‘Gasolinazo’ Infuriates Mexico and Taints Flagship Energy Reform

  • Mexicans pay more of their wage at pump than 59 other nations
  • Energy conflict to embolden opposition leader Lopez Obrador

An employee fuels a vehicle at a gas station in Mexico City, Mexico, on Dec. 28.

Photographer: Susana Gonzalez/Bloomberg

Mexico is bracing for a series of protests as the opposition threatens a “peaceful revolution,” after the government of President Enrique Pena Nieto announced plans to raise gasoline prices by the most in two decades.

Gasoline will soar as much as 20 percent in January as the nation moves away from subsidies that have burnt a hole in public coffers, the Finance Ministry led by Jose Antonio Meade announced this week.

The price slam, or “gasolinazo” in Spanish, is going to hit hard, with Mexicans tying with South Africans to spend more of their annual income on fuel than residents of 59 other countries tracked by Bloomberg. The hike may also taint Pena Nieto’s flagship energy reform passed in 2013, emboldening opposition leaders such as Andres Manuel Lopez Obrador to strike out against the overhaul that opened the industry to foreign investment for the first time in almost eight decades.

"This is very grave, because it will give a bad name to the energy reform, even though it isn’t the fault of the reform," said Alejandro Schtulmann, president of Mexico City-based political-risk advisory firm Empra. "Lopez Obrador could empower his rhetoric by saying he’ll make changes to the energy reform."

Pena Nieto had said the overhaul would help lower energy prices by increasing competition. Now, the hashtag #ReformaEnergetica has become a trending topic on twitter, with many people saying they’d hoard fuel from gas stations that are already suffering shortages in several states. Illegal gasoline sales have cropped up in 10 states amid the scarcity, Reforma newspaper reports. Protests are scheduled for Jan. 1 in Mexico City and Guadalajara and have already taken place in Tamaulipas state.

Jesus Zambrano, a lawmaker with the Democratic Revolution Party, called for a "peaceful revolution," including boycotts at gas stations. Even Concamin, a leading industrial trade group, raised concern about cost pressures.

Pena Nieto already suffers from the lowest popularity of any Mexican president in two decades amid rising violence and corruption scandals. That’s hurt his Institutional Revolutionary Party’s chances in the 2018 presidential race as well as this year’s gubernatorial elections.

"The president hoped that the reforms would be his legacy," Carlos Loret de Mola, a leading Televisa newscaster, wrote on his Twitter account. "With the gasolinazo, he has buried" the reforms.

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