LP gas price starts the year with a slight rise

The national average maximum price of liquefied petroleum gas (LP) started 2023 with a slight increase of 2 cents per kilogram compared to the previous week, with what was determined by the Energy Regulatory Commission (CRE) will be 19.23 pesos per kilo from January 1 to 7, compared to the ceiling of 19.21 pesos per kilo that was established for the last week of last year, from December 25 to 31.

With this, it accumulates two weeks of marginal increases, since, from December 18 to 24, this established ceiling was 19.18 pesos per kilogram, the maximum price that was the lowest since the ceiling price policy was established in the country. in August 2021.

Thus, the maximum price of this energy used by seven out of 10 homes increased 0.1% weekly in the first seven days of 2023, while, compared to the previous week, its increase is 0.3 percent.

The price that must be respected as a ceiling by distributors of gas LP in the country it is thus the third lowest that has been determined since the price cap policy.

In the annual comparison, the reduction in the ceiling price is 9.3% compared to the price of 21.21 pesos per kilogram that were determined for the first week of 2022.

In contrast to the first price ceiling that was established in the country for the week of August 1 to 7, the reduction already reaches 16%, since at the start of this policy the maximum price established was 22.92 pesos per kilogram.

But if the maximum price is observed in relation to the last monthly average price determined by the LP gas distributors for the country in a free market without any price control, the reduction is 24%, after in July 2021 it was reported to the CRE a national average price of 25.19 pesos per kilo.

It should be remembered that in August 2021 the Energy Regulatory Commission imposed a cap on the price of LP gas, which is maintained to this day in 220 regions of the country, after even with the reduction in the price of oil, distributors did not stopped increasing their prices, particularly in 2020, when the oil price It reached zero for moments due to the excessive supply and low demand derived from the lack of mobility in the world. While LP gas is a derivative of this hydrocarbon and should follow the trajectory of its prices, in Mexico it even increased at that time.

Therefore, after an investigation, the Plenary of the Federal Economic Competition Commission fined 53 companies and 34 people who acted on their behalf, for colluding to set, raise, arrange and manipulate the price of LP gas distribution through plants and sales at service stations, as well as dividing, distributing, assigning or imposing portions of the market, through clients in the national territory.

However, within Cofece itself it was considered that the sanction of 2,400 million pesos that the organization issued for anti-competitive practices of this industry was not enough since the damage done to consumers was greater, according to the agency, more than 13,392 million pesos.

Among the accused distributors are the Soni, Nieto, Tomza, Simsa, Global, Uribe and Metropolitano groups in Mexico City, as well as in some municipalities of the State of Mexico, Culiacán, Colima and Tamaulipas.

Therefore, members of Cofece consider that there are still no competitive market conditions among the distributors of this fuel, which leads Cofece to investigate and continue with the regularization of competition, within its powers, without being a sectoral regulator, as is the Energy Regulatory Commission (CRE).

Since Russia’s invasion of Ukraine and the uncertainty in the energy markets of this phenomenon, coupled with the reduction in demand from China due to a new period of confinement in different locations due to outbreaks of Covid-19the maximum price of LP gas at the national level reached an average of 25.66 and 25.47 pesos per kilogram during March and April of last year, respectively, which represented its highest levels in history.

karol.garcia@eleconomista.mx