The News
The News
Thursday 21 of January 2021

No Gas Hike But…


A demonstration against the gas hike,photo: Cuartoscuro/Artemio Guerra Baz
A demonstration against the gas hike,photo: Cuartoscuro/Artemio Guerra Baz
The price of gasoline, as per the market liberalization, is a the result of a formula that involves many different factors

As street protests against President Enrique Peña Nieto’s fuel price increases of Jan. 1 lingered Friday in several Mexican cities, even a month later, the administration backed down from slapping yet other gas increases they had in their schedule.

Peña Nieto’s image came out badly mangled from the January price hikes which sent people out on the street looting and ransacking supermarkets and convenience stores. The widespread of the protest against the “gasolinazo” (gas price hikes) sent the federal government a very clear message not to mess with people’s meager economics, as did the Jan. 1 increase. The president’s popularity rating plummeted to 12 percent. Ouch!

By the end of the month the attention got somewhat sidetracked by Peña Nieto’s cancellation of his Jan. 31 visit to the White House in Washington, given President Trump’s insistence that Mexico should pay for his border wall project.

The people of Mexico rallied behind Peña Nieto but even then street protests against his fuel price policies continued unabated and the people let the President know that The Donald offended Mexicans again. The people’s support did not mean that Peña Nieto had regained popularity and indeed despite his confrontational attitude with The Donald they were still mad as hell at him.

On Friday the Treasury and Public Finance Secretariat (SHCP) published a news item in the federal government’s Official Gazette that the previously announced hike would not immediately go into effect and that gas prices would not budge until Feb. 17. Still, the price hike spiked an inflation surge most low income Mexicans immediately resented.

Nevertheless the official information was that withholding prices for the meantime was more to give “a fiscal stimulus” to gasoline importers than to please protesters.

But after the decision was published on the Official Gazette on Friday, SHCP Under-Secretary Miguel Messmacher had to admit: “Yes, that was a political decision,” and not a purely economic one, very much contradicting SHCP head José Antonio Meade Kuribreña who has consistently denied that Peña Nieto is playing politics plus the fact that the price increase in fuels must not scare consumers because under the new scheme the price of gasoline will be separated from “tributary and political motives.”

Messmacher literally corrected Meade’s position and admitted that this will not stop the programmed increases in the pricing of fuels “but during the transition stage a political decision has to be made so that we gradually cushion changes aiming and joining market trends. And yes, this was a political decision,” he repeated.

He explained that these hikes had long been in the making and that the government showed surprise at the virulent reaction from throngs of mobs that vandalized businesses in anger and revenge nationwide.

Yet during all this time – and this is just what has angered protesters – President Enrique Peña Nieto kept making the now obviously false promise that “the price of gasoline will go down” and when the hike came, reaction was in tandem to the unkept promise.

The price of gasoline, as per the market liberalization, is a the result of a formula that involves currency exchange rates, the international price of crude, refining and logistics costs of getting gas to the filling pumps as well as adding up the Special Tax on Production and Services (known as IEPS) as well as the value added tax and profit yield to filling station operators.

Most definitely Peña Nieto is buying time and patience from a very irritated population that would have taken to the streets on the double had he increased the price of fuels last Friday.

But take this as a temporary stay as on Feb. 17 there will be a new announcement either increasing prices again or not to go into effect as of Feb. 18.

The question now being asked is as to how people would react to a new “gasolinazo” and more so the political price the President and his Institutional Revolutionary Party (PRI) will have to pay in upcoming elections for governor in June, one of them in Peña Nieto’s own home State of Mexico turf.

But also PRI leader Enrique Ochoa asked the President not to increase fuel prices anymore as not only will they affect voting against his party in 2017, but it will have a grave effect on the presidential elections of 2018 which, if held now, Peña Nieto would lose hands down.

The halt in the price hike is political indeed.