Mexican Fuel Deregulation Causing Ripples

The shakeup in Mexico is related to the election of President Donald Trump and the future of the North American Free Trade Agreement, which is now up in the air.

A rise in Mexican gas prices is having a ripple effect on the U.S. side of the border, according to the Texas Food and Fuel Association.

According to an association report, the Mexican government is moving to lift price controls on gasoline. On the free market, prices are skyrocketing. Border lawmakers say this controversial decision is spilling into West Texas.

In 2013, Mexico’s legislature enacted an energy reform bill which ushered-in wide-ranging policy changes to Mexico’s energy sector, including opening the gasoline market to private suppliers and changes to the way that retail prices of gasoline and diesel are calculated.

SLOW RISE

Until recently, the price of fuels at Mexican pumps would rise a little each month, in line with a preset formula—and prices across the country were set at that rate. As part of the energy reform bill, the government embarked on a staggered fuel price deregulation program—and the price rises in January 2017 reflect the ongoing reorganization of the current price regime.

The change-over is a complex matter, not least because to now all gasoline stations in Mexico were Pemex franchises which never posted price boards as there was no need for them. For the first time, non-Pemex branded stations (Hidrosina is the first) are beginning to appear in Mexico with boards advertising prices per liter for various fuels, and eventually motorists in Mexico will be able to ‘shop around’ for gasoline and diesel as they do now in the U.S. and Canada, the association said.

Texas Congressman Will Hurd, the association asserts, says the shakeup in Mexico is related to the election of President Donald Trump. With the future of the North American Free Trade Agreement up in the air, Hurd says working with our southern neighbors could help stabilize things.

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