THE NEW YORK TIMES: Total Pledges Lower Prices to Avoid Tax: “In Britain, Esso and the supermarkets Asda and Tesco said Friday they will cut the cost of gasoline by up to 4 pence a liter (26.5 U.S. cents a gallon) following a drop in the wholesale price of oil. BP and Shell also announced price cuts.”: Posted Saturday 17 Sept 2005
By THE ASSOCIATED PRESS
Published: September 16, 2005
Filed at 2:09 p.m. ET
PARIS (AP) -- French oil company Total SA agreed Friday to pass on any decline in the price of gasoline to consumers more swiftly and to invest more in refineries after the government threatened to levy a new windfall tax.
The world's fourth-largest oil company by sales made the commitment following talks in Paris with Finance Minister Thierry Breton and executives from other oil companies. The government had urged them to boost capacity and lower the cost of gas at the pump.
Total Chairman and CEO Thierry Desmarest pledged to pass on declines in wholesale prices to French consumers within a few days, but to wait much longer before passing on increases in order to protect consumers from speculative spikes.
''We've said in a more formalized way that it will take two to three weeks to increase the prices,'' said Jean-Paul Vettier, Total's head of refining and marketing. ''Conversely, we will expedite the drops in price in some days.''
Breton welcomed the pledge from Total, which controls about one-fifth of the French gas station market. ''The consumer will be better protected,'' Breton said at a news conference.
But the minister failed to obtain any firm commitments from foreign oil companies at the meeting. Instead, he said he had ''taken note'' of plans presented by BP PLC, Royal Dutch Shell PLC and Esso, a subsidiary of Exxon Mobil Corp., to invest a combined 500 million euros ($612 million) in France over the next three years -- although it was unclear whether the plans were new.
Breton brushed off suggestions that his intervention could harm the French oil giant's competitiveness, stressing that other governments were also looking to encourage the industry to make more effort on prices and long-term investment.
''That's just good governance,'' Breton said. Although Total's commitments would cause it to charge lower prices on average, Breton said he believed competing retailers would be forced to follow suit.
Total shares were the most heavily traded Friday in Paris, where they closed 0.9 percent higher at 219.60 euros ($268.86) shortly before the announcements.
Oil companies have been reporting bumper profits, boosted by soaring oil prices. Total reported a second-quarter net profit of 3.08 billion euros ($3.79 billion) earlier this month, up 35 percent on the same period last year.
Total said it plans to spend 2.8 billion euros ($3.4 billion) on French refineries over the next five years -- more than three times its investment in the first half of the decade. It also announced an 800 million euros ($978 million) plan to build a new French ''upgrader'' facility to convert surplus heavy fuel oil into automotive fuel.
Total said it plans to spend 500 million euros ($611 million) on wind and solar power projects, biofuels and research into cleaner fuels and carbon dioxide sequestration technologies to combat climate change.
In Britain, Esso and the supermarkets Asda and Tesco said Friday they will cut the cost of gasoline by up to 4 pence a liter (26.5 U.S. cents a gallon) following a drop in the wholesale price of oil. BP and Shell also announced price cuts.
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