pemex gas station About 1,000 Pemex stations have said they'll switch to Gulf.

Gas prices will rise up to 3% Thursday

First effects of energy reform show up at the pump

The price of gasoline and diesel fuel will go up on Thursday but it will be the only increase in 2015 as the “gasolinazo,” which the monthly hike in the price has come to be known, is eliminated.

The January 1 increase will amount to 3%, which is the 2015 inflation rate as projected by the Bank of Mexico. In most of the country (prices along the United States border are maintained at levels equivalent to those in the U.S.), a liter of Magna will cost 13.70 pesos (US $0.93), Premium 14.53 and diesel 14.35, but those prices are the most gas stations can charge. Another change for the new year will allow individual gas stations to charge whatever they wish within those limits.

The change in pricing comes as a result of energy reforms and the elimination of the government subsidy of fuel prices which has been in effect for 20 years. The Finance Secretariat says gasoline and diesel prices in the U.S. in 2013 were 15.4% higher than in Mexico.

But the scenario is a little different now that the price of oil has plummeted in the last two months: Brent oil, a benchmark, is down from $102 to $70.50 so far this quarter, and the price of gas in the U.S. has fallen in tandem.

As of December 19, the average price per gallon of regular gas in the U.S. was $2.47, the equivalent of 10 pesos per liter and its lowest level in more than five and a half years, according to market research firm Lundberg Survey.

Opposition politicians have called on the government to cancel Thursday’s increase, citing an economic impact that will be severe if it is allowed to go ahead.

National Action Party Sen. Ernesto Cordero Arroyo, who served as a finance secretary in the Felipe Calderón administration, says the increase will boost inflation and harm economic growth. He and his party claim that gas in Mexico could end up costing 50% more than in the U.S. this year.

Source: Milenio (sp), El Universal (sp)

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