**Understanding the Gasoline Price Surge in Mexico: Factors and Implications**
In recent statements, President of Mexico, Claudia Sheinbaum Pardo, reassured the public that the prices of gasoline and diesel would not rise beyond the inflation rate. However, data from the Federal Consumer Protection Agency (Profeco) tells a different story. Between January 8, 2024, and January 6, 2025, the national average price for regular gasoline increased from 22.47 to 23.85 pesos per liter, an increase of 6.14%. Similarly, diesel rose by 7.02%, from 24.06 to 25.75 pesos per liter. These percentages surpass the estimated inflation rate for the end of 2024, which was predicted to be 4.50%.
Carlos Rubio Arriola, President of the Baja California Energy Group, outlined five main factors influencing fuel prices: the cost of the fuel molecule, transportation, operation of service stations, the Special Tax on Production and Services (IEPS), and Value Added Tax (VAT). The depreciation of the peso against the dollar further elevates costs, as more than half of Mexico’s fuel products are imported from the United States.
Specific regions, such as Baja California, have a different dynamic due to how fuel is transported, which can affect pricing differently compared to other parts of the country. Moreover, administrative costs for service stations have increased due to federal and state taxes, labor requirements, and compliance with other regulations.
In border zones, a lower VAT rate of 8% contrasts with a 16% rate in the rest of the country, contributing to regional price disparities. Recent adjustments in IEPS rates and limited fiscal incentives further impact pricing.
**Secondary Story: Economic Impact and Consumer Reactions**
Concurrently, economic pressures stemming from rising fuel costs affect consumers and local businesses in Baja California. Residents like Adriana, a government employee, and Francisco Arellano Vázquez, a retiree, express concerns over the increasing expenses affecting their livelihoods. Additionally, the fuel market dynamics involve cross-border considerations such as the cost discrepancy between Mexico and the United States, influencing where consumers choose to purchase gasoline.
Energy experts, like Gonzalo Monroy, criticize government narratives that attribute price hikes solely to gas station operators, highlighting significant tax contributions from IEPS that reach historical records. There’s skepticism toward achieving energy self-sufficiency, given Mexico’s refining capacity and production levels compared to domestic demand.
The combined influences of international oil prices, exchange rates, and domestic policy underscore the complexities facing Mexico’s fuel market, leaving consumers and businesses to navigate an uncertain economic landscape moving forward.