However, President Sheinbaum urged the sector to make a greater effort to reduce prices even further. With a combination of voluntary price caps and the absorption of the IEPS, the government seeks to stabilize the market in the face of volatile international oil prices. What is happening internationally that affects fuel prices? The rise in fuel prices is linked to the blockage of the Strait of Hormuz, a key point through which 20% of the international oil market passes. The reduction in crude oil flow through Hormuz caused Brent oil to surge by 48% and reach 107 dollars per barrel. As a result, the volatility and risk of scarcity are increasing the cost of raw materials globally, a cost that is passed on to the final price at gas stations, on which thousands of people depend. The Government reported an increase in fiscal stimuli to the Special Tax on Production and Services (IEPS) amid the pressure of international oil prices. The increase in subsidies for fuels will be in effect from April 4 to 10, as a containment measure to avoid an impact on inflation and the pockets of thousands of Mexican families. Diesel fuel will receive the greatest government support, at 81.20%; last week it was 70.28%, according to the publication in the Official Gazette of the Federation (DOF) by the Ministry of Finance and Public Credit (SHCP). In real terms, the government will absorb 5.97 pesos per liter, while motorists will pay a fee of 1.38 pesos of the IEPS. What will be the stimulus for gasoline? For gasoline, the SHCP also applied an increase in subsidies: Magna gasoline: the support rises from 23.12 percent to 31.34 percent, representing 2.09 pesos per liter; the fee to be paid is 4.60 pesos. Premium gasoline: the fiscal stimulus will be 18.48 percent, about 1.04 pesos, so motorists will pay 4.61 pesos per liter. Government pressures to keep fuel prices stable Along with the fiscal stimuli, President Claudia Sheinbaum intervened to mitigate the impact of fuel prices. She warned that without the support, the price of a liter of diesel would skyrocket to 35 pesos; in some places the price even reached 30 pesos. At the end of March, she announced an agreement with gas station owners to set a price cap on diesel at 28.50 pesos.
Mexico Introduces Fuel Subsidies to Control Prices
The Mexican government has increased tax subsidies for diesel and gasoline to curb rising prices caused by volatility in the international oil market. President Claudia Sheinbaum announced an agreement with gas station owners to set a price cap on diesel.
