Mexico gasoline price hike caused by increase in international oil prices: government

Record ID: 162951

  • Title: Mexico gasoline price hike caused by increase in international oil prices: government
  • Date: 2nd January 2017
  • Summary: MEXICO CITY, MEXICO (JANUARY 2, 2017) (REUTERS) GENERAL VIEW OF NATIONAL PALACE IN MIDDLE OF CITY DEPUTY FINANCE MINISTER MIGUEL MESSMACHER, GREETING REPORTERS MESSMACHER SITTING DOWN REPORTERS DURING NEWS CONFERENCE (SOUNDBITE) (Spanish) DEPUTY FINANCE MINISTER MIGUEL MESSMACHER, SAYING: "What is happening and what we are seeing is the transfer of this increase in international oil prices and the impact that this has on fuels, given that it is the main input; so we are seeing the effect of this increase in prices. This is not due to an increase in taxes. Taxes have already been fixed since the end of 2015." GENERAL VIEW OF NEWS CONFERENCE (SOUNDBITE) (Spanish) DEPUTY FINANCE MINISTER MIGUEL MESSMACHER, SAYING: "These things always generate discomfort. It is very clear, it is understandable and it is a very important work that we have to do to explain why it is being done and that again, this is not due to an increase in taxes, this is due to an increase in international prices of fuels and therefore we must continue to explain why this is happening so that the population and households understand. It is clear to us that it is obviously an unpopular measure." TWO MEN PROTESTING AT GAS PUMP IN GASOLINE STATION DEMONSTRATORS HOLDING PLACARD GROUP PROTESTING AT GAS STATION NEW PRICES OF GASOLINE ARE DISPLAYED AT HIDROSINA GAS STATION MAGNA GASOLINE BRAND SELLING AT 16.32 PESOS (79 CENTS) PER LITER, WHILE PREMIUM FUEL AT 18.19 PESOS (88 CENTS) PER LITER DEMONSTRATORS HOLDING BANNER AGAINST GAS HIKE (SOUNDBITE) (Spanish) DEMONSTRATOR, LUIS GOMEZ, SAYING: "We are trying to show the general nuisance felt by the nation. This gasoline hike is laughable. To talk about gasoline costing 16.32 (per liter) when the minimum wage is 80 pesos ($3.86 dollars) is a joke. What we are doing is a symbolic act that will last all day long." OFFENSIVE MESSAGE ON TAXI, DIRECTED AT MEXICAN PRESIDENT ENRIQUE PENA NIETO TAXI DRIVER SHOUTING OUT OFFENSIVE COMMENTS DIRECTED AT GOVERNMENT DEMONSTRATOR HOLDING BANNER (SOUNDBITE) (Spanish) DEMONSTRATOR, TIRSO ROBLES, SAYING: "We know the increase to gasoline is the first thing that is announced. Subsequently, surely we will be experiencing an increase in public transport and then an increase to basic grocery products. So, the increase in gasoline not only affects those of us who we have vehicles. It affects the people in general." VARIOUS OF POLITICAL ACTIVIST, A STREET VENDOR KNOWN AS JUANITO, DEMONSTRATING OUTSIDE GOVERNMENT BUILDING
  • Embargoed: 17th January 2017 22:21
  • Keywords: Mexican gasoline prices rise 20.1 percent government
  • Location: MEXICO CITY, MEXICO
  • City: MEXICO CITY, MEXICO
  • Country: Mexico
  • Topics: Government/Politics
  • Reuters ID: LVA0015XE13YB
  • Aspect Ratio: 16:9
  • Story Text: Mexico's government said on Monday (January 2) a hike in gasoline prices this month was caused by an increase in international oil prices, while protests against the measure have intensified.
    Gasoline prices rose much as 20.1 percent compared to the highest recorded prices last month in December, as part of a program to end years of government-set prices at the pump.
    In a statement published last month, the finance ministry said the widely used Magna gasoline brand would rise 14.2 percent and would sell at an average price of 15.99 pesos (78 cents) per liter at retail, while Premium fuel would go up 20.1 percent to an average of 17.79 pesos per liter.
    Diesel would rise 16.5 percent, with an average price of 17.05 pesos per liter.
    "What is happening and what we are seeing is the transfer of this increase in international oil prices and the impact that this has on fuels, given that it is the main input; so we are seeing the effect of this increase in prices. This is not due to an increase in taxes. Taxes have already been fixed since the end of 2015," Deputy Finance Minister Miguel Messmacher told a news conference.
    Messmacher said it was the government's responsibility to explain why the increase had been implemented.
    "These things always generate discomfort. It is very clear, it is understandable and it is a very important work that we have to do to explain why it is being done and that again, this is not due to an increase in taxes, this is due to an increase in international prices of fuels and therefore we must continue to explain why this is happening so that the population and households understand. It is clear to us that it is obviously an unpopular measure," he said.
    Meanwhile, activists held posters and shouted slogans during a protest against the rising prices of gasoline enforced by the Mexican government at a Hidrosina gas station in Mexico City.
    At this gas station in particular, Magna gasoline was being sold at 16.32 pesos (79 cents) per liter, while Premium fuel at 18.19 (88 cents) pesos per liter, on Monday.
    "We are trying to show the general nuisance felt by the nation. This gasoline hike is laughable. To talk about gasoline costing 16.32 (per liter) when the minimum wage is 80 pesos ($3.86 dollars) is a joke. What we are doing is a symbolic act that will last all day long," said demonstrator, Luis Gomez.
    Taxi drivers also showed their disgust, directing their anger at Mexican President Enrique Pena Nieto.
    Demonstrator Tirso Robles said the rise in gasoline prices would have a ripple effect on public transport and basic food supplies as well.
    "We know the increase to gasoline is the first thing that is announced. Subsequently, surely we will be experiencing an increase in public transport and then an increase to basic grocery products. So, the increase in gasoline not only affects those of us who we have vehicles. It affects the people in general," he said.
    Analysts said the liberalization program was likely to have an impact on inflation, which has already passed the central bank's 3 percent target due to a sharp peso depreciation.
    In November last year, the energy regulatory commission said a staggered fuel price liberalization will begin at the end of March and extend through the rest of 2017.
    The move will phase out government-set gasoline prices, a practice that has prevailed in Mexico for decades, and replace them with market prices.
    The change is one of the most tangible parts of a landmark energy reform program in Mexico, which in 2013 ended the 75-year monopoly of state oil company Pemex over nearly all facets of the sector, from crude production to retail fuel sales.
    In April, Mexico allowed private companies to import fuels for the first time, nine months ahead of what the energy reform program originally stipulated.
    The reforms also paved the way for private companies to establish their own non-Pemex branded gas stations for the first time since the 1930s. That began earlier last year.
    Gasoline prices in Mexico are higher than in the United States, where market prices prevail, and Pemex loses about $3 billion a year importing gasoline into Mexico, according to Nomura analyst Benito Berber.
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