The gasolinazo, the name Mexicans have given the the government-mandated 20 percent hike in gas prices as a result of the partial privatization of Mexico’s national oil monopoly, continues to inspire massive discontent.
President Enrique Peña Nieto, whose administration mandated the price hike. Has watched his poll numbers plummet, with only one in four Mexicans approving of his handling of the office.
And now he’s trying to cool things down.
From the Associated Press:
Mexico’s president tried again on Thursday to calm anger over the big jump in gasoline prices this month amid a historically weak currency and continued threats by Donald Trump to steer manufacturers back to the United States.
In his latest speech, the deeply unpopular President Enrique Pena Nieto outlined measures that he said would help families mitigate the impact of the price hike. Yet steps like notifying more than 3 million Mexicans older than 65 that they have money in government retirement accounts seemed unlikely to dissipate the outrage that led to widespread looting in parts of the country and marches calling for his resignation.
Earlier this week, Pena Nieto promised to police price increases for staple goods and invest in modernizing public transportation. But it was difficult to see how any of that could make up for the overnight 20 percent increase in the price of gasoline when the government ended price controls.
After days of seeking ways to strike a calming chord, Pena Nieto tried taking a more relaxed posture Thursday, leaning casually on the podium, cracking jokes — and telling Mexicans to suck it up.
Protests lead to State Department warning
Just how tense the situation in Mexico has become can be judged by this travel advisory from the State Department:
The U.S. Consulate General Nogales informs U.S. citizens that large demonstrations are expected at Port of Entry DeConcini January 14-15, 2017 to protest the increase in gasoline prices. U.S. citizens are urged to use the Mariposa Port of Entry until further notice. As always, avoid areas of demonstrations, and exercise caution if in the vicinity of any large gatherings, protests, or demonstrations.
Demonstrations in Nogales last Sunday turned violent, with police firing numerous warning shots in an attempt to turn back protesters.
Protests continue, on a reduced scale
A report from Business Insider:
Protests against the gas price hike imposed by the Mexican government at the start of this year have spread across the country, appearing in at least 28 of Mexico’s 32 states.
Many of the protests have been peaceful, but in some areas demonstrators have shut down gas stations and facilities belonging to the state oil company, Pemex.
Elsewhere, protests against the gasolinazo, as the price increase has come to be called, have boiled over into looting and violence.
In Mexico City, one police officer was killed while trying to stop looting at a department store, and elsewhere police officers joined in to ransack stores. At least six people have been killed and more than 1,500 have been arrested.
Looting seen during the first week of the year largely subsided this week, but in Tijuana, which shares the Western Hemisphere’s busiest land-border crossing with San Diego, protesters continue to block traffic and confront authorities. Since the price increase — designed to let prices float in response to supply and demand — Tijuana and Baja California state have seen some of the country’s highest prices.
One protest, a blockade in the city of Rosarita, turned violent earlier this week, with at least seven people hurt when a truck rammed the barricade.
A video via the San Diego Informer:
U.S. gas stations on the border do a booming business
While the gasolinazo had been bad for Mexican businesses, it’s proving a real boon for one kind of business on this side of the border.
From Bloomberg Markets:
Mexico’s fuel market liberalization has done something rarely seen before: make California’s pump prices look cheap.
Drivers are flooding across the border to southern California to fill up on gasoline, after protesters blocking distribution centers near the Baja California capital of Mexicali caused stations to run dry. Antunez’s Shell gas station in Calexico is just five blocks away from the Mexican border and rarely has business been as busy as now. Mexicali drivers wait four to five hours to cross into the U.S. just to fill their fuel tanks and then wait two more hours to cross back into Mexico.
Unleaded gasoline in Mexicali was increased in January to 16.17 pesos a liter, or $2.815 a gallon. Seventeen miles north across the border in El Centro, California, pump prices jumped 5.3 cents a gallon to average $2.718 as of 5 p.m. New York time Wednesday, according to GasBuddy, a price tracking company.
“There is a very important commercial exchange happening in the border region,” said Jose Angel Garcia, the president of Mexico gasoline retailer association Onexpo. “There are trucks with large tanks being used to bring fuel into Mexico from the U.S.”
More from CSP News, a trade publication for gasoline retailers in the U.S.:
In Calexico, Calif., gas stations reported a tripling in fuel sales and waits of an hour or more for fill-ups, according to The Desert Sun. The town of 40,000 sits across the border from Mexicali, where protesters had earlier blocked the road into the central fuel distribution center, causing local gas stations to run out of fuel. Federal police cleared the blockade, but waits for fuel in Mexicali were still more than an hour that same day.
“It’s great for us,” Juan Arce, the manager of two SoCo Express gas stations in Calexico, told the newspaper. “I do feel bad for the people to the south.”
Several retailers in Calexico reported similar spikes in business. “It’s been more than double,” said Carlos Vera, manager of a Shell-branded site. On a high-volume day, the gas station typically sells 5,000 gallons of gas; the weekend of Jan. 7, it sold nearly 10,000. Its supplier has had to refill its underground storage tanks each day, Vera said.
Motorists were filling up gallon gasoline containers, empty laundry soap containers and even metal barrels to bring back into Mexico for family and friends.
Cartels add gas to their drug business
And in Mexico, there’s one organization already doing business in a highly valued commodity where the demand is great and the market is eager to buy.
So it should come as no surprise that they, too, are getting into the gasolinazo.
From Bloomberg Businessweek:
The black market is booming. Several states experienced gasoline shortages at the end of last year as more thieves tapped into state-owned Petróleos Mexicanos (Pemex) pipelines. The pilfered fuel was sold to drivers hoping to save money. Pipeline theft in 2015 increased sevenfold, to more than 5,500 taps, from just 710 in 2010. Pemex attributes the company’s 12-year slide in crude production in part to the growth in illegal taps.
The drug cartels have turned to fuel theft as a side business worth hundreds of millions of dollars each year, and crime groups focused solely on gasoline robbery have sprung up, says Alejandro Schtulmann, president of Empra, a political-risk consulting firm in Mexico City. “You only need to invest $5,000 or $8,000 to buy some specific equipment, and the outcome of that is huge earnings.”
Fuel theft creates a vicious cycle: The theft increases costs for Pemex and makes the official gasoline supply more scarce, contributing to higher prices for legal consumers. Theft amounts to about $1 billion a year, says Luis Miguel Labardini, an energy consultant at Marcos y Asociados and senior adviser to Pemex’s chief financial officer in the 1990s. “If Pemex were a public company, they would be in financial trouble just because of the theft of fuel,” he says. “It’s that bad.”
And while on the subject of funny business. . .
Consider this from teleSUR English:
An anti-corruption group in Mexico revealed Tuesday that the energy minister, as well as relatives of President Enrique Peña Nieto, had financial interests in the recent gas hikes that have sparked protests across the country for the second week in a row.
Energy Minister Pedro Joaquin Coldwell is a shareholder of four of the five gas stations on the Caribbean island of Cozumel in partnership with his sister and two sons.
One of the gas stations was closed down in April 2016 over alleged manipulations of prices, as the station was not providing the amount of diesel customers were paying for, Mexicans Against Corruption and Impunity exposed in the official reports by Profeco, the oil watchdog in Mexico. The ruling was appealed.
The investigative paper Aristegui Noticias denounced a conflict of interests even more problematic in the context of the contested gas price hike. “Coldwell is the head of the energy sector in Mexico. As the energy minister, he could access privileged information on the oil business,” said the article.
Coldwell denied any interference in the administration of the four gas stations in an interview with the anti-corruption group, adding he will pass over his shares to a trustee in order to avoid conflicts of interests.