20 | JUL | 2019
LP gas: Monopolies, theft, and corruption
The majority of Mexican society depends on LPG - Photo: Yadin Xolalpa/EL UNIVERSAL

LP gas: Monopolies, theft, and corruption

16/06/2019
09:27
Mexico City
Editorial
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The so-call “huachicol”, fuel theft, has also taken over the LPG sector

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Three-quarters of Mexican society depend on liquid petroleum gas, also known as LPG. This energy resource is used in the homes of the majority of Mexicans and it's used to cook and heat water.

After it was revealed that over 700 companies are registered in the business of supplying LPG, you might think that in the face of this diversity, the final consumer has a wide variety of options and prices that fulfill their needs, with lower prices as the result of all the competition in the market. Nevertheless, this is not the case.

First, the client has to face monopolistic practices perpetrated by concessionaires in charge of the sale and distribution of LPG, which means the price set will benefit the businessperson, not the client. The reason behind the high prices is that, in reality, the 700 LPG companies are grouped into five distribution association. Also, although it might not make sense, almost 80% of the fleet of trucks used by the national LPG sector aren't owned by the companies, but rather by third-parties that work as commission agents and obtain a percentage from the sale of each LPG cylinder or stationary tanks that are refilled. This is the result of ancient family businesses that have entrenched in the sector.

Moreover, the so-call “huachicol”, fuel theft, has also taken over the LPG sector because it has been revealed that there are shell companies that are in charge of the sale and distribution of stolen LPG, who also ban legal companies from distributing LPG in certain areas.

This crisis confirms, once again, that Mexico can't improve its economy because of a lack of rule of law, since opportunists, monopolies, and criminal groups have taken over the LPG sector. We can't allow those businesses that should be honest and fulfill the needs of the population to become monopolies or criminal organizations, and a source of corruption and theft.
 

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