By Anthony Harrup
MEXICO CITY -- Mexicans protested Monday against sharp increases in gasoline and diesel prices at the start of the year, blocking roads, gas stations and fuel facilities in various parts of the country.
The government raised the maximum price of regular gasoline by 14% on Jan. 1, while premium fuel rose 20% and diesel 17% as part of the shift toward free prices and greater private participation in the motor fuels market.
The increase, which Mexicans refer to as a "gasolinazo," or "gasoline blow," eliminates subsidies that for years have been a feature of government-set fuel prices.
Under the overhaul of energy laws in 2013, Mexico last year opened gasoline imports to the private sector and allowed service stations to operate under brands other than that of state oil company Petróleos Mexicanos. This year it plans to gradually remove price controls, starting in March with some border areas.
"The continuation of this process unfortunately coincides with a relevant increase in the price of oil," Deputy Finance Minister Miguel Messmacher said Monday during a meeting with reporters. "It isn't the result of an increase in taxes, the tax has been fixed since the end of 2015."
Disgruntled consumers descended on a service stations across the country holding placards, and others blocked roads to protest against the increases, which many fear will stoke inflation.
A Pemex spokesman said relatively few gasoline stations were affected, although protesters temporarily blocked storage terminals, delaying the delivery of gasoline to retail points. Pemex suffered terminal blockades in states such as Morelos, Durango, Chihuahuaand Coahuila, he said.
A number of cities suffered gasoline shortages in December, which Pemex attributed to a surge in fuel theft and a pipeline outage caused by a clandestine tap, made worse by an unusual increase in demand. Demand was further pressured ahead of the New Year by motorists filling their tanks before the price increases took effect. Pemex said supplies at gasoline stations were returning to normal Monday.
The higher fuel prices have led a number of economists to raise their inflation expectations for 2017, and many see consumer prices rising more than the central bank's 2%-4% target band.
Mr. Messmacher said gasoline prices rose between 11% and 13% a year between 2010 and 2013, when overall inflation was between 3.5% and 4%, and that the inflationary impact of this year's increase ought to be limited.
In the past, however, the government would raise gasoline prices gradually through the year with monthly increases. Part of the reason for the big jump this month was prices were capped in 2016, which kept the government from raising prices in the second half of last year.
"These things always generate annoyance," Mr. Messmacher said. "We're quite clear that it's an unpopular measure."
The official said 30% of households in Mexico consume about 70% of the gasoline, so "we didn't consider it good public policy to maintain an artificially low price for fuels."
The government expects price competition will appear as suppliers other than Pemex start bringing gasoline into the country, initially by rail and road and later via the construction of new import terminals and pipelines. Mexico imports more than half of the roughly 34 million gallons a day of gasoline it consumes.
In the meantime, private suppliers will also have access to Pemex's fuel import facilities under nondiscriminatory terms.
Write to Anthony Harrup at email@example.com
(END) Dow Jones Newswires
January 02, 2017 16:54 ET (21:54 GMT)
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