What happens when gas is sold ‘at cost’? French drivers save pennies

By Claudia Colliva, Chris Liakos and Olesya Dmitracova, CNN

Paris/London (CNN) — Two of the largest retail chains in France have announced they will forego all profit on fuel sales, yielding to government pressure to sell gasoline and diesel at cost. The savings for motorists at the pump? $1 to $2 per tank.

“From September 29, the 750 service stations of Leclerc hypermarkets will be selling petrol ‘at cost price’ every day. This, of course, means with no profit,” Michel-Edouard Leclerc, president of the E. Leclerc group, wrote on X, formerly Twitter, Tuesday.

Speaking on the Franceinfo television channel Wednesday, Leclerc added that the initiative would last until December 31.

Carrefour made the same commitment Tuesday, saying on X that fuel would be sold “at no margin” in all of its hypermarkets “every day, from this Friday until the end of the year.”

Supermarket chain Casino will also sell fuel at cost every weekend in October and then at least twice a month until the end of the year, a spokesperson told CNN Wednesday.

The French government has been piling pressure on businesses to cut prices for essentials like food and gasoline as consumers continue to feel the pain of elevated inflation.

President Emmanuel Macron said in a TV interview Sunday that the country’s prime minister would meet executives from fuel retailers this week and “ask them to do business at cost.”

Leclerc denied his company had bowed to government pressure, saying it had suggested the idea to the prime minister.

“We proposed doing it not every weekend, but every day,” he said.

With a 60% share, supermarkets dominate the fuel distribution market in France. However, the benefit for motorists from the retailers’ latest moves is likely to be small.

E. Leclerc’s profit margin on fuel is 2% to 3%, meaning consumers will save a few cents per liter, or €1 or €2 per full tank of gasoline or diesel, Leclerc said.

“That may not sound like much to you, but the public go out of their way for such margins,” he told the interviewer, adding that fuel taxes account for about 60% of the pump price.

Making zero or very little profit on fuel sales may be new for French retailers but their US counterparts have been doing it for years.

Gasoline prices at US warehouse clubs can be a lot lower than at traditional gas stations, and chains such as Costco, BJ’s Wholesale Club and Sam’s Club offer members coupons to use in their stores when they fill up. Gasoline sales at the warehouse clubs are an important part of their business and draw customers inside.

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