Gasoline Hikes Lead to Food Shortages in Mexico

Protesters block the entrance to a Pemex gas station as they burn tires during a protest against the rising prices of gasoline, January 3, 2017. | Photo: Reuters

This has interrupted the shipping of vegetables, grains, meat and fruits to supermarkets, sparking outrage among Mexicans.

Shortages of food and basic products are being reported throughout Mexico as thousands of people have blocked fuel stations and roads across the country to protest sharp increases in gasoline prices, local press outlets reported Wednesday.

Trade and transportation leaders warned that since there are no official fares in freight transport it is impossible for them to increase fares in the same proportion as the government has increased the price of gasoline and diesel.

Both sectors have had to negotiate new prices and this has interrupted the shipping of vegetables, grains, meat and fruits to power stations and supermarkets, La Jornada reports.

Mexican officials argue that the hike on fuel prices conforms to a policy of the gradual liberalization of fuel prices that took effect at the start of January. The price of oil rose Sunday by as high as 20.1 percent to 88 cents per liter, with diesel at 83 cents.

The price hikes have caused widespread public backlash, with multiple protests against President Peña Nieto. The crisis has deepened due to gasoline hoarding, which has caused supply shortages in many states.

Still, Peña Nieto has promised that fuel prices would eventually decrease due to his 2014 neoliberal energy reform that ended nearly seven decades of sovereign rule over energy resources by state-run oil company Pemex.

Hundreds of gas terminals have reportedly decided to stop operating, fearing possible risks to the stations due to protests. The president will address his country on Wednesday when he returns from his Christmas vacation.

Meanwhile, tens of thousands continue to protest the across of the country over gas price hikes, but also over the government's failure to address the critical living conditions of millions of poor across Mexico.


Unrest over Mexico gasoline price hike erupts into looting

XALAPA, Mexico (AP) — Protests over a sharp gasoline price hike erupted into looting of gas stations and stores in various parts of Mexico on Wednesday, with dozens of businesses reportedly sacked.

Protesters also continued to block highways, burn tires and seize gas stations, snarling traffic and jeopardizing fuel supplies across the country.

The National Association of Self-Service and Department Stores of Mexico said in a statement that 79 stores had been looted and 170 were closed or blockaded in central Mexico, including the capital.

The unrest "resulting in the theft of merchandise put at risk the lives of clients and workers in the stores, primarily in Mexico State, Michoacan, Hidalgo and Mexico City," the statement said.

In the Gulf coast state of Veracruz, store guards were overrun by crowds who carried off clothing, food, washing machines, televisions, DVD players and refrigerators.

Three supermarkets, an electronics store and a shopping center were sacked and at least 14 people were detained, the state government reported. At one supermarket officers fired into the air to disperse the multitudes.

Earlier in the day, President Enrique Pena Nieto took to the airwaves to defend his unpopular gasoline deregulation measure that resulted in price hikes of up to 20 percent over the weekend.

The increases took effect as the government ends regulated prices for gasoline and diesel, which it says represented subsidies that unduly benefited wealthier Mexicans.

The change boosted the average price for a liter of premium gasoline to 17.79 pesos (about 90 cents). That makes 4 liters, or about a gallon, equal to nearly as much as Mexico's just raised minimum wage for a day's work — 80 pesos (about $4).

Pena Nieto said he would try to help groups hit hard by the increases, in an apparent reference to bus, truck and taxi drivers.

"I understand the anger and irritation felt by the general public," Pena Nieto said, saying that "this is an action that nobody would want to take."

"If this decision had not been taken, the effects and consequences would have been far more painful," he added.

The farm activist group El Barzon said that even with tax breaks or government support for truck drivers, "the wave of anger and discontent among Mexicans cannot be held back."

The state-owned oil company Pemex said Tuesday that blockades of fuel terminals in the states of Chihuahua, Morelos and Durango had caused a "critical situation" in distributing fuel to gas stations there.

It said that if the blockades continued, it could interrupt operations at airports in Chihuahua and Baja California.

The country's industrial chamber, known as Concamin, said that "impeding production and commerce is not the best way to handle the increase in fuel prices."


Protests erupt across Mexico over a sudden spike in gasoline prices

The bus packed with holiday travelers ground to a halt. Up the highway, on the outskirts of Mexico City, protesters were blocking the lanes, brandishing sticks, burning debris and waving banners that read: “Enough!”

“It’s chaos,” said the bus driver, looking out at a traffic jam that extended as far as he could see.

An hour passed, then five. Passengers were getting hungry. From the windows, they could see travelers who had abandoned their vehicles and were dragging luggage along the dark highway.

The blockade — one of at least 21 that brought traffic to a halt across Mexico on Monday — was staged in response to a sudden hike in gasoline prices brought on by a new government policy of deregulation.

On Dec. 31, a gallon of standard-grade unleaded fuel cost roughly $2.60. On New Year’s Day, as a new policy took effect, it jumped more than 14% to about $2.95. The price of premium fuel rose by as much as 20%.

The protests began after Jesus Zambrano of the leftist Democratic Revolution Party and other opposition leaders called on Mexicans to oppose the hikes by staging a "peaceful revolution.”

On Tuesday, blockades were still snarling traffic on some highways, and authorities were on the hunt for several people accused of hijacking a fuel tanker near Mexico City and siphoning off gasoline.

The state oil giant Pemex called on the organizers of the blockades to cease their activities, warning in a statement Tuesday that  "if these blockades and aggressions continue, the supply of gasoline and diesel to the population will be seriously affected."

For decades, the government had set fuel prices, often kicking in a healthy subsidy. Pemex was nationalized in 1938 and was long a symbol of Mexican pride and autonomy. But it has become a source of scandal in recent years, with some Pemex officials facing charges of corruption.

Deregulation of gas prices, which was announced Dec. 27, is part of a larger effort by President Enrique Peña Nieto to end the state monopoly of the oil industry. The overhaul allows foreign companies to begin oil exploration in Mexico, and later start importing and distributing gasoline there.

The president promised at the beginning of the energy sector overhaul that fuel prices would go down, not up.

Many economists say they believe deregulation will benefit the economy and consumers in the long run. But the sudden change in gas price policy comes at a difficult moment, coinciding with rising world oil prices and the peak holiday travel season as well as rising inflation, a steep decline of the value of the peso against the dollar and U.S. President-elect Donald Trump’s threats to pull out of trade deals and slap taxes on imports from Mexico. Some economists suggested the deregulation was timed to give the Mexican government a much needed infusion of cash.

The Mexican economy took another hit Tuesday as Ford announced it is cancelling plans to build a new $1.6-billion factory in Mexico, investing $700 million in Michigan instead.

“It’s a perfect storm,” said Jorge Piñon, an energy expert at the University of Texas in Austin. “When you compare the cost of gasoline with the average salary in Mexico, versus in the U.S., it costs a lot more, so the increase in cost has a much a higher impact on them.”

A Bloomberg study of 59 countries found that Mexicans, along with South Africans, spend the largest portion of their incomes on gasoline — and nearly twice as much as Americans.

Structural problems with Mexico’s oil refinery and distribution system have compounded the problems, leading to fuel shortages at some gas stations in recent days and spawning a black market for fuel in some states, Piñon said.

“They don’t have the capacity to meet demand,” he said.

Pemex, which has been forced to import oil because its refineries cannot process Mexican crude oil quickly enough, has seen its oil imports from other countries bottlenecked at crowded Mexican ports.

Mexico’s oil pipelines have also been hit by an increase in thefts. More than $1 billion in gasoline is stolen by criminal networks each year, the government has estimated.

Some political analysts speculated that the controversy could benefit the opposition parties hoping to take the presidency in the 2018 elections.

Ricardo Anaya, president of the National Action Party, used the controversy to criticize Pea’s energy reforms for coming too late. He blamed a “lack of investment in strategic areas that today make it necessary to import most of the gasolines we consume in the country."

Many Mexicans are worried that rising transportation costs will drive up the cost of everything, including food. Even those stranded by the blockades on Monday night were sympathetic to the cause. On the bus stranded on the way to Mexico City, the driver lamented Mexico’s economic fortunes as passengers shared loaves of bread and passed around a single bottle of Coke.

“Everything is going up, the price of tortillas, the price of beans, and it’s going to rise even more,” he said.

“They just better not touch the price of beer!” someone in back responded.

“President Pea,” one woman cried out. “Where are you?”

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