Mexico Activates Weekly Fuel Subsidies Amid Rising Global Oil Prices

Mexico City — Mexico’s finance ministry activated subsidies for regular gasoline, premium gasoline, and diesel this week in response to rising international crude oil prices.

The Ministry of Finance and Public Credit (SHCP) announced the measure in the afternoon edition of the Official Gazette of the Federation. For the week of March 21-27, the federal government will apply a stimulus to the Special Tax on Production and Services (IEPS) for each liter of the three main vehicle fuels.

For the second consecutive week, the ministry implemented a subsidy of 61.80 percent, equivalent to 4.55 pesos per liter. As a result, consumers will pay only 2.81 percent of the tax.

The subsidy for diesel is larger than for other fuels because it is the most commonly used for freight transportation activities. An impact on the logistics chain could translate to higher product costs.

Although regular gasoline prices should remain below 24 pesos per liter due to a voluntary pact to stabilize costs, the federal government also included it in the weekly subsidies.

For the reference period, the federal government will absorb 24.08 percent of the IEPS, meaning consumers will contribute only 5.08 pesos of the tax per liter.

For premium gasoline, the ministry determined the federal government will implement a subsidy of 7.47 percent per liter. This means that for each liter purchased, the public will pay only 5.23 pesos of the IEPS.

The weekly measure comes as international fuel prices have increased due to the military conflict in the Middle East.

In Mexico, the price of regular gasoline remains on average below 24 pesos, but premium gasoline is already at 27 pesos nationally, with Nuevo León reaching nearly 27.50 pesos per liter.

Diesel averages 28.48 pesos per liter nationally, though in Jalisco it reaches 28.33 pesos. The global oil supply is affected by the Middle East conflict, making fuel prices more expensive as they are derived from crude oil.

The federal government typically activates weekly subsidies when the price of a barrel of oil approaches $100. According to the finance ministry, these are measures to mitigate the impact on Mexican household economies.