Gasoline: AMLO’s first challenge

Mexico’s gasoline crisis has uncovered a wave of chaos; the United States is also involved 

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Mexico’s gasoline crisis has uncovered a wave of chaos; the United States is also involved 

In recent days, Mexico has presented delays in gasoline distribution, the citizens have reported rows up to two kilometers and have to wait hours to get fuel for their cars. BBC Mundo affirms that there are hundreds of service stations closed because in more than 7 days no gasoline has arrived, so users have had to wait since the night before to ensure they have fuel for the next day.

Andrés Manuel López Obrador (AMLO), Mexico’s president, affirmed that this shortage is due to the stealing that has occurred massively in the oil pipelines. According to BBC World, “fuel robbery causes the state a loss of 60,000 million pesos a year, about USD$ 3,000 million.”

To prevent the “huachicoleros” (as fuel thieves are called), the government decided to close some pipelines, which is why 8 states of the country are in this crisis.

In a press conference, AMLO said that to prevent theft, “it was closed and a special surveillance system was established.” Although it is already trying to balance, the Government also said that they are looking for a way to solve the shortage, and that, in addition, there is not a big rise in the price while it is regulated. He also said that with these thefts, a deficit of 93,000 barrels per day of gasoline was being presented.

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A great challenge for the Government

One of the biggest challenges that AMLO has had in his first months as president of Mexico has been related to gasoline. The situation of the robbery in the pipelines is only one more in the list of what has to do with fuel. The biggest problem revolves around the Tax on Products and Services (IEPS).

Since his campaign, Lopez Obrador said he would not tax the gasoline and that, in addition, it would lower the price. However, after being elected and before becoming, the debate on what would be López first measure of 2019, since by the end of 2018, according to Forbes, an incentive granted by the government in this sector, to counteract this tax.

If this stimulus is taken away, it would see a significant increase in gasoline, thus not fulfilling what he had promised in the campaign.

In the last days of 2018, the Ministry of Finance published a report where it was seen, as El Financiero confirms, that the government would not apply the stimulus in the first days of 2019, thus drastically raising the price of gasoline.

Opponents strongly criticized this, by failing to the Mexicans: “gasoline is triggering inflation and there is nothing more contrary to the common good that expensive products and services, when there is high inflation always the poorest end up paying,” said the leader of the PAN party, reports El Financiero.

However, the same media stated that “increases in IEPS fees will not necessarily lead to an increase in the prices of gasoline, since that will depend on each establishment, in a market with released prices.”

Already carrying this, the Government did not have time to stop the stimulus or tax it, because, from the first days of January, the theft of fuel attracted attention. In this way, it is even more complicated for AMLO to continue with its promise not to raise the price of gasoline, as it must compensate for the shortage in some way.

What does the United States have to do?

As a result of the robberies and closures of oil pipelines, an article was published in the Wall Street Journal entitled “Mexico Reduces U.S. Gasoline Imports “, where it affirmed that the new Mexican president had cut the amount of fuel imports from the United States, reducing by 28% the amount imported by Pemex, the oil pipeline company that closed due to thefts.

The article caught the attention of public opinion, and strongly criticized the president’s decision, especially because Mexico is the main US foreign market. As a result of this, AMLO expressed himself in this regard and denied what the article says.

However, opinions continue to be faced. Although the Wall Street Journal was also criticized for the veracity of the argument, journalist Robbie Whelan said on Twitter that the article does not say it is a lie to close the thefts, but that there are other factors for shortages. In addition, he affirmed that the article does not say that the crisis is the fault of President AMLO. To prove it, the article uses figures from the ClipperData firm where the import records of the previous years can be seen, compared to the last months.

LatinAmerican Post | Juliana Suárez

Translated from: ‘Gasolina: el primer gran reto de AMLO’