No More Pemex?

Mexican gas station

photo by Juan Pablo Arancibia Medina

Starting in 2017, foreign gas companies will be allowed to sell their gas in Mexico, which will break Pemex’s decades-long government monopoly on gas. (Mexico kicked out foreign oil companies in 1938.) Naturally, The Wall Street Journal puts a positive spin on this development and argues that it will be good for Pemex and good for Mexico. Meanwhile, in an opinion piece for Aljazeera, John Ackerman alleges that the change in policy is a Faustian bargain with the Obama administration. One thing is clear: this will be a massive change. What will it mean for Pemex? What will it mean for the consumer? El Codo pointed me toward the following analysis from his friend Antonio, who runs a gasolinera. Antonio writes:

“Pemex has organized a series of events to take place in order to prepare Mexico for the incursion of foreign Petrol companies to be allowed to sell their fuel in Mexico starting 2017. Amongst those changes, starting January 2015 Pemex will no longer set a fixed final price to the public on fuel, instead, they will set a ‘Maximum’ final price and every gas station owner will be free to set their own price, as long as it is not higher than the Maximum allowed by the Mexican Government. This is what we are seeing happening on January 1st… the increase of 3% on fuel to the public has been authorized as the ‘Maximum’ allowed price during 2015. Supposedly no more monthly increases.”