Mexico to Complete Liberalization Ahead of Schedule | Advisor Pulse

Mexico’s Energy Regulatory Commission (CRE) announced regional liberalization for the states of Campeche, Quintana Roo and the Yucatan will occur November 30th, instead of December 30th, at a press conference on Thursday, November 16th. These states will join many states in central and southern Mexico that were previously scheduled to liberalize on November 30th. This development means all of Mexico will be liberalized to end November, completing another milestone along the process of moving Mexico’s crude and refined products industry past its former monopolistic structure under national oil company Pemex.

The table and map that follow show liberalization progress to date, as well as the states that will liberalize on November 30th.

The liberalization process will leave Mexico’s fuel prices subject to global refined product market dynamics as the Mexican government will no longer publish regional price maximums that place a ceiling on fuel station prices. While it is true that fuel prices may be allowed to “freely float” for the first time in over seventy years, there are expectations for continued intervention by the Mexican government to “soften” retail fuel prices.  Mexico’s Energy Minister Pedro Joaquin Coldwell recently stated that “a tax mechanism” will be designed for softening retail prices. The Mexican government and energy industry officials will likely aim to avoid repeating the significant price surge that took place to start 2017 when diesel prices went from $14.63 MXN to $17.05 MXN overnight. Nevertheless, the completion of fuel price liberalization signals an opening for greater price volatility to enter the Mexican market.

View our special feature webcast on the cost of Mexican energy reform and learn more about how Breakthrough is helping clients navigate these changes in Mexico.