Gasolinazo protests destabilize Mexico amid energy reform
Market liberalization's difficult part is pummeling Mexico. Under fiscal pressure, the government began allowing energy prices to rise on Jan. 1.
The consequent 20% increase in gasoline prices-a jolt known popularly as gasolinazo-has provoked protests, looting, and violence.
According to news reports, the uprising by Jan. 12 had resulted in at least six deaths.
It also triggered border arbitrage. Mexican motorists were enduring hours-long lines at border crossings to buy gasoline in Arizona and California, where prices naturally increased.
Aggravating border tensions were blockades by protestors of several fuel-distribution centers.
The government tried to damp unrest by pointing out that without increases in the controlled prices of energy it would have to further cut services.
Its appeals encountered sympathy typical of participants in an economy accustomed to energy-consumption subsidies.
Under all systems of price control, adjustment feels to beneficiaries like imposed hardship. Because natural treasuries have limits, adjustment is inevitable. So, therefore, is political backlash.
Mexico is far from the first country to have ridden through the cycle.
At this writing, Mexican unrest showed no sign of easing.
Grievance, moreover, targeted governance beyond fuel pricing.
Even before the price hikes, more of which are in prospect, Mexicans were expressing impatience with government corruption and economic inequality.
And they're uneasy over election of Donald Trump as the US president. During his campaign, the real-estate tycoon made inflammatory comments about immigration policy and Latinos.
Support thus erodes for conservative Mexican President Enrique Pena Nieto.
It was Pena Nieto who in 2013 inaugurated historic constitutional reforms that are, among other things, opening undercapitalized oil and gas projects in Mexico to private and foreign investment.
The process enabled Mexico to end its first licensing round with a deepwater auction largely seen as successful on Dec. 5.
Eventually, reform promises to benefit the people of Mexico by turning natural resources into wealth and by improving supply-channel efficiency.
For now, however, Mexicans experiencing gasolinazo seem not to agree.
(From the subscription area of www.ogj.com, posted Jan. 13, 2017; author's e-mail: [email protected])
Bob Tippee | Editor
Bob Tippee has been chief editor of Oil & Gas Journal since January 1999 and a member of the Journal staff since October 1977. Before joining the magazine, he worked as a reporter at the Tulsa World and served for four years as an officer in the US Air Force. A native of St. Louis, he holds a degree in journalism from the University of Tulsa.