Oil price drop passed on to French consumers: Hollande

[PARIS] President Francois Hollande is satisfied the sharp oil price drop has been passed on to French consumers, his office said in a statement after he met with oil industry figures.

The meeting concluded that the fall in oil prices, which hit a new five-year low this week, was correctly reflected in prices at the pump, the statement said.

"The French market works," the chief executive of oil company Total, Patrick Pouyanne, told reporters at the meeting at the Elysee palace.

"The drop in crude oil prices has been entirely passed on to the consumer."

Brent crude oil has lost more than 40 per cent since June, as flagging demand in industrialised countries coincided with soaring production in the United States and OPEC's resistance to an output cut.

In Europe, political pressure for cheaper prices at the pump is mounting, with governments eager to boost the spending power of hard-pressed consumers and businesses' margins battered by years of stagnation and high energy prices.

Britain's finance minister, George Osborne, has warned oil companies that the government will be watching carefully whether the fall in prices is passed on to consumers.

In France, the price of diesel, which is used by most motorists, has dropped by 8 euro cents per litre over five months, the president's office said, and by 11 cents for gasoline.

This represents a saving of 6 euros (US$7) over a month for the average motorist, it said.

However, according to data from the European Commission Oil Bulletin, the 13.2 per cent drop in pre-tax diesel prices between June 23 and Dec 1 does not match the 23.1 per cent decline in wholesale diesel prices.

That is also the case in the rest of Europe, where even when taken into account the lower euro against the dollar, the gap is still wide.

REUTERS