France Targets Oil Profits: Possible Regulations Ahead
In a move towards controlling escalating profits in the refining sector, French Finance Minister Bruno Le Maire indicated potential policy adjustments during a press conference last Thursday. Le Maire highlighted France’s commitment to addressing inflation concerns that have been impacting Europe, and shared the country’s efforts to reduce the prices of essential goods and services, which include food and transportation.
According to Le Maire, implementing windfall taxes could be a strategy for France to mitigate the strain of high consumer prices. “In collaboration with Energy Minister Agnes Pannier-Runacher, I plan to discuss the issue of soaring margins with the relevant economic players. Decisions will be made to prevent extreme profit margins in this industry and others,” stated Le Maire last Thursday.
Earlier in the week, Le Maire welcomed the decision of TotalEnergies to maintain a cap on fuel prices beyond the year-end. He also appealed to other businesses to maintain price checks to cushion the cost of living. In response to escalating prices, TotalEnergies announced their commitment to extend the fuel price cap of 1.99 euro per litre, provided high prices persist.
Le Maire also shared insights from officials of oil-producing nations with whom he interacted at the G20 summit. He hinted at Saudi Arabia’s plans to continue restricting its crude oil production.
In September of the previous year, the Council of the European Union consented to enforce a temporary windfall tax on energy firms that experienced over a 20% surge in average yearly taxable income compared to 2018, in addition to the taxes they already pay in their respective countries.
In March, ExxonMobil expressed dissatisfaction with the trend of windfall taxation. The oil giant indicated that it would reconsider its role in Europe, considering the new tax impositions on profits. The company established a comparison between Europe’s windfall tax approach and the US’s Inflation Reduction Act, as it unveiled a fresh clean energy venture in the States.
ExxonMobil initiated a legal action against the EU over the 33% windfall tax in December after projecting that the windfall tax might cost the company $2 billion in 2023. The company’s future investments in Europe will depend on the region’s global competitiveness and attractiveness.
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