Motorists Get Lucky Break on Increase of PEMEX Gasoline Prices Ronald Buchanan - Platts
go to original January 4, 2013

MEXICO CITY - A surprisingly modest increase of the state-controlled and heavily subsidized price of gasoline in Mexico was announced Friday by the nation's Finance Ministry, despite considerable speculation that a major change might be in store.

The 11 centavos increase announced by the deputy minister, Miguel Messmacher, amounted to less than 1 US cent.

The new price, due to begin Saturday, is 10.92 pesos per liter for regular gasoline, or about less than $3.20 per US gallon. Similar increases were announced for premium grade and diesel.

Messmacher, speaking at a press briefing, said the ministry estimates that Mexican gasoline prices are about 10% less than those of the United States.

The price structure between the two countries is, however, very different. While the US has a free market in gasoline retail, the Mexican state monopoly, Pemex, charges the same price for the same grade of fuel throughout the country.

No official alternatives to Pemex service stations are available to motorists, though a black market in stolen fuel is thriving in some regions. Small, monthly increases in gasoline prices have been a regular feature of the Mexican economy for several years, but several economists had suspected that the new administration of President Enrique Pena Nieto might announce a more radical change.

The information provided by Messmacher certainly pointed out the need for change. Consumption of gasoline per head in Mexico is very much higher than that in comparable countries, he said.

Mexico's per capita consumption is more than twice as much as Argentina's and three times as much as Brazil's. Indeed, Mexican motorists guzzle twice as much as those of France, one of Europe's leading economies, Messmacher said.

Mexico currently imports 520,000 b/d of gasoline and diesel, a third more than it did some five years ago and about half of the nation's total consumption.

In addition, Messmacher pointed out that the price of gasoline is very heavily subsidized. Last year through November, he said, gasoline subsidies cost the government 206 billion pesos, just over $16 billion.

And most of the subsidies go not to the nation's poor but the rich. Some 10% of the wealthiest motorists receive 30% of the subsidies, the ministry said in a statement.

Edited by Katharine Fraser, katharine_fraser@platts.com

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