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A Limited Gas Station Network

Wed, 01/18/2017 - 14:51

The now extinct state monopoly over Mexico’s oil and gas industry had a stifling effect on the development of crude oil production and also on the infrastructure needed to distribute products to the final customer. Fixed fuel prices set by the government and the presence of PEMEX as the country's only supply source led to an underdeveloped network of gas stations.

In 2017, as part of the sweeping changes brought about by the Energy Reform, Mexico started a process to abandon he single-supplier system and move toward a competitive, open market where prices will be determined by the market and gas stations will compete for clients. Official data points to around a dozen new fuel storage and distribution companies setting up shop, with projected investments of US$427 million, according to CRE.

“The previous model discouraged investment in fuel transportation and storage, resulting in an insufficient infrastructure and therefore less security in the fuel supply,” CRE said in a press release early in 2017. “Under the new scheme, investments for US$2 billion have been identified and there is an additional US$12 billion expected to reinforce Mexico’s fuel supply,” it added.