Gas Price Caps on the Rise

For the fourth consecutive week since their announcement, gas price caps have risen, this time, to MX$23.26 per kilogram, sixteen cents higher than last week. 

This week’s (August 22 - August 28) gas price caps have been announced and they show  another increase; this measure, put into place by the López Obrador’s administration, aims to help families acquire this basic good and prevent sellers from abusing gas prices.

Ever since the measure was announced by the Energy Regulatory Commission (CRE), it has been met with controversy. A national strike was called immediately affecting approximately 28 million households who are dependent on gas said to produce heat and cook food. Though the announced price caps at the time represented a 10 percent decrease over the price reported by distributors a month before, prices have not been lowered since June. In fact, in response to the LPG distributors strike, the government announced the creation of the state-owned Wellness Gas company.

Wellness will begin distribution on August 27 in Mexico City´s Iztacalco borough. PEMEX and subsidiaries are planning to build six distribution centers in Mexico City, State of Mexico, and Hidalgo to fulfill demand in the area and become a competitive company. An estimated 44,000,20-kilogram tanks are expected to be filled daily. The two other sizes to be filled at the centers are 10 and 30 kilogram tanks. Octavio Romero Oropeza, Director of PEMEX, during a supervisory visit to Hidalgo, revealed that the Tepeji del Río and Tula distribution centers alone are expected to handle over 4,800 tanks a day.

Moreover, PEMEX’s plan is to have its own gasoline and diesel distribution centers function  as Wellness gas distribution centers. In fact, both Hidalgo centers are being built in or around PEMEX facilities and industrial parks. Mexico City will have its distribution centers in Miguel Hidalgo and Iztacalco. 

Companies are currently selling over 15,000 daily barrels of gas, worth an estimated MX$28 million. 1.2 million homes in Mexico City have installed capacity for an LP gas tank and a little over 900,000 buy cylinders. Moreover, government price caps have been faulting in their objective, for gas distributors have been selling gas over the cap.