Background on the Gas Suppliers and Their Demands
Gas suppliers across Mexico are preparing for a nationwide strike during the first week of June, as there has been no response from the federal government to their demand for a tariff adjustment in the price of liquefied petroleum gas (LPG).
Who are the Gas Suppliers?
The gas suppliers, including companies that distribute gasoline, diesel, electricity, and LPG, have issued an urgent call to President Claudia Sheinbaum and the Secretary of Energy (SENER), Luz Elena González. Their aim is to establish direct dialogue and reach agreements with the industry.
The Current Situation
Since 2021, a price cap of 10.61 pesos per liter has been in place for LPG, creating an “unsustainable situation” that has led to job losses and may result in mass company closures if not addressed promptly.
Financial Challenges and Government Response
The Mexican Association of Liquefied Petroleum Gas Distributors and Related Companies (AMEXGAS) warned earlier this year that the financial situation of the sector has worsened due to the imposition of a “Distribution Tariff,” which reduced profits by up to 50%. This has made it difficult to cover operational costs for home deliveries, as well as complicating payroll, fuel, equipment maintenance, and insumos (supplies) expenses.
The gas suppliers have also denounced blocked permits, arbitrary regulations, and market distortions caused by price caps, which they view as a persecutory attitude from the Secretariat of Energy.
Despite President Sheinbaum being questioned about the impending crisis in the gas sector and ordering the SENER to address it, no meeting invitation has been issued yet.
Proposed Tariff Increase and Impact
The sector proposes increasing the LPG tariff to 12 pesos per liter, aiming to “ensure secure and continuous distribution.”
LPG serves 100 million Mexicans and is present in 76% of the country’s households. Therefore, gas suppliers urge the federal government to respond promptly.
Key Questions and Answers
- Who are the gas suppliers? The gas suppliers include companies that distribute gasoline, diesel, electricity, and liquefied petroleum gas (LPG) across Mexico.
- What is their demand? The gas suppliers are requesting a tariff adjustment in the price of LPG to address unsustainable conditions caused by the current price cap.
- What is the proposed tariff increase? The gas suppliers propose raising the LPG tariff to 12 pesos per liter.
- Why is this issue important? LPG serves 100 million Mexicans and is present in 76% of the country’s households, making a prompt government response crucial.
- What challenges is the sector facing? The sector faces financial difficulties due to reduced profits from the Distribution Tariff, blocked permits, and market distortions caused by price caps.
