Average Price of Fuel Cheaper in the US than in Mexico

The average price of regular gasoline in the US is now cheaper than its Mexican equivalent, starting the week at MX$20.02/l (US$0.99/l), 8.1 percent cheaper than Mexican gasoline which stood at MX$21.78/l (US$1.08/l).

For months following the start of the Russia-Ukraine war, US citizens had been crossing the border to find cheaper gasoline in Mexico, a trend that is now likely to diminish. Nevertheless, in certain border states, Mexico still holds an advantage, as El Financiero reported. Baja California, for example, continues to boast lower gasoline prices than California, with motorists spending MX$21.1/l (US$1.05/l) on average to MX$31.27/l (US$1.55/l), according to data sourced from the American Automobile Association (AAA) and PETROIntelligence.

It is in the major oil-producing state of Texas, however, where the story changes. Compared to its Mexican neighbors, The oil state of Texas is the one that offers the best prices with respect to its Mexican neighbors, Coahuila (US$1.07/l), Nuevo Leon (US$1.13/l) and Tamaulipas (US$0.95/l), Texas price per liter of gasoline is significantly cheaper at US$0.83/l. New Mexico also offers cheaper fuel at US$0.98/l compared to Chihuahua, where the price per liter is quoted at US$1.01/l.

On a positive note, the price of the Mexican oil export basket recovered this week after a recent drop-off. As global oil prices rose for the second consecutive day, the export blend closed Wednesday at US$78.26/b, up 6.24 percent from the monthly low of US$73.66/b recorded last week and 9.06 percent from the same month last year. 

After hitting a yearly high of US$119.62/b in the aftermath of Russia’s invasion of Ukraine, the Mexican basket closed the months of March, April and May with steady gains of 6.75, 4.19 and 11.58 percent respectively. However, in the intervening period, profits have fallen, starting with a loss of 7.94 percent in June, followed by losses of 8.63 percent in July and 12.58 percent in August. Nevertheless, across this year overall, the Mexican export blend remains at an average of US$94.29/b, still US$39.29 above the amount budgeted by the Ministry of Finance for 2022 and up 9.78 percent year over year. 

Globally, Brent crude futures rose US$3.05/b, or 3.5 percent, to $89.32/b, while US West Texas Intermediate (WTI) crude oil futures saw gains of $3.65/b, or 4.7 percent, closing Wednesday at US$82.15/b. Whereas oil prices are down 22 percent so far in 3Q22, this slight surge recorded this week is largely due to US fuel inventories falling more than expected, just as Chinese demand starts to pick up again and the EU ponders fresh sanctions on Russia.