Mexico Descends into Chaos Over Sharp Spike in Gasoline Prices

Prices at the gas pumps in Mexico have risen sharply, and the massive increases have been received none too well in America’s neighbor to the south.

Looting and riots erupt in Mexico as gas prices spike 20 percent in one weekend   Daily Mail Online

According to the Daily Mail, protests over the price jumps have quickly morphed into riots in many parts of Mexico, with gas stations and countless numbers of other stores and businesses looted and destroyed.

The chamber of commerce in Veracruz, a city on the Gulf, said, per its initial evaluation, 50 different stores and other businesses there had suffered looting. Also, the National Association of Self-Service and Department Stores of Mexico said that 79 stores had been sacked and 170 were either closed or blockaded in central Mexico.

The catalyst for all of the trouble was Mexican President Enrique Pena Nieto’s decision, announced Dec. 27, to deregulate gas prices. The deregulation is part of the president’s broader agenda to finally bring an end to the state monopoly of the oil industry there. By embarking on this path, the door is now open for foreign oil companies to begin exploration in Mexico and eventually begin importing fuel into the country.

Although most experts believe that deregulation will serve Mexico’s economy and its people well over time, it has also brought an end to the subsidies that had been keeping prices artificially low. As a result, prices shot up roughly 20 percent over the weekend, to 17.79 pesos (or 90 cents) per liter.

While that does not, at first glance, sound like a lot of money, it now means that four liters of gasoline, which is roughly equivalent to one gallon, are about $3.60, while the minimum wage for one day’s work in the country is 80 pesos, or about $4.

The information contained here is for general information purposes only. The Financial Writer blog and Bob Yetman disclaim responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this article, or any other article featured at this blog, should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

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