Gas LP closes 2022 at the lowest prices in 12 months

The maximum price of liquefied petroleum gas (LP) for the last week of the year, from December 25 to 31, is 19.21 pesos per kilogram on average, which increases 0.15% compared to the previous week, and It is the second lowest since the maximum price policy began, according to the Energy Regulatory Commission (CRE). Although it shows a clear reduction, this is less than that of the international prices of this fuel.

And it is that this average maximum price decreed by the federal government for the week of Christmas festivities, which is one of the weeks with the highest annual demand, is 12% less than that ordered for the last week of 2021 and 24% less than that of the last month reported by distributors in the free market, without government control.

The low level of cap prices is due to the fact that the reference that makes up approximately a quarter of the total price in Mexico has fallen so far this year, since in the last week of last year the price of propane in the Mont Belvieu market averaged 1.01 dollars per gallon and this year the latest report from the United States Energy Information Administration reports it at 0.69 dollars per gallon, which implies a drop of 35.2%, that is, almost three times the reduction of the price cap for BELIEVE.

As of last October, the national supply of LP gas amounted to 281,000 barrels per day on average, a figure practically identical to that of the first 10 months of 2021; of that volume, imports had a 67% share, a figure that barely changed compared to last year.

So far this year, it has an average ceiling price of 23.39 pesos per kilo, but between August and December, the average is 21.96 pesos per kilo and can be compared with the ceiling prices that began in August 2021, in which the average between August and December it was 24.64 pesos per kilogram, with which the reduction in this period has been 12.2 percent.

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 19, the maximum price of LP gas nationwide it reached an average of 25.66 and 25.47 pesos per kilogram during March and April, respectively, which represented its highest levels in history.

These prices were even higher than the last one reported by distributors in the free market that began in 2017, which was 25.19 pesos per kilogram.

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 They stopped increasing their prices, particularly in 2020, when the price of oil reached zero for moments due to 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 outlets. in 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 agency issued for anticompetitive practices in this industry was not enough since the damage done to consumers was greater, according to the agency, from more than of 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.

karol.garcia@eleconomista.mx