Diesel Subsidy Increases and Magna Gasoline Subsidy Decreases

During the week of January 25 to 31, the Secretary of Finance and Public Credit ( SHCP ) decided to increase the subsidy per liter of diesel, while reducing it for Magna gasoline. Compared to the previous week, the subsidy for diesel rose from 26.84% to 29.16%, whereas the subsidy for Magna gasoline declined from 21.31% to 19.31%. Thus, the price for a liter of Magna gasoline was set at 5.20 pesos, which includes a discount of 1.24 pesos; for Premium gasoline, the price was established at 5.45 pesos, and the price for a liter of diesel is 5.02 pesos, with a discount of 2.06 pesos.

What is the reason for the subsidy?

The federal government, through the Secretary of Finance, chooses to apply these subsidies on gasoline and diesel to mitigate the increases in international oil prices and other energy costs. The higher the discounts, the greater the impact on federal tax revenue.

What is the actual cost of a liter of gasoline? As of January 24, the national average cost of a liter of Magna gasoline is 24.34 pesos, Premium is at 25.73 pesos, and diesel averages 26.13 pesos per liter, according to information from PetroIntelligence.

It's interesting to observe how subsidy decisions reflect the government's strategies to cope with international market volatility. However, it is crucial to remember that while these subsidies provide temporary relief to consumers, they can also impact the government's financial health and, potentially, the overall economy if not managed sustainably.