As soaring energy prices crush businesses, France rolls out a new $500 million aid package, including help with commuting and heating costs | Fortune

When the couple first fired up the oven in their store in Saint-Just-en-Chaussée, a small town about 90 kilometers (55 miles) north of Paris, in March, they paid 2,230 euros ($2,540) for 2,000 liters (528 gallons) of the heating oil that it burns. Last week, they spent almost the same amount on just 1,200 liters (317 gallons).

Fuel prices that have spiked since the start of the Iran war on Feb. 28 are dealing a hard blow to the couple and other small businesses across Europe.

“Originally, it was a good deal, because initially, a fuel-heated oven is more economical than an electric one,” Kevin Luce said. “That is until the price (of fuel) increased by 50%. So, yes, now it’s not a good deal.”

Soaring fuel prices hit hard in rural areas of France

The Luces aren’t alone. There are more than 34,000 bakers across France churning out around 6 billion baguettes each year, according to the national federation of bakeries and patisseries, which says that about one quarter of them use oil- or gas-fired ovens.

As customers filed through the bakery for their morning baguettes, croissants and other pastries, Luce told The Associated Press that “all this superfluous expenditure on energy represents a loss of earnings. It’s salary we can’t take, it’s salary increases we can’t give to our employees. It’s investments we can’t make.”

Although inflicting pain globally, the energy crisis is biting particularly hard in the rural expanses and communities of the European Union’s largest country by area. The roughly 21 million people who live in the countryside — about a third of the French population — often rely on cars to get around, because public transportation is limited. Rural areas make up nearly 90% of France’s territory.

The so-called yellow vest protest movement, which rocked French President Emmanuel Macron’s government during his first term in office, put down wide roots in rural towns and villages, with protesters setting up camps on roundabouts.

The demonstrations, some violent, gripped France for months. Fuel prices were one of the triggers of the anger then, a painful memory for Macron’s ministers that hangs over them now, as they wrestle with renewed angst and fury about soaring costs.

France’s government is trying to help, but it may not be enough

The French government responded this week with its latest aid package — worth an estimated 450 million euros (around $512 million) — for people and industries battered by the eye-watering prices at the pumps. It includes subsidies for people who commute at least 15 kilometers (9 miles) to work and support ranging from 48 euros to 277 euros ($54 to $315) to assist 5.8 million families with their winter energy bills.

Martial Realland sold his home to help realize his long-held dream of owning a food truck that he drives from village to village in the l’Oise region of northern France, selling savory ham and cheese pancakes, fries and other snacks. Filling the truck with diesel costs 200 euros (around $228), compared to 120 euros ($136) before the Iran war, he said.

“It really hurts,” he told the AP. “It’s catastrophic.”

And as the fall and winter loom, he’s also bracing for a sky-high heating bill, because the home that he rents is warmed with heating oil.

“I’m scared” of that bill, he said, estimating that filling his 1,500-liter (396-gallon) tank could cost 2,500 euros ($2,847). “Last year, it cost 1,600 euros.”

With that in mind, he may not fill the tank at all this year.

Realland said he is already turning down work that requires a long drive, because the diesel that his truck burns wouldn’t make it worthwhile financially.

A far-right lawmaker sounds the alarm in her rural region

Christine Loir, a lawmaker from the National Rally party of far-right presidential hopeful Marine Le Pen, said that more than 10% of homes in L’Eure, the Normandy region she represents in the National Assembly, use heating oil. The prices for the fuel are soaring, and Loir said that many can’t afford to install other heating systems or better insulate their homes.

She is lobbying the government to lower taxes on heating oil, which is more commonly used in rural areas, both in homes but also by enterprises, including in some bakers’ ovens. She said some constituents have told her that this winter they’ll have to choose between heating and food.

“People are extremely worried,” Loir told the AP. “People say that if fuel prices don’t come down, they’ll stop going to work, they can’t cope.”

This baker won’t raise prices for his customers’ daily bread

There is at least one crumb of comfort for customers of the Luces’ bakery in Saint-Just-en-Chaussée who come not just for bread and cakes but often for a chat, too.

Their prices: 1 euro (about $1.14) for a basic baguette and 1.10 euros ($1.25) for a “traditional” baguette, which takes longer to make, aren’t rising in line with fuel prices.

“I won’t change my price,” he said. “It wouldn’t be of any help. It wouldn’t soak up the lost revenue and it would be counterproductive, because our customers would feel betrayed. They shouldn’t have to pay more. They’re already paying enough at home.”