Petróleos Mexicanos (Pemex) tanker trucks. Photo: Google

By MARK LORENZANA

Mexico will allocate 503 billion pesos this year in subsidies to gasoline and domestic electricity — produced with gas and coal — as a key element to combat inflation, Secretary of the Treasury Rogelio Ramírez de la O reported on Monday, Aug. 1.

In contrast, the United States is about to embark on an ambitious anti-inflation plan that puts at its center the shift from an economy based on fossil fuels toward cleaner energy sources. For this, the United States will invest about $36 billion per year for the next decade.

According to Ramírez de la O, if the gasoline subsidy did not exist, inflation would be much higher, and the salary of Mexican workers would be reduced by 12 percent.

“Without this package (IEPS and additional fuel incentives), inflation in the country would have been 2.6 percentage points higher than what it is today, at 8.16,” Ramírez de la O said, during the daily morning press conference of Mexican President Andrés Manuel López Obrador (AMLO). “This is why, among other reasons, inflation in Mexico is lower than that of other countries, including the United States.”

While announcing the results of the plan against inflation and famine, which the government signed with companies in the agribusiness and self-service sectors, Ramírez de la O said that the federal budget for 2022 will allocate 503 billion pesos of subsidy for energy. Of this amount, 430 billion pesos will be used to subsidize gasoline, and 73 billion will be for domestic electricity.

Meanwhile, in Washington, Democrats reached an agreement last week to promote the U.S. Inflation Reduction Act of 2022 in the U.S. Senate. The plan, proposed by U.S. President Joe Biden, includes tax credits for clean-energy companies and consumers of electric cars and low-power-consumption appliances.

The bill introduces several provisions targeting consumer energy costs, including $9 billion in consumer rebates for electric home appliances and energy-efficient retrofits of residential properties, in addition to tax credits for heat pumps, rooftop solar and electric HVAC and water-heating systems. Other proposed initiatives include tax credits for lower and middle income consumers who purchase electric vehicles ($4,000 for used vehicle purchases, and $7,500 for new vehicle purchases), and a $1 billion grant program for energy-efficient affordable housing.

The bill also proposes fines for excess methane leaks from oil and gas wells, pipelines and other infrastructure.

Leave a Reply