TIJUANA Since the weekend, the price of gasoline and diesel has gone up for the second time this year as part of a cut in the federal subsidy of fuel in Mexico.
Even so, the subsidy keeps Mexican fuel prices about 30 per cent lower than just across the border in the United States.
The spike in prices which the locals refer to as a "gasolinazo" coincided with a new record of fuel Mexico imported. The state-owned energy company now imports more than half of the fuel it uses domestically a source of national frustration with huge political implications.
Mexico is an oil producer but does not have enough refining capacity and thus is forced to import fuel already refined. The government has been gradually reducing the subsidy of gasoline to be able to use that revenue to help cover the cost of importing fuel.
Alejandro Díaz Bautista, an economist and professor of the College of the Northern Border, said the government's stated goal to reduce fuel imports runs squarely into the problem of insufficient refining capacity.
Starting last Saturday, consumers had to pay nine Mexican cents more per liter. (There are 3.78 liters in one gallon.) A liter of regular unleaded (Magna) now costs 9.91 pesos ($.78 U.S. cents), premium rose to 10.69 pesos ($.84 ) and diesel to 10.27 pesos ($.81).
The economist explained that since President Calderon's administration began more than five years ago, the price of regular unleaded gasoline has increased 47 per cent, while the price of diesel has spiked 80 per cent.
"The price increase, the second one of 2012, is a big blow to the budget of families in Baja California and the rest of the country," he said.
The increases have led to a surge in the price of public transportation and the basic grocery items, such as milk and eggs.
Despite the on-going frustration in the rise in prices, consumers have not reduced their consumption of fuel, which in turn has pushed Mexico to seek to import ever growing amounts of it.
omar.millan@sandiegored.com
