The price of a liter of regular gasoline is 46 percent more expensive in Mexico than in the United States at the end of 2024, according to calculations made by El Financiero with data from the American Automobile Association (AAA) and PETROIntelligence.
Currently, the national average for regular gasoline in Mexico is 23.96 pesos per liter, while in the United States, the price is 16.42 pesos per liter.
What determines the price of gasoline in Mexico?
Despite the special tax incentives implemented on the northern Mexican border, the average price of regular gasoline in Baja California, Sonora, Chihuahua, Coahuila, Nuevo León and Tamaulipas is 32.9 percent higher than in California, Arizona, New Mexico and Texas.
Ramsés Pech, partner at Caraiva y Asociados-León & Pech Architects, said that the main reason why Mexico has higher gasoline prices than its northern neighbor is taxes.
“40 percent of the cost of gasoline is related to the Special Tax on Production and Services (IEPS) and the Value Added Tax (VAT), while 52 percent is based on the international reference price of oil (as well as refining or importing), and the remaining 8 percent is the profit indicator (gross profit) of gas stations, which includes logistics costs (around 2 percent),” said the specialist.
Gasoline price Fuel refining in Mexico is three times more expensive compared to the United States, which is an aspect that raises the price of gasoline. [Photograph. Cuartoscuro]
How much will the IEPS increase for gasoline in Mexico?
In 2024, the IEPS on regular gasoline was set at a rate of 6.1752 pesos per liter, while for 2025, the figure will rise to 6.4555 pesos, which represented a growth of 4.5 percent at an annual rate.
The specialist added that, in 2024, an IEPS collection for fuels of around 370 to 390 billion pesos is expected, the highest since the tax came into force.
“And by 2025 it is expected that it could reach 435 billion pesos, and so far, there is no specific label for the use of these resources to improve the air, road infrastructure, or simplify the burning of fuels derived from crude oil,” he said.
He added that in addition to the tax burden, refining in Mexico is three times more expensive compared to the United States, which also impacts the price of gasoline.
“All these factors make gasoline in the country more expensive compared to other high-consumption countries, such as Japan, where a liter of gasoline costs 23.42 pesos, followed by India (22.80 pesos), Canada (22.60), Brazil (21.18), China (16.29), Indonesia (12.83), Saudi Arabia (12.62) and Russia (11.61),” said Pech.
Alejandro Montufar, CEO of the PETROIntelligence platform, indicated that the Government of Mexico, through the Ministry of Finance and Public Credit (SHCP) has the opportunity to reduce the payment of IEPS on fuels to prevent inflation from skyrocketing in high volatility scenarios.
“With fiscal stimuli, we seek to generate governability to try to mitigate a greater increase in inflation; in fact, we have observed that in other first world countries they have begun to be used,” he said.
Motorists in the United States are currently enjoying the lowest gas prices in three years, according to data from the American Automobile Association.
“The national average is tantalizingly close to falling below $3 a gallon, yet 32 states already have an average below or well below $3. Hockley County, Texas, appears to have the lowest average, clocking in at $2.30,” said Andrew Gross, a spokesman for the association.
Source: elfinanciero
