Fuel prices now deregulated throughout Mexico

By Elliot Bullman

Market will set prices at pump as part of the federal energy reforms

Gasoline and diesel prices are no longer subject to government control anywhere in Mexico following the conclusion of a process to liberalize the domestic fuel market.

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On November 30 fuel prices became fully deregulated the publication of Government-set prices ended.

Large oil companies and other players in the fuel market have welcomed the news to further ease government control and United States-based suppliers are eager to take advantage of the relaxed trading conditions.

Since April Chevron, Exxon, Shell and BP have imported their own fuel rather than accessing Pemex supplies. Theirnew retail gas stations have proliferatedin a market previously only open to Pemex company Pemex.

178771.pngPhoto Credits: Web Site Animal Político

Now that fuel prices will be further exposed to market forces, companies are expected to ramp up supply. Trucks and trains are already transporting fuel at frequent intervals from Texas refineries to the United States-Mexico border and onward to distribution terminals in Mexico.

Coupled with an energy reform thatallows private companies to participate at every stage of the supply chain, the end of state controls means that more and more foreign companies are planning to invest in port terminals, storage facilities and other infrastructure that will allow them to better compete with Pemex.

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Nevertheless, Pemex will maintain an advantage over new competitors in terms of infrastructure — at least for the time being— although it faces significant problems of its own such as the loss of billions of pesos in revenue due to pipeline theft thatcontinues to rise despite efforts to combat it.

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