01172017Tue
Last updateFri, 13 Jan 2017 1pm

Gasoline in Mexico 30 percent more expensive than in United States

Gasoline prices in Mexico (apart from in the U.S. border area) are due to go up for the 11th time this year on Saturday, November 1.

This means that for most motorists in Mexico the price of gasoline will have risen by around 70 percent over the past five years. (Magna has almost doubled in cost – up by 94.23 percent – since 2007.)

The policy to gradually increase the cost of gas (monthly hikes known as ‘gasolinazos’) was originally meant to reduce governmental subsides and bring the cost of fuel on a par with international levels, in particular the United States.

But the price of gas in Mexico outstripped its northern neighbor some time ago and the higher cost of filling a tank is beginning to have a negative impact on the Mexican economy, analysts say.

Since December 2009, Magna fuel has increased from 7.80 pesos a liter to today’s price of 13.13 pesos.  Premium has gone up from 9.57 to 13.89 pesos, while diesel costs 13.72 pesos, up from 8.16.

In line with current monthly gas hikes, Magna will end the year at 13.31 pesos per liter, equivalent to $3.74US a gallon.

The only state in the United States where gas is more expensive than Mexico is Hawaii, where the average price is $4.05US a gallon, according to gasbuddy.com.

In many southern U.S. states gas costs almost a dollar less than in Mexico: South Carolina ($2.76US), Tennessee ($2.77US), Mississippi ($2.79US), Virginia and Texas ($2.80US).

Gas purchased in Florida is 65US cents cheaper per gallon, while California – one of the most expensive states for gas in the United States – the average cost is 35US cents less than Mexico.

Prices in Mexico are approaching the levels of Canada, where gas retails around 30 percent higher than in the United States.

In fact, the average price of a gallon of gas in Alberta ($3.62US) is now less than in Mexico, according to gas buddy.com.  Motorists in Ontario, however, are still paying around $3.94US a gallon, while residents of British Colombia are forking out $4.17US.

The Mexican government deliberately keeps down the price of gas at the Mexico-U.S. border in order to maintain parity with the United States.  In the 20-kilometer swath known as “La Franja,” Magna sells for 10.91 pesos a liter and Premium 12.50 pesos.

Chamber of commerce leaders in Mexico have repeatedly warned that the monthly hikes are seriously affecting the bottom lines of thousands of business and affecting their competitiveness.

In July, the president of Coparmex, Mexico’s Employers’ Association, Mauricio Kuri Gonzalez, said businesses were spending on average around eight percent of their income on gasoline.

There is a slither of good news on the horizon, however, for drivers fed up with seeing their valuable pesos buy less and less fuel as the months slide by.

The monthly hikes are to be scrapped in 2015, and replaced with a one-off hike in January in line with inflation. This policy will continue for two years, until 2018, when the government will lift price controls and gasoline will be sold in line with market conditions.

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