By RICARDO CASTILLO
Lest we forget:
One of the unkept promises that helped to topple the popularity of former Mexican President Enrique Peña Nieto was his much-repeated outright lie that with his Energy Reform and Pemex joining free-market competition, “fuel prices will come down.”
On Jan. 1, 2017, Peña Nieto made the grave error of liberating gasoline and diesel prices. His move immediately brought about general outrage in the entire nation and throngs of angry people took to the streets, ransacking stores and wreaking havoc.
Current Mexican President Andrés Manuel López Obrador (AMLO) paid close attention and has not made the same mistake as his predecessor. Instead, “we are complying with out promise to not raise the price of fuels,” he said. “But there have been increases because the profit margin of distribution companies has gone up.”
This past week, AMLO expressed his dissatisfaction with the money being made by filling station operators because, even with competition, the prices just keep climbing. making Mexican gasoline some of the most expensive in the continent.
Just as a point of comparison, while the average price per gallon of regular gasoline in the United States on April 11 was $2.74 (53.73 pesos at 19.30 per “sell” dollar), in Mexico the average price per gallon (four liters) of “green magna” was around 84 pesos ($3.77) at more than 20 pesos per liter. In short, Mexicans are getting ripped off in a free-market world.
On Wednesday. April 10, AMLO threatened to re-establish government-owned filling stations in direct competition with the private stations, immediately striking terror in the two major organizations representing the approximately 11,500 existing filling stations in nationwide.
The old Mexican Association of Gasoline Distributors (Amegas) of Pemex concessionaires, as well as the new one, which now claims to be the largest, Onexpo National (representing international brands such as British Petroleum, Shell, Repsol, Total, Exxon and Gulf, as well as Mexican-owned fuel vendors G500, Oxxogas, Hidrosina and Fullgas) claim that there is no such thing as an upward trending price fix.
According to reliable sources, filling station owners from Onexp and Amegas met in the plush Xcaret Resort Hotel in Cancun recently. Their two subjects of discussion were “from price controls to free market,” in which allegedly an agreement to gradually slide gasoline prices upward was reached. The participants also discussed how to profit from the subsidy to the federal Special Tax on Production and Services (IEPS). If this was true, the idea of “free competition” was fraudulent because, in reality, prices of gasoline and diesel have continued to shoot up since January.
What hit the alarm bell for AMLO this very week, just prior to the Easter holiday, was a report from the National Institute of Geography and Statistics (INEGI), which said that, during March, inflation spiked to 4 percent. He promptly laid the blame on the constant tiny upward ticks in fuel prices (most people don’t notice the one- or two-centavo pinch at the pump).
Onexpo and Amegas officials immediately demanded an emergency meeting with the Finance Secretariat (Hacienda) of a “technical” nature to deny the accusations. The two concessionaires even blamed Pemex for the price surge, saying that it was due to the added costs of the storage infrastructure and distribution fees, that have not changed for 25 years. These fees, they said, have “generated logistics distortions, both regionally and seasonally, and even supply issues that directly influence prices,” according to an Onexpo press release.
Nonetheless, gasoline prices have risen by 12 percent so far this year.
AMLO was so frustrated that he warned that “if distributors don’t pay heed to the call to avoid abuses, in gasoline prices the government could create its own group of filling stations.” These stations, if they ever open up, would operate with controlled fuel prices. Pemex, even if the brand is its own, does not currently operate filling stations, except one in Houston, Texas.
Please note that the conflict is strictly operational for the filling stations and, nowadays, the Federal Commission for Economic Competition (Cofece) is investigating the causes of the fuel price hikes and to see if indeed there was collusion to establish a monopoly on the part of the filling station concessionaires.
During his Thursday, April 11, daily press conference, AMLO announced that fuel theft in Mexico has been brought down 91 percent from 56,000 barrels per day in December to about 5,000 barrels a day now. López Obrador repeated his promise to continue working to reduce gasoline theft, eventually bringing down to zero the number of stolen barrels by going after all the fuel thieving gangs still operating across the country.
And while we are on the subject, the Mexican Chamber of Deputies on Wednesday, April 10, said that Article 16 of the Federal Law to Prevent and Sanction Crimes Committed on Hydrocarbons Issues had detected violations of fuel sales registries, “reporting an inferior amount (of what was actually sold), as low as 1.5 percent of what was registered in gauging instruments.”
In case you are not familiar with what it is like to fill up your gas tank in Mexico, suffice it to say that many Mexicans refer to this as “getting 900 millimeters liters,” a practice common among crooked filling station operators, which abound in the nation. This is added theft and salt to the wounds of poor Mexicans struggling to keep up with the gasoline price hikes.
There’s no doubt about it, somebody in Mexico is getting rich of the uptick in gasoline costs … by stealing. The problem now is that it’s happening in AMLO’s watch, and the man is POed.