Why Will Mexicans Pay More for Petrol in 2017?

As we enter a new year, a lot of people across the world will be glad to see the back of 2016. But for some, settling in to the new year won’t be as pleasant as planned. That’s exactly the case for Mexicans, whose government are set to increase petrol prices by the biggest margin in nearly twenty years. Why? Read on for the latest.

Pricing it up

According to the latest reports by the Financial Times, the price for a litre of regular petrol will rise to 15.99 pesos in Mexico. Premium petrol will set buyers back 17.79 a litre and diesel will go up to 17.05. These increases aren’t just regular inflation though. They represent one of the biggest hikes in recent years, with regular petrol increasing by 14.2 percent, premium by 20.1 percent and diesel by 16.5 percent. So what could have caused it?

Part of it is surely down to Mexico’s decision to de-nationalise the country’s petrol sales. For nearly eight decades the government has controlled pricing of fuel, but have recently decided to change paths. Prices can now be set by many companies importing and selling in Mexico, rather than state-controlled Pemex.

A worsening situation

The move has been further impacted by a slump for the Mexican currency though. Over the last year, the Peso has dropped 15% against the US dollar, meaning imports – particularly those from the states – will be considerably more costly. The future doesn’t look great either for the Mexican Peso, as America’s election of anti-Mexico president Donald Trump has seen negative forecasts for investment in the country.

This could lead to very slow growth for the south American country, with inflation likely to increase as a result. It’s hardly the start Enrique Peña Nieto wanted for his energy reforms, which is now polling negatively with the Mexican public, who will be most affected by the changes.

Higher costs elsewhere

It’s not just imports that can affect the price of petrol. There are certain ways in which oil companies can reduce their costs, which eventually will make it down to the price of the finished product. Different oil-water-gas systems, for instance, can potentially be beneficial for producers, as discussed in the article ‘An Oil Company Used Dual-modality ECT and ERT to Study the Flow of Multiphase Oil-water-gas Systems Reducing Energy Costs and Improving Plant Yields’