Mexico has decided to temporarily halt gas subsidies along its borders with the United States, citing shortages as more American citizens cross the border to procure cheaper fuel.
“In the United States, gasoline prices are higher than in Mexico, and citizens of that country cross the border to stock up,” the ministry stated.
Gas prices have spiked in the United States in recent months. A gallon of regular gas cost $4.189 on average as of April 4, more than nine percent when compared to a month ago when the price was $3.837. When compared to a year back when the price was $2.873, the current price is over 45 percent higher.
On a per-gallon basis, gas at Chevron in Mexico cost $3.75, which Vaquero says is a steal when compared to nearly $6 in San Diego. At Pemex, a company owned by the Mexican government, gas was even cheaper at just $3.30 per gallon.
Mexico’s gas subsidy program has been pushed forward by President Andres Manuel Lopez Obrador, who promised to insulate citizens from sharp spikes in energy prices. Mexico remains a major oil producer and exporter.
Annual inflation in Mexico, which was at 7.29 percent during the first half of last month, would exceed nine percent in the next four months if fuel subsidies were taken off, Yorio stated.
“I think that practically all the surplus that will be generated by higher prices will also be reflected in the cost of gasoline,” he said. “So we’re literally going to have to use the surplus to finance the additional subsidies.”