Suppliers to Gas Stations: A Story Never Told

The entry in force of the famous Energy Reform in 2013 brought with it a series of substantial changes in the way energy businesses are developed in Mexico, especially in the most visible face of the energy industry: gas stations.

Previously, this important segment of the market revolved around PEMEX, including all the activity related to the suppliers of services and equipment to the gas stations. These companies needed to have the approval of the state company to be able to operate and sell in the sector. It was a  case of the "old-fashioned” Mexican way of doing business,  and it involved entering a network of immense corruption.

However, with the first changes to the gas industry that took place in 2008, regarding the flexibility of the PEMEX monopoly and its operating mechanisms, which were consolidated with the Energy Reform, companies and individuals involved in the supply of services and sale of products or equipment for gas stations took on an important role that, when normalized in the sector, began to blend in and become part of the business ecosystem.

Subsequently, this important component of Mexico's gas station industry has gained significant importance, since it has been the technical and professional basis of the exponential growth of companies dedicated to the retail sale of fuels, going from just over 9,000 service stations in 2015 to a whopping 13,000 gas stations by the end of 2022. 

Why do I say that?

It’s simple: From the beginning of the regulations imposed by organizations like the Energy Regulatory Commission (CRE) and the Energy and Environment Security Agency (ASEA), gas station permit holders and market participants have gradually acquired new professionalization, skills and experience in areas totally unknown until then, since PEMEX oversaw and supervised many legal, operational and tax aspects of gas stations. However, in 2017, this "professionalization" of companies and entrepreneurs increased exponentially with the entry of new participants in the middle market (midstream), who started a deep change in the way of doing business.

The new brands of both foreign and national franchises, alongside the advances and regulatory consolidation, brought with them a series of commercial and operational guidelines that differed from those that PEMEX had instilled in the Mexican commercial tradition, including  the application of innovative technology in all areas of the operation and maintenance of the stations. This gave way to a new generation of gas stations and companies.

But none of these advances would have been possible without the intervention of a huge menu of professionals, companies and specialists in such diverse areas of knowledge as accounting, finance, IT, law, administration, advertising and the technological advances in every one of the operational, administrative and fiscal teams, who made the aforementioned new generation of fuel companies a reality.

Today, there are more than 5,000 of these companies and professionals supplying services, equipment and knowledge for gas stations; however, just over 80 are supported by a college or association, such as the Mexican Association of Service Station Suppliers, A.C. (AMPES)(), which follows the tradition in the US with the Petroleum Equipment Institute (PEI), among others. From all this , two strong pieces of data emerge:

1. The ability to find suppliers with certifications or the trusted support for the industry that a partnership with these associations provides.

2. The scarce culture of membership to a commercial union that exists in Mexico.

These are situations that open large gaps in competitiveness and, therefore, generate risks and externalities for the industry, contrary to the gas station sector itself, which has a solid and significant business forum, such as the Organization of Oil Dealers(ONEXPO). It  is important to note that the significant growth of supply without professional or union support results in the existence of unfair competition or risks to the sector, which have a significant impact on the different political and governmental situations that exist in Mexico today. 

This is why it is relevant for  this very important segment that has accompanied the fuel industry to follow in the footsteps of its customers in the consolidation of a group that faces all the political and legal changes that the country suffers. This group can also become a forum for the dissemination and discussion of technological advances and market trends. Finally, it can be a valid interlocutor and proficient reputational support mechanism as an additional voice at the industry discussion table. Besides,  belonging to a fully recognized guild or association potentiates professional, commercial, and reputational development factors that reinforce a more solid fuels sector.

As everybody in the fuels market says: "If you are not at the table, you are on the menu."