AIGLP Warns LPG Price Controls Threaten Mexico’s Supply

The Ibero-American Association of Liquefied Petroleum Gas (AIGLP) has expressed serious concerns over the escalating crisis in Mexico’s LPG sector, warning that government-imposed price controls are disrupting the market, deterring investment, and jeopardizing supply security for millions of households.

Since 2021, Mexico has enforced maximum price caps on LPG to protect consumers amid competition issues highlighted by the Federal Economic Competition Commission (COFECE). However, the AIGLP reports that these caps have drastically squeezed distributors’ profit margins, forcing many to operate at losses insufficient to cover basic operational costs.

The Mexican LPG Association (AMEXGAS) states that distributors receive about MX$2.68 per liter, significantly below the MX$4.25 per liter required to ensure minimum safety and quality standards. This financial strain has caused roughly 40 distribution plants to shut down in recent months, especially in states like Jalisco, Veracruz, Puebla, and Tamaulipas, affecting over 135 companies and thousands of jobs.

The AIGLP highlights that LPG is a globally traded commodity whose prices are influenced by international supply-demand dynamics, crude oil fluctuations, logistics costs, and exchange rates. Imposing fixed domestic prices without factoring in these variables creates financial imbalances and heightens the risk of widespread shortages.

Furthermore, price controls have stifled investment in infrastructure modernization and limited distribution in remote areas, pushing some communities back to using firewood for cooking and heating.

Fabrício Duarte, General Director, AIGLP, called on Mexican authorities to adopt smarter regulatory approaches that balance consumer protection with sustainable operations. Suggested measures include flexible pricing bands, targeted subsidies, and enhanced enforcement against illegal fuel distribution.

“The AIGLP stresses the urgent need to reinforce the sector’s institutional framework with transparency, technical expertise, and collaboration,” Duarte said. “It is vital that government policies recognize market realities, engage with industry stakeholders, and support an inclusive energy transition that guarantees clean and safe energy access for all.”

LPG remains a cornerstone of energy access and social welfare in Mexico, the association noted, urging the adoption of a long-term, evidence-based policy framework grounded in dialogue and technical cooperation.

As of last week, LPG prices are capped between MX$9.67 and MX$12.58 per liter depending on the region, according to official figures from the National Energy Commission (CNE).