Gas Prices Rise in Mexico

Gas Prices Rise in Mexico

On January 1st, 2017, gas prices rose an alarming 20 percent in Mexico, causing widespread protest amongst its citizens. The instability of the Mexican Peso worsens the current gas crisis, shown by the staggering inflation rate of 1.51 percent in only the first two weeks of this new year. President Enrique Peña Nieto declared that artificially regulating the price of gas costs the Mexican government around 200 billion Mexican pesos (9.62 billion USD), which would limit government spending on social programs.

Many link this inevitable increase of prices to the Energetic Reform passed in 2013. This reform planned to privatize several sources of energy, including gas. The government-owned company PEMEX was responsible for the extraction and distribution of oil. However, after a period of mismanagement and crisis in recent years, PEMEX declared bankruptcy, and soon the government sought private companies willing to participate in the market.

Finally, at the beginning of 2017, private companies took control of the distribution and extraction of oil, no longer under the flag of PEMEX. Although PEMEX will not disappear, its influence will not be as heavy as it used to be, and the private sector will control the price of gas, rather than the government. After the increase in prices, protesters around the country rallied. They looted gas stations, blocked highways and met in several cities to demand a lower price, claiming this increase in prices made gas unaffordable to keep up with their normal lifestyles. So far, President Peña has defended his decision.

The Mexican government announced that another increase in gas prices could take place early this February, leaving citizens worried for the hardships to come.

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