Mexico would consider state pumping stations in push for fair fuel prices

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Mexico’s President Andrés Manuel López Obrador

said on Tuesday he would consider creating a chain of government pumping stations if existing gasoline outlets did not charge “fair prices,” as he seeks to make good on a campaign vow to ensure stable fuel rates.

During a press conference, the President claimed that some concessionary companies operating gas stations were keeping government fiscal stimuli to increase profits. Thus, he warned that he would expose concessionaires who were selling gas and diesel for a higher price.

Although national oil company Pemex is fully state-owned, most of Mexico’s more than 11,000 Pemex-brand gas stations operate as franchises and set their own prices. López Obrador said the government was thinking of opening and operating a small group of gas stations, but gave few details.

The previous government’s landmark energy opening did away with government-set fuel prices. The reform also opened Mexico’s retail fuel market beyond Pemex, ushering in numerous gasoline retailers to the local market such as Exxon Mobil and BP .

López Obrador, who took office in December, has promised to keep prices from rising above inflation and has repeatedly pledged that consumers would not see price hikes for fuel.

In an effort to avoid abrupt changes in prices for consumers, the government adjusts fuel taxes on a weekly basis, but cannot completely mitigate shifts in international crude prices.

Benchmark gasoline prices have been rising this year in line with increases in prices for crude oil, the main input for gasoline and diesel.

López Obrador urged gas station operators to offer lower prices by trimming their profit margins. He also said the government would publicize which stations had the lowest prices.

“To reach our goal of no price increases, we would consider creating a network of gas stations [...] enough so that stations sell at fair prices,”

López Obrador said at a regular news briefing on Tuesday.

As a possible example, he mentioned a station in Mexico City operated by the Marines, which he said is honest and attracts lines of cars for its low prices.

The leftist has lashed out at his predecessor’s decision to abruptly end long-standing fuel subsidies, a move that boosted prices. The sticker shock triggered protests and looting across Mexico that severely hurt ex-president Enrique Peña Nieto ’s already tainted popularity and contributed to his party’s electoral defeat.