Mexican President Warns Retailers: Keep Gas Prices In Check

(Oilprice.com, Tsvetana Paraskova, 9.Apr.2019) — The Mexican government may consider creating a small network of gas stations that would sell gasoline at lower, “fair prices”, if gas station operators in the country don’t keep gas prices in check, Mexico’s leftist President Andrés Manuel López Obrador said on Tuesday.

López Obrador—in office since December 1, 2018—called on gas station operators in Mexico to sell gas at lower prices by cutting their profit margins, Reuters quoted the Mexican president as saying at a regular news briefing on Tuesday.

The government will publicize which gas stations in Mexico sell gasoline at the lowest prices, said López Obrador.

“If this doesn’t work… to reach our goal of no price increases, we would consider creating a network of gas stations… enough so that stations sell at fair prices,” Lopez Obrador said at today’s briefing, as carried by Reuters.

At the end of last year, Lopez Obrador ordered the Mexican military to begin a major crackdown on fuel theft across Mexico, which resulted in days of gas shortages in Mexico City and other cities in the country.

Leftist López Obrador also wants a greater role for Pemex in reversing the downward trend in Mexican oil production.

Pemex’s crude oil production continues to decline—according to Pemex figures, its crude oil production averaged 1.813 million bpd in 2018. To compare, Pemex’s crude oil production averaged 2.429 million bpd in 2014, falling to 1.948 million bpd in 2017.

López Obrador and Pemex have grand plans for reversing the decline, with the government coming to the rescue of Pemex, as the oil firm itself said in December. A new strategic plan aims to guarantee “the country’s energy security and sovereignty” and targets to raise crude oil production to 2.48 million bpd by the end of this administration’s term in office—the end of 2024.

One hundred days into office, López Obrador has already cancelled upcoming oil and gas auctions and banned fracking in moves undoing his predecessor’s energy reform that opened Mexico’s oil industry to foreign investment in 2013 for the first time in seven decades.

“For all practical purposes, energy reform in Mexico is dead,” Tony Payan, director of the Mexico Center at Rice University’s Baker Institute, told Houston Chronicle’s Sergio Chapa last month.

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