Car-fuel poverty: Determinants and policy implications for France

In the face of inflation following the Ukrainian crisis, several European governments implemented a generalized gasoline subsidy. In contrast, the reduction of fossil-fuel consumption is crucial to mitigate the current energy and climate crises. Fuel consumption for transport increases with income, making rich households the main beneficiaries of generalized subsidies. In this context, a thorough investigation of the nature of vulnerability to rising gasoline prices is needed to formulate targeted policies. Herein, we contribute in this line for the case of France. Firstly, we develop three metrics of car-fuel poverty. Secondly, we use multivariate statistic analysis to identify car-fuel-poor household profiles. Then, we estimate the socioeconomic determinants of such vulnerability. We find that, aside from income, household composition, region, access to public transport, and house ownership significantly impact the probability of being car-fuel-poor. Then, using our results, we evaluate the impact of recent subsidies implemented in France and suggest alternative targeted policies. We find that the policies that have been implemented are regressive and incur in inclusion and exclusion errors. Instead, a targeted subsidy fully compensating the car-fuel-poor would have been efficient implying, at the same time, important government savings.