Motorists in Mexico were shocked when they saw the prices of gasoline on New Year’s Day. Pump prices soared by over 20% in some areas of the country on January 1, sparking panic buying, protests in the streets and a call by a prominent lawmaker to hold a peaceful revolution.
One trucking company employee said that if the gasoline prices continue to increase the cost of everything else will go up as well.
One protester said paying taxes for gas is understandable, but where are all the services from the government in return such as filling potholes in streets. He said the politicians prefer to put the tax money into their own pockets rather than spend it where it should be spent.
The increase in gasoline was the result of the decision by the government to deregulate the price of gas and comes as the country prepares for a year of uncertainty.
The Mexican peso has lost a great deal of value since Donald Trump won the U.S. presidential election.
Trump has pledged to deported millions of undocumented immigrants as well as rip up the current NAFTA treaty. Trump also promised to apply import duties to all good imported from Mexico.
The price of regular gas is 15.00 pesos per liter in the country’s capital of Mexico City, which is equal to approximately $2.85 a gallon. However, prices vary depending upon where you are in the country.
Mexicans had been used to low gas prices at the pump. The government expropriated the oil industry in the country during 1938 and booted out all of the foreign oil companies, which most Mexican celebrated. The majority of Mexicans also associated nationalized oil with less expensive gas.
There is the thought that Mexico is very rich in petroleum reserves and that its citizens should be entitled to a shareholder benefit.
However, Mexico’s President Enrique Peña Nieto introduced reforms to the energy industry over three years ago, which opened the state controlled market for oil foreign investment for the first time since 1938.
He won acclaim around the world for the program and sold his changes to his fellow Mexicans with promises that his reforms would general additional energy making it less expensive.
Growth would be 5% during 2016 said Peña Nieto and the government began to borrow as well as spend in the anticipation of that.
Gas prices will fluctuate, which has not happened since 1992 when gas prices were fixed.
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