Costalegre Community Message Board

Mexico to Raise Gasoline Price to Market Rate by 2010 (Update1)

By Andres R. Martinez and Jens Erik Gould

Sept. 9 (Bloomberg) -- Mexico will increase the price of gasoline sold by state-owned oil company Petroleos Mexicanos on a weekly basis until it reaches international market rates in 2010, Finance Minister Agustin Carstens said.

Gasoline prices in Mexico will reach market rates as the government gradually eliminates its subsidy, Carstens said in an interview on Televisa television today.

``We are proposing to reduce the subsidy to free the country's budget and to give a benefit to all the other sectors of the economy,'' Carstens said.

Gasoline subsidies will fall 43 percent to 138 billion pesos ($13.1 billion) next year, according to President Felipe Calderon's budget proposal. Pemex, as the Mexico City-based company is known, is the sole domestic distributor of the fuel.

Mexico imports about 40 percent of the gasoline consumed in the country.

http://www.bloomberg.com/apps/news?pid= ... in_america

The Mexican government has been using Pemex monies for most spending for the last 10 years without any significant re-investment and now the wells are running dry. This will cause massive political upheaval in the coming years. Currency speculators are already targeting the peso for an expected 25% to 40% drop against the Dollar and Euro in the next 3 years – couple that with a 40% drop in oil revenues and you will have a disaster.

Interesting concept and would hope only political upheaval. With or without the devaluation I can't imagine how high gas prices will effect the poor - gonna be tough

I would bet that the Mexican people will not let this occur as most cannot afford to pay market prices for oil. It practically guarantees that the current party will be out of power in the next election.

Remember what happened last year when tortilla prices went up.............