Background on the Federal Government’s Fiscal Policy
For the seventh consecutive week, the federal government has removed fiscal stimulus from gasoline and diesel, coinciding with a 7-cent reduction in the average price of regular gasoline (Magna) nationwide.
Current Gas Prices and Fiscal Changes
As of May 24, the average price for regular gasoline (Magna) across Mexico is 23.55 pesos per liter, down from the previous week.
This decision comes as the global oil price has decreased ahead of Memorial Day weekend, signaling the start of the summer driving season in the United States—a period with heightened demand for motor fuels.
Without fiscal stimulus, motorists will now pay the full Impuesto Especial sobre Producción y Servicios (IEPS) rates until May 30. The complete IEPS rates are as follows: 6.45 pesos per liter for regular gasoline, 5.45 pesos per liter for premium gasoline, and 7.09 pesos per liter for diesel.
Oil Price Fluctuations and Their Impact
The U.S. West Texas Intermediate (WTI) crude oil benchmark fell by 1.1% to $61.76 per barrel during the week in question.
On Friday, oil prices rose due to U.S. buyers closing positions before the Memorial Day weekend, which marks the beginning of the summer driving season in the United States—a time of increased demand for motor fuels.
Every Friday, Mexico’s Secretariat of Finance publishes the upcoming week’s fuel stimulus for gasoline and diesel in the Official Gazette of the Federation (DOF).
Typically, the amount of these fiscal incentives depends on international oil price trends.
When oil prices rise, the government provides more stimulus and reduces IEPS rates; when oil prices fall, stimulus amounts are decreased, and IEPS rates increase.
This fiscal policy aims to stabilize fuel prices in Mexico and mitigate the potential impact of sudden international oil price increases.
Key Questions and Answers
- What is the current situation with gasoline and diesel prices in Mexico? For the seventh week, the federal government has removed fiscal stimulus from gasoline and diesel. The average price of regular gasoline (Magna) has dropped to 23.55 pesos per liter.
- Why are gasoline and diesel losing fiscal stimulus? The removal of fiscal incentives coincides with a decrease in global oil prices ahead of the summer driving season in the United States, which typically increases fuel demand.
- What are the current IEPS rates for gasoline and diesel in Mexico? The complete IEPS rates are 6.45 pesos per liter for regular gasoline, 5.45 pesos per liter for premium gasoline, and 7.09 pesos per liter for diesel.
- How does the Mexican government stabilize fuel prices? The government adjusts fiscal stimulus and IEPS rates based on international oil price trends to maintain stable fuel prices in Mexico.
