Subsidies at the Border Resume But Exclude Tijuana

On April 2, Mexico’s government revealed that the policy that subsidized gasoline would stop applying between April 2 and 8 near the US border due to shortages caused by more Americans driving south to avoid higher fuel prices. However, after only three days of suspension, authorities announced that the subsidy would be reinstated in all 40 border municipalities, except for Tijuana, one of the world’s busiest border crossings, and Playas del Rosario.

Initially, the policy stopped applying in the border states of Tamaulipas, Nuevo Leon, Coahuila, Chihuahua, Sonora and Baja California, due to the shortage that stemmed from what Rogelio Ramírez de la O, Minister of Finance, described as “an imbalance between supply and demand.” Additionally, the administration admitted that the shortage was also affecting US citizens that were crossing the border in hopes of avoiding the record-high prices of gasoline and diesel.

“We had to intervene, the problem was corrected and solved. Our adversaries were already saying that there was a gasolinazo, but we already have sufficient supply,” said President Andrés Manuel López Obrador. “We are helping Mexicans who live in the US and have double citizenship, but we are also helping Americans that live near the border, who are our neighbors. It is an act of solidarity to them,” he added.

Gabriel Yorio, Deputy Minister of Finance, said to Reuters that the administration planned to use the surplus revenue from rising prices of oil crude to subsidize gasoline and diesel prices in the country. He added that this measure had helped contain inflation, which already rose to 7.29 percent during the first 15 days of March. Accordingly, the Ministry of Finance and Public Credit (SHCP) revealed in its General Economic Policy Guidelines (GEPC) that the rise of oil prices would increase the revenues from oil exports so that they would be higher than the increase in expenses from hydrocarbon imports for PEMEX.

Conversely, experts still expect that fuel prices all over the world will eventually affect countries that have not perceived significant damages to their economies due to the Russian invasion of Ukraine. According to MBN, rising hydrocarbons prices are expected to outpace global inflation and interest rates. Such surges are said to lead to an increase in the price of Mexico’s imports from the US, which could, in turn, debilitate the government’s efforts to keep prices down.