The price increase comes as part of a planned liberalization of Mexico’s energy market, which involves the move from subsidies that kept gas prices low to a market-based pricing scheme that will adjust prices at the pump based on supply and demand. And while Mexico’s unpopular president Enrique Pena Nieto had promised that fuel prices will fall thanks to his 2014 energy reforms, which dismantled the seven-decade-old national ownership of petroleum resources by state-owned firm Pemex, the initial move in prices has been higher, and decidedly so, by roughly 20 percent for gasoline and slightly less for diesel.
The price ceiling will then be adjusted daily starting Feb. 18, before letting supply and demand determine them in March, although it is the immediate shock that is of concern to the peace and stability in Mexico.
Case in point, around 100 protestors blocked a service station in Acapulco on Friday, while on Saturday an assembly of popular organizations in Chihuahua state’s capital pledged to block all commercial transportation from entering or exiting the city as a means toward paralyzing the economy and pressuring the federal government to reverse the hikes. The assembly of people’s organizations also announced their intention to block major highways and railways in response to what they see as a neoliberal looting of Mexico and handover of its resources to private capital, according to a statement.
On Sunday, the day the price hikes went into effect, Excelsior reported that angry citizens protested in several spots of the capital, Mexico City, blocking roads, demanding a return to lower gas prices.
But before readers blow this off as just another protest by an angry population which fails to grasp the "global deflationary collapse" while focusing on "fringe, outlier events" - at least in the words of central bankers - things suddenly got serious when none other than the country's powerful Jalisco New Generation cartel entered the fray, threatening to burn gas stations in response to the price hikes, according to Jalisco authorities cited by TeleSur.
“They are speculating in order to obtain million dollar profits from the majority of the people who don’t make even a minimum wage, we have already realized that the (shortage) of fuel is because dealers don’t want to sell fuel unless they can do so at a profit, all of our people are now ready to start the mission,” the Mexican drug cartel stated in a WhatsApp message circulating in Jalisco.
Related: Oil Ends 2016 On A Bullish Note
“The CJNG, in support of the working class, commits itself to making burn all the gasoline stations that to December 30 of the current year, at 10:00 p.m.” — before the price increases go into effect — “have not normalized the sale of fuel at the fair price,” the message said, according to the Mexican news outlet Aristegui Noticias.