhere in Europe, French gasoline and diesel prices have gone up in the wake of the 30 per cent rise of oil prices since June.

But they are by no means the highest in Europe. Prices in Italy and Scandinavia are significantly higher, up to € 2 in Norway and € 1.88 in Italy. But for Hollande`s falling poll values there is really no good reason for the French move. It is doubtful if the measure will raise his poor performance values. On the contrary, French citizens are likely to consider the measure as a rather silly publicity trick.

It is in stark contrast to the courageous decision by Mario Monti to raise gasoline/diesel excise taxes and help bolster lacking budget revenues.

It contrasts also with proposal for the introduction of a carbon tax of € 32/ ton on C02 emissions made by Prime Minister Rocard in August 2009, but which did not pass legislative hurdles.

Considering today’s EU-wide C02 price of low € 8/ton it shows how far Europe has moved away from an effective climate policy during the last three years!

Will a “green energy policy” ever be among the priorities of the present French government? Will it push the EU to be more forthcoming? After the recent fiddling with gasoline prices neither appear very likely. That it is pity! One would have hoped for a more strategic leadership after the change of government in France. Too bad for France and too bad for Europe!

Brussels 30.08. 2012 Eberhard Rhein

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