Mexico President tells fuel stations to charge less

First Mexico’s president told oil drillers to produce more. Now he wants fuel stations to charge less.

Mexican President Andres Manuel Lopez Obrador (pictured) is calling on fuels, liquid petroleum gas, and natural gas distributors to review their profit margins and pass on more tax savings to consumers in his latest crackdown on the private energy market.

Mexico offers subsidies for fuel aimed at reducing the amount charged to consumers when international prices rise. Distributors absorb about 63 percent of that aid, Mexico’s deputy finance minister Arturo Herrera said at the president’s morning press conference in Mexico City.

If the subsidies don’t keep fuel prices low, “then we would think about creating a group of service stations in the country," Lopez Obrador said. He didn’t specify whether the state-owned oil company Petroleos Mexicanos, which leases out its brand to private franchises in Mexico, would own the new filling stations.

The leftist leader swept into power in July elections with a pledge to end gasoline price spikes, known as “gasolinazos,” that saw consumer prices surge 20 percent in some regions in 2017. The price increase was blamed on the energy reforms of the previous centre-right government, which opened Mexico’s energy market to private investment and ended the policy of capping fuel prices.

While gasoline prices are now set by the market, the Mexican government applies a so-called “fiscal stimulus” that reduces the excise tax on gasoline and diesel, giving it some control over the final price.