Mexico gasoline hike impact marginal for U.S. refiners: analysts

An increase in Mexico's ceiling on gasoline prices taking effect in January is expected to have a marginal impact on U.S. refiners, said energy industry analysts.

The price ceiling increase announced on Tuesday will lift regular gasoline prices by as much as 14 percent and premium prices by as much as 20 percent over the highest levels in December, the Mexican finance ministry said.

"In general, this should not have much of an impact on U.S. refiners," said Kenneth Medlock III, senior director of energy studies at Rice University. "To begin, the lifting of subsidies affects the retail price, not the wholesale price, so any impact on refining margins will have to work through lower demand in Mexico. This is likely to minimal as well."

"The bottom line is that the wholesale price is unlikely to be impacted as that is largely set in the international market," Medlock said.

Mexico's gasoline price ceiling increase is part of a government plan to move away from set prices for fuel.

Exports to Mexico make up a significant portion of gasoline U.S. refineries send overseas. In September, finished gasoline sent to Mexico accounted for 60 percent of 16.9 million barrels in exports, according to the U.S. Energy Information Administration.

A drop-off in demand from Mexico comes as U.S. refiners have to contend with improving domestic automobile efficiency, said Amy Myers Jaffe, executive director for Energy and Sustainability at University of California, Davis.

"Any drop in growing demand in nearby markets is bad news as (refining) margins will be under pressure increasingly over time as U.S. demand is expected to fall as people buy better cars," Jaffe said. "And even if people buy bigger cars, again, those new big cars will get better miles per gallon than the old big cars they replace."

U.S. refiners can easily find other countries seeking gasoline to make up any dip in Mexican demand, Jaffe said.

"U.S. refineries have deep conversion and upgraded efficient equipment and cheap natural gas that make them more competitive than European plants in the global market," she said.