Gasoline in Mexico was 2.5% more expensive than in the US during 2022

Gasoline in Mexico was on average 2.50% more expensive than in the United States during 2022, in addition to the fact that in that period its price was only surpassed in five months by that of the neighboring country to the north.

Regular gasoline in Mexico had an average national price of $4.06 per gallon, according to data from Petróleos Mexicanos (Pemex) and the Energy Regulatory Commission (CRE).

For its part, regular gasoline in the United States traded on average at $3.96 per gallon nationwide, according to data from the Energy Information Administration (EIA).

Ramsés Pech, energy and economy adviser, explained that the price of gasoline is usually higher in Mexico than in the United States because the taxes that have to be paid are higher.

He said that while in Mexico normally 30% of what is paid for each liter of regular gasoline is from the Special Tax on Production and Services (IEPS), in the United States a rate of around 12% is paid for each liter of fuel.

Alejandro Montúfar Helú, CEO of Petro Intelligence, said that another reason why the price in Mexico is usually more expensive than in the United States, is because the former imports more than 70% of the oil products it consumes.

Why is it more expensive? Basically for import activities, logistics, distribution, etc. It is a further point, which means that there are logistics costs, that is added to it and naturally the price in Mexico will be higher”, said the director of PETRO Intelligence.

The demand for regular gasoline in Mexico amounted to 621,000 barrels per day in the month of October 2022, according to data from Pemex, the Ministry of Energy, and the Treasury and Public Credit. Of said demand, 80% was covered through imports.

In Mexico you have to pay for transport by boat, loading, unloading, transport to service stations and apart from the tax, which is higher,” Ramsés Pech remarked, adding that in the country “there is no good pipeline infrastructure to move the fuel”.

In Mexico it rose less

Despite the fact that the average gasoline price was lower in the United States during 2022, the year-on-year increase was only 7.39% in Mexico, while in the American Union it was 31.84 percent. The difference was thanks to the stimuli and subsidies applied by the federal government on the price of fuel.

In March, days after the start of the war between Russia and Ukraine, which caused a rise in international oil prices, the federal government stopped charging the IEPS and even gave a complementary stimulus (subsidy) until August.

The fiscal stimuli are made so that the increase in gasoline is not greater than the increase in inflation, here with these data we can see that it was an effective policy for that objective”, affirmed the general director of PETRO Intelligence.

In June, the price of regular gasoline reached its highest level in the United States (which according to analysts is determined by the market), at $4.93 per gallon, an increase of 60.86% compared to the same month last year.

Meanwhile, in Mexico the price of magna gasoline averaged 4.13 dollars per gallon in June, making it around 20% cheaper than in the United States. It was in this same month that the complementary stimulus reached its highest level in all of 2022.

Ramsés Pech assured that if it had not been for the stimuli and subsidies for gasoline, “we would be flying in space with inflation.”

It should be noted that the increase in the price of gasoline in the United States during 2022 was similar to that of oil.

The US benchmark had an average price of $94.41 per barrel in 2022, an increase of 38.67% over the same period last year. While that of the North Sea Brent was 99.01 dollars (39.59% more than in 2021).

The Mexican export mix had an interannual growth of 37.86%, with an average price of 64.88 dollars per barrel.

less volatility

Analysts assured that this year the price of fuels will fall due to the economic slowdown that is expected to hit the US, Europe and China.

“We hope that in the first quarter we will see an increase due to meteorological factors and then we anticipate that it will decrease due to economic expectations of a crisis,” said Alejandro Montúfar.

The director of PETRO Intelligence said that in Mexico the increase in the price of gasoline will remain in line with inflation, with an increase of around 8 percent.

Oil prices started the year with heavy losses on fears of reduced demand.

sebastian.diaz@eleconomista.mx