Faced with fuel shortages caused by American drivers who flock to stock up on cheaper fuel in the area, Mexico has been forced to cancel gasoline subsidies in regions bordering the United States, Mexico’s Finance Ministry said in a statement on Saturday.
Mexico’s decision to subsidize gasoline to soften price spikes would not apply from April 2 to April 8 in the US border regions Tamaulipas, Nuevo Leon, Coahuila, Chihuahua, Sonora, and Baja California.
The measures also include Tijuana, which is considered one of the globe’s busiest border crossings.
The ministry explained its decision by saying that border regions are suffering a gasoline shortages due to the imbalance between supply and demand caused by the citizens of the US, where gasoline prices are higher than in Mexico.
As global oil prices skyrocketed amid fears that the ongoing Moscow’s military operation in Ukraine and resulting anti-Russia sanctions could impair Russia’s oil export, the gasoline prices in the US smashed historic records last month.
According to the International Energy Agency (IEA), Russia, as the world’s biggest supplier of oil to global markets, is exporting about 2.85 million bpd barrels per day.
Since Mexico itself is a big oil producer and exporter, the government has so far spared motorists from higher fuel costs with the recently introduced subsidy enabled by using the extra revenue it collects from higher prices on oil exports.
Mexican Finance Minister Rogelio Ramirez de la O noted the country will be able to keep costs at bay through subsidies even if the crude oil’s price spikes to $155 per barrel, which still leaves the maneuver space since the US benchmark WTI was at $99.38 on Friday while global benchmark Brent crude closed at $104.35 per barrel.
The government of President Andres Manuel Lopez Obrador, who has long promised to protect Mexican consumers from sharp price hikes at the pump, has been championing Mexico’s subsidy.
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