Gasoline Sales Drop Despite Lower PricesBy Peter Appleby | Wed, 03/25/2020 - 14:11
The greater effects of the COVID-19 pandemic are being felt on the retail side of Mexico’s oil and gas industry, with a 15 percent reduction in sales figures for March, reports El Financiero.
On Tuesday, President Andrés Manuel López Obrador announced that Mexico was officially entering Phase 2 of the crisis, leading to stricter regulations to tackle the growing pandemic. Among the new measures taken during Phase 2 are the suspension of school classes at all levels and the suspension of non-essential work activities, alongside increased care for those at higher-risk of contracting the virus, Milenio explained.
With the 15 percent reduction in gasoline sales in March, it seems that many Mexicans had already cut their movements prior to the Phase 2 announcement. Though the first week of March saw only a 5 percent reduction in comparison to the previous month, the following weeks saw demand falling further.
However, the drop is not being seen in the same pattern across the country the country with stations in some states offering significantly lower prices than stations in other regions. Roberto Díaz de León, President of ONEXPO, explained to El Financiero that “there are several factors impacting this issue. The stations that finish the fuel first then start to rotate with good prices and the effect of the coronavirus has been felt at different times in different parts of the country.”
Though this price drop has been fueled by the falling demand for fuels globally in the face of the COVID-19 pandemic, coupled with the flooding of markets by Saudi Arabia and Russia as the two oil nations compete in a price war, President López Obrador erroneously claimed earlier this week that the lower pump prices were a decision he had taken. On his official Twitter account, the president wrote: “Despite the fall in the price of oil, which of course affects us, we made the decision to reduce the price of gasoline because it is now costing us less to import it. This is strengthening the popular economy in the face of adversity.”
The reduction in gasoline prices in Mexico may have led to increased sales under normal circumstances. According to price aggregator PetroIntelligence, consumers in the State of Mexico, where many of those who work in Mexico City live, can currently purchase a liter of regular gas for below MX$14. But this rate is unlikely to last for long, with Díaz de León stating that average price for a liter of regular gasoline could fall a further 50 cents in the coming weeks.