Last updateFri, 15 Mar 2019 3pm

Gasoline hits 19 pesos per liter

Magna gasoline reached a new historic price this week in the Guadalajara metro area at 19.01 pesos a liter. That is a 14-percent hike in the last five months. On January 1 Magna gas was averaging 16.68 pesos at the pump.

pg2bPremium gasoline is up from 18.56 pesos to 20.47 pesos in the same time period – a 10-percent increase, and diesel fuel is up from 17.40 to 19.62 pesos, a 13-percent rise.

The cost of Magna at the end of May 2011 was 9.16 pesos.

As a comparison, the average price for gasoline in the state of Texas this week is approximately 14 pesos per liter (US$2.77/gallon at 19 peso/dollar exchange rate).

Although the price of gasoline has not been fixed since the end of last year, the cost per liter is still tied to Petroleos Mexicanos (Pemex), the nation´s only distributor of the product. So, although you might be purchasing your gas at BP, Oxxo stations or any one of 60 some new non-Pemex gas chains, Pemex sets the underlying price. But price hikes are also rising due to speculators and chains that commercialize the gasoline.

Mexican citizens held demonstrations 17 months ago when the government raised prices between 15 and 20 percent on January 1 2017. State police in Guadalajara used tear gas to disperse one group of protesters outside the San Juan de Dios Market that day. The rage was widespread and sometimes violent across the country, with protesters blockading gasoline stations, major highways and Pemex installations.

Returning to Jalisco this weekend on the toll road from Manzanillo, drivers spent an hour crawling the last two kilometers to the first tollbooths as protesters blocked traffic, according to one expat. Federal police were called in to take back control of the highway.

The Mexican government´s decision to stop setting the price of gasoline was a key part of its deregulation reforms designed to reduce the monopoly of the state-owned Pemex and liberalize the price of fuel in Mexico in line with the international market to spur private investment in the underfunded energy sector. It seems that the price deregulation has yet to happen, although the funding for buying up gas stations from Pemex and allowing foreign companies to drill for oil has increased rapidly. The government has allowed gasoline prices in Mexico to reach those of many non-oil producing countries in Latin America.

One gas industry analyst says that the Secretaria de Hacienda should take control of prices, as the federal government has shown its incapacity to do so. The market for gasoline in Mexico is some US$30 billion.

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