Gasoline deregulation underway in Mexico

The deregulation of gasoline prices in Mexico today is a reality. Starting on November 30, nine out ten gas stations will sell gasoline at prices fixed by supply and demand , including Mexico City and the State of Mexico – the country's top gas consumers.

From all these gas stations, close to 2,578 are operated by 25 new brands – different from the PEMEX franchise – and represent 22% of the total of gas stations in the country, which up to this month are 11,735.

Thus, in most parts of the country, the maximum prices which the Ministry of Treasury used to fix will no longer be valid, according to Guillermo García , president of the Energy Regulatory Commission (CRE) .

By then, only 494 gas stations in the southern states of Campeche , Quintana Roo and Yucatán will continue selling the products based on the prices established by the Ministry of the Treasury.

Therefore, 96% of Mexico's population (around 118 million of people) will have access to deregulated prices on November 30.

Mr. García claimed this is the result of the new oil and petroleum market arising from the energy reforms, and said a sudden increase in gas prices is not expected.

During an interview with EL UNIVERSAL , Mr. García detailed “the price of each liter of gasoline in its Magna (Regular), Premium (Supreme) and Diesel variety will be determined by supply and demand, as it happens in the United States or in Central America.”

From that moment and, specifically, after January 2018 when the market will be deregulated in its entirety, Mexico will take as a reference the values of the gas stations in Texas, “which is the most solid market on refined products in the world.”

Yet when asked about the risk of a sudden price increase for gasoline, Mr García replied: “there will always be a price difference between the relevant market and the point of consumption.”

He further added the costs of logistics and transportation would cause an increase in the overall price, but that it would be “interesting” to see how the “different actors seek to minimize these costs,” although he claimed an incentive will be determined to have logistic costs be as low as possible.

“Every day we'll be receiving the prices of each gas station in the region, and we will supervise it jointly with other authorities to see there's a reasonable behavior , but this will be a supervision aimed towards an even ground, towards adequate trade practices, and a modern supervision. First, we're establishing a free price, and then we're going to ask the questions depending on how the market is behaving,” said the president of the CRE.

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