The changing face of Mexico's retail gas market. The changing face of Mexico's retail fuel market.

Fuel prices are up due to crude’s recovery

Liberalized market is not responsible for increases, says regulator

Higher retail fuel prices are the result of a recovery in international crude oil prices rather than the liberalization of the Mexican fuel market, according to the president of the Energy Regulatory Commission (CRE).

“The increase has been reflected at all gas stations because oil went from US $50 to US $70 [a barrel] and that’s impacting on the final price,” Guillermo García Alcocer said.

García added that no price hikes have been unexplained or unfounded.

Gasoline prices rose 4.7% for magna and 4.1% for premium in January. Year over year they are up 7.7% and 7.3% respectively.

Since November 30, fuel prices have been fully deregulated in all regions of Mexico, meaning that the federal government no longer sets or publishes daily maximum prices.

Market liberalization was rolled out in a staged process across the country as part of a wider energy reform which also opened the retail fuel market to private foreign and national companies.

Private gas stations consequently proliferated in a market until recently monopolized by state oil company Pemex.

There are now more than 30 gas station brands established in the country, according to the federal Energy Secretariat (Sener).

The price motorists pay to fill up is now determined by international oil prices, costs related to refining, transportation and storage as well as commercial margins.

According to the official CRE fuel price application Gasoapp, the highest price for a liter of regular unleaded Magna fuel in Mexico City yesterday was 17.99 pesos (US $0.96, or $3.62 per gallon) at a BP gas station.

The lowest price was 16.35 pesos per liter (US $0.87, or $3.30 per gallon) at a Pemex station.

For premium fuel, the highest and lowest prices were 19.55 pesos per liter (US $1.04, or $3.95 per gallon) and 18.24 pesos per liter (US $0.97, or $3.68 per gallon) respectively.

In relation to liquid petroleum prices, the CRE president said that the market is currently very depressed. García explained that the CRE is monitoring prices and margins in the sector and a mobile application allowing consumers to compare gas prices will soon be released.

While the government was still setting maximum prices last year, García said, the CRE had issued fines totaling 112 million pesos (US $6 million) to retailers who exceeded the set cap and one of the biggest penalties was imposed on a petroleum gas retailer.

Another factor affecting the oil industry in Mexico is fuel theft from Pemex refineries and pipelines, which costs the federal government more than US $1 billion annually in lost revenue.

Large drug cartels have increased their dominance in the lucrative illicit market joining smaller gangs of fuel thieves known as huachicoleros.

Source: Milenio (sp), Reforma (sp)

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