Mexico: The Rising Price of Gasoline

Source: Linda Kurtzweil

When we moved to Mexico in 2015, our fellow expats were quick to tell us that only two things were expensive in Mexico: gasoline and electricity — well, they were right.

I already wrote about the high cost of electricity in my post Why Some People Pay Up to 380% More Per Kilowatt of Electricity. So today, I’m turning my attention to gasoline.

January Price Jump

In January of 2017, fuel prices in Mexico increased overnight by approximately 20% across the country. In Spanish, this price increase was known as el gasolinazo.

The increase caused the inflation rate to jump to 4.72% in January of 2017. This was the highest inflation jump in Mexico since 1999. For comparison purposes, the inflation rate was 2.61% in January of 2016.

The price increase sparked outrage and protests across the country. You’re still likely to see signs like “No al gasolinazo” (No to the fuel price increase) written on the back windows of taxis and buses.

How Fuel Prices Are Set

The fuel prices across Mexico are currently set by a government agency called la Comisión Reguladora de Energía (CRE).  This is the maximum amount that a gas station can charge for fuel and the price varies by region.

A gas station can choose to charge less; however, if they charge more than the set amount, they can be sanctioned by the government.

The prices used to be determined monthly but that recently changed and now they are set daily. The prices are based on international fuel prices and distribution costs. Since Mexico imports a large percentage of it’s gasoline from the U.S., the value of the dollar against the peso has a tremendous impact on fuel prices.

Once the Mexican government has determined the base price of the fuel, they add additional taxes that account for 40% of the price at the pump. The taxes fall into two main categories: Impuesto Especial sobre Produccion y Servicios (IEPS) and Impuesto al Valor Agregado (IVA). 

The new fuel prices for the following day are published on CRE’s web page Monday through Friday, between 4 pm and 5 pm. The next day’s prices go into effect at midnight.

Free Market Pricing

The Mexican government has controlled fuel production and distribution in the country since 1938. That all ended under President Enrique Peña Nieto and now Mexico is privatizing the fuel industry. That opens the door to competition and by January of 2018, all fuel prices will be determined by the marketplace.

The Mexican government decided to slowly implement free market pricing over the course of the year. Here are the dates for implementation by area:

March 30, 2017:  Baja California and Sonora

June 15, 2017: Chihuahua, Coahuila, Nuevo León, Tamaulipas and Durango

October 30, 2017: Baja California Sur, Durango and Sinaloa

November 30, 2017: Mexico City, Jalisco, Aguascalientes, Colima, Chiapas, Estado de México, Guanajuato, Guerrero, Hidalgo, Michoacán, Morelos, Nayarit, Puebla, Querétaro, San Luis Potosí, Oaxaca, Tabasco, Tlaxcala, Veracruz and Zacatecas

December 30, 2017: Yucatán, Campeche and Quintana Roo

Let’s Wrap This Up

Whether or not you think gasoline is expensive in Mexico will depend where you’re from. Our Canadian and European friends don’t seem to think the prices are high here in Mexico.

In our case, filling up the tank with premium here in Mexico does cost us a little more than it would in Central Florida. It comes out to about $0.15 USD more per liter or $0.57 USD per gallon.

As far as the locals are concerned, everyone that we’ve spoken to agrees that the fuel prices are too high based on wages. Minimum wage in Mexico is $80.04 pesos or $4.02 USD a day.

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About the Author

Q-Roo Paul
Paul Kurtzweil (Q-Roo Paul) was a deputy sheriff in Florida for 25 years before retiring at the rank of lieutenant in 2015. He and his wife moved to Mexico looking to maximize their retirement income. In 2016, they started a blog called Two Expats Mexico ( sharing their experiences, as well as information about the logistical and legal aspects of retiring south of the border. The blog has been viewed over two million times and the articles have been republished in numerous periodicals across Mexico.

17 Comments on "Mexico: The Rising Price of Gasoline"

  1. Hi Paul – I have a question – why does “Mexico imports the majority of it’s gasoline from the U.S.”? Thank you.

    • Q-Roo Paul | March 2, 2017 at 10:05 am |

      Although they are a Mexico produces quite a bit of crude oil, they lack the facilities and infrastructure to refine it.

  2. ive seen posts about imss insurance not being offered to temp residents anymore and is it also true for perm residents, just been seeing on fb, nothing official, so do you know anything about that? thanks

  3. Since we’re on the subject of gasoline in Mexico, I’d like to add a thought on actually buying it. I know of some people who are (painfully) aware of the 50 for 500 peso switcheroo. That’s when the friendly, helpful gas station attendant will suddenly and somewhat sheepishly turn around to you with a 50 peso note in hand, reminding you that the total was $450, or whatever. You have accidentally given me a 50 peso note instead of a 500, senor. “Ooops, sorry!” you say apologetically, fishing for a 500 this time. It may not hit you for a while that you really did give the guy/gal a 500 the first time, especially when you next check out your wallet. Or you may not realize it at all. Some of these attendants should be employed in casinos, given their excellent sleight of hand. Some advice, based on personal experience: NEVER use a 500 peso bill at a gas station if you can possibly avoid it. If you absolutely can’t avoid it, learn to pronounce “quienientos” (500) and make sure the attendant understands you know what it is before you hand it over. Adding, “no es una cincuenta!” would help too. They rely on your uncertainty about what you gave them. Not all attendants are like that, of course, but a loud buzzer should go off in your head when you reach for a 500 to pay for gas. Based on your average minimum wage in Mexico, that’s more than a week’s pay and quite a temptation. It’s best to just eliminate that opportunity. Nunca mas!

  4. Wendy Connor | March 2, 2017 at 12:46 pm |

    I appreciate and enjoy your well written and informative articles. You always provide background and reasons to help make the articles easy to understand.

  5. Great explanation. When the gasoline prices jumped in January, within a few weeks we started seeing more bicycles. So far, the gas cost increase has not affected the price of our beer here in San Felipe, Baja Callifornia (just want to cover what is most important to many retirees). We were also lucky that the protesting was all done in the state capital 2 hours away – Mexicali.

  6. Deb Kuffner | March 2, 2017 at 4:26 pm |

    Another amazing post! Thank you so much, Paul, and say ‘hello’ to Linda for us! Saludos! Deb and Joe

  7. Gasoline is definitely higher in Mexico than the US gasoline for sure and will continue most probably. Also true, Europe gasoline is crazy high priced and has been like that for a long while. Many will contrast fuel price increases in their current “place-of-res” (<-like us in Mexico), with Europe gasoline prices and they dismiss or maybe justify it as: "Well, at least we're not in Europe." Which is true nonetheless.

    I suppose you could weigh-in the alternatives: walking, bikes, horses/animals(LOL), public transport, and related. Not only that but, assess the cost of your vehicle, and associated insurance, maintenance, etc. costs as well. Vehicles and their associated costs are just expensive, period.

    Also, just like pharmaceuticals, your everyday food and similar related attributes, if it's needed, “they” (businesses, corps, gov, etc) will always make more money on it than you may not approve of, but “they” know they will always win in the end. Competition, HOPEFULLY will lower the prices on these everyday needed commodities – such as gasoline for one.

  8. Expat in Q.Roo | March 2, 2017 at 9:52 pm |

    It doesn’t help that the cartels are illegally tapping into the pipelines and are stealing enormous amounts of fuel. It would be of great benefit if they could somehow protect and prosecute those who are doing this…but it is not likely to happen.\

  9. Robyn Crowder-Conn | March 3, 2017 at 10:01 am |

    Thank you! I really enjoy reading your blog and all the comments! So helpful ! Robyn Conn

  10. Hi Paul. I hope you don’t mind but I shared this posting on a couple of the Facebook pages I follow. I think many will find your point of view pleasing and extremely informational lime I do. Keep up the great posts….my wife and I love it!

    • Q-Roo Paul | March 4, 2017 at 11:11 am |

      Hi Corey! Feel free to share all our posts — that helps us grow. Thanks for the support 🙂

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