French prime minister Manuel Valls concedes that nudging French drivers towards buying diesel cars may have been a mistake. As diesel’s share of French motor fuel demand hits a record high, adding to the long list of problems facing the country’s refining industry, it looks like he has a point.
French diesel consumption as a share of total motor fuels demand jumped to a record high of 82.8pc in February, according to the latest figures from industry association Ufip. Diesel’s share 10 years ago was 72.7pc. In a speech in November, Valls called the country’s policies to favour diesel-fuelled cars in the past a mistake, and Ufip and other industry voices have opposed the idea for much longer.
“We must gradually undo this, intelligently and pragmatically,” Valls said. “We must continue to adjust our tax system to encourage citizens to make more ecological choices.”
France was a leading force in the dieselisation of the European car fleet over the past few decades, cutting taxes on diesel relative to the rate paid for gasoline to make diesel-fuelled engines more cost effective. Diesel was a more efficient fuel in cars produced by European auto manufacturers, European supplies of the fuel before dieselisation were adequate, and the continent’s refiners had a growing market for surplus gasoline in the US.
But the US is now approaching self-sufficiency in gasoline, removing the most lucrative export destination for European refiners. At the same time, the continent’s diesel deficit has become chronic and is worsening. Tighter marine fuel emissions regulations will increase gasoil demand even further, adding to Europe’s need to import middle distillates from the Mideast Gulf and Asia-Pacific. On top of that, particulates in diesel exhaust are increasingly regarded as a public health concern.
France’s refineries are the biggest victims of its diesel policy. Ufip expects more than one refinery to close in the face of competition from more modern refineries elsewhere in the world. Total chief executive Patrick Pouyanne said in January that his company will announce decisions about restructuring its refineries in the spring and said two of its five plants in the country are losing money. The 160,000 b/d La Mede site is thought to be most vulnerable to closure.
France is now steadily moving towards reversing the dieselisation policy that has so badly damaged the EU’s refining industry. The French government said in October that it plans to raise tax on diesel by 2 cents/litre in the 2015 budget, and proposals are being examined for a scheme to subsidise the modification of older diesel cars. Paris may lead the way, with mayor Anne Hidalgo seeking to rid the capital of diesel cars by 2020 in an effort to cut pollution.
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