Taxes on gasoline in Mexico are five times higher than in the United States, making fuel at least 60% more expensive, according to an analysis by newspaper El Economista.
By comparing data from the consulting firm PETROIntelligence and the U.S. Energy Information Administration (EIA), El Economista calculated that 46% of what consumers currently pay for a liter of gasoline in Mexico goes to taxes, compared to 15% in the U.S.
As a result, the average price of a liter of gasoline in Mexico was 22.13 pesos per liter (US $1.28) on Monday, while gasoline in the U.S. sold for $3.058 per gallon, or $0.81 per liter.
The taxes on a liter of regular Magna gasoline in Mexico comprise 6.18 pesos in the federal Special Tax on Production and Services (IEPS), 0.55 pesos in state IEPS and about 3.54 pesos in value-added tax. This adds up to 10.27 pesos of taxes (US $0.60) on each liter, compared to 2.06 pesos (US $0.12) on an average liter in the U.S. — although the final price paid by U.S. consumers varies depending on local state taxes.
The fuel tax in the U.S. is updated every six months, while in Mexico, fuel prices are controlled through the IEPS, which varies each week depending on the fiscal stimulus applied by the Ministry of Finance and Public Credit (SHCP).
In times of hardship, such as the oil price spike following Russia’s 2022 invasion of Ukraine, the SHCP can cushion the blow to consumers by reducing IEPS or even applying an additional subsidy. It can later use the IEPS to recoup these subsidies, helping to reduce the impacts of fuel price volatility over time.
As global oil supply chains adapted during 2023, Mexico steadily restored IEPS and reduced fuel subsidies. This pushed fuel prices up 3.21% over the year, while they fell by 2.37% in the US and in many other countries around the world.
“The collection of the IEPS did not allow the low prices seen internationally to be observed in 2023, because the government had to recover the revenues used to prevent the price from reaching levels of 30 pesos per liter (US $1.74) last year [2022],” Alejandro Montúfar, director of gasoline market research firm PETROIntelligence, told El Economista.
These comparatively high fuel prices have presented challenges for Mexican businesses. For instance, low-cost airline Volaris and transportation firms such as Grupo México Transportes and Traxión all reported struggling with higher costs.
For Volaris, this was one factor leading to a 25% fall in share price over the first nine months of 2023, as fuel represents about 35% of its operating costs.
With reports from El Economista
What this article made me think about is, “where does all the tax money from gas and tourism go in Mexico? Obviously only a small percentage goes back into roads, infrastructure, airports, etc.
One of the first things Americans have to learn when they come to Mexico is leave your Harley and Mercedes in the US. They are useless here with Mexico roads.
I rode one of my motorcycles to Pueblo Mágico Cocula today. The birthplace of Mariachi. The road was ok but certainly not for a $50K plus vehicle.
Yesterday I purchased gasoline at Chevron (a longtime mechanic of mine with family in Baja California told me to purchase only it there) for 21.99 pesos per liter. At 0.058 of a dollar, that’s $1.28 per litre. A gallon is 3.78541 litres translating to $4.85 per gallon. Chevron sells the same @ $4.50 – $4.90 per gallon near me. Your article off the wall in its figures (though it might hold true for Mississippi or Texas) but thank you for awaking me to the reality that I can buy my gasoline a bit cheaper here.
I am in San Diego, California.
Hi Robert, the average US prices in the article are based on figures from the Energy Information Administration, but as mentioned, the final consumer price depends on local state taxes. California has some of the highest fuel taxes in the US, which is why you wouldn’t see a huge difference from Mexican prices where you are.
I filled up at Sam’s today near Austin, TX for $ 2.66 a gallon. No I am not planning on moving to California. You can keep Governor Gavin Newsom and his 50+ billion dollar budget deficit.
Since Mexico is projected to go completely oil independent soon, the price of the fuel should be cheaper shouldn’t it? When the US went independent not that long ago, gas prices fell a lot.
Do not count on it. Mexico does not have a large tax based considering the population. Gas Tax gets everyone, even if you do not have a car. You want to talk gas tax, go to Europe or Canada and look at their road tax on all fuels. Europe I get it, they do not want you to drive a personal car. Take Public Transport.
El Economista is a right wing newspaper and against the current government. Gas prices in most states are higher than in Mexico with the exception of some southern states. With the current government gas prices have been steady since 2018 due to subsidizing. Mexico used to sell crude to the U.S. and buy it back as gasoline at higher prices because it did not have refineries, (they were abandoned by the previous neoliberal governments). It was like selling oranges and buying back orange juice. Mexico bought a refinery in Texas (Deer Park), built a huge refinery (Dos Bocas) in the state of Tabasco and has refurbished several other refineries that were abandoned by previous governments. Since 2018 (AMLO’s presidency) tax revenues have been used to build the refinery, two international airports (AIFA & TULUM), the Tren Maya, government banks, roads, dams, social programs such as pensions for seniors over 65, scholarships for students from elementary to university levels, as well as for disabled students, a new government run airline (Mexicana de Aviación), refurbish hydroelectric plants, build solar farms in the northern states, provide free fertilizer for small to medium farmers and several other infrastructure projects. This is where taxes are going now instead of the pockets of corrupt politicians. If you want to read a newspaper that is not owned by right wing media, read “La Jornada”. México will become oil independent this year!
Propaganda? Clearly the commentator is pro-AMLO.
High gas prices should be an issue the opposition could use in an election, but I haven’t heard much about it. Here in Jalisco (currently 24mxn per liter of regular gas), the price of gas has not decreased in over 4 years. This is a huge tax on the middle class. It now costs well over $100usd to fill up a tank on a mid-sized truck or SUV. All this said, it is time to migrate to hybrids or alternative powered vehicles. What happens to Pemex when the impending transition away from fossil-fuels occurs over the next decade?
Hi Jeff. I am also in Jalisco. I ride my motorcycles in Guadalajara and area. Infrastructure is a major issue if you have a car.
Even if Mexico lowers taxes and people buy better vehicles they don’t have proper roads to use them on.
Certainly Mexico is making strides but a lot further to go.
Everytime I go back to California I appreciate all the beautiful things I took for granted when I lived there. You might have a 5000sq ft house in Mexico but you don’t get the entire package of a Mercedes and Harley to go with it.
As you pointed out, the previous comment was pro current government.
AIFA has 107 total flights today (arrivals and departures, according to the airports website). Benito Juarez has has 115 flights (arrivals and departures) in the last 2.5 hours.
AIFA has 107 total flights today (arrivals and departures, according to the airports website). Benito Juarez has has 115 flights (arrivals and departures) in the last 2.5 hours.
Here on the Oaxaca coast regular gas is ten percent higher than that in your article, about $24.43/liter.
Inflation in Baja is getting higher and higher. It’s a simple answer. Cost of fuel. You have to get products into the stores. It’s hurting the locals more and more. From food cost, getting to work on and on. Not enough refineries to processes the oil along with how to get the fuel to cities that are further away from the current refineries.
We’ve lived in Cuernavaca for over 5 yrs. The gas has stayed pretty much the same plus or minus a peso or two around $22.4 pesos. If anyone has been to Cuernavaca you know how bad the roads and streets are. The biggest problem has been the devaluation of the dollar from about 22 to 1 to 17 to 1. We have a volvo XC60 and it cost us about $85 U.S. to fill it last week. Oh yes, one last thing vote for me in the next election for president and when elected I’ll have every tope in the county torn out.