Gasoline Price Cap Set as Finance Ministry Cuts Subsidies
After the government and gas stations agreed to keep the price of Magna gasoline capped at 24 pesos per liter for at least six months, the Ministry of Finance and Public Credit ( SHCP ) decided to reduce the subsidies it provides on the Special Tax on Production and Services (IEPS), which are reflected in the prices charged at gas stations. For the week of March 1 to 7, the discount percentage applied will be 7.15% on the IEPS rate for Magna gasoline, representing half of the subsidy provided in the previous week, which was 14.04%.
How are these discounts on the rates managed? What is the cost per liter of gasoline?
The IEPS rate for Magna gasoline increased from 5.55 pesos to 5.99 pesos; for diesel, it went from 6.08 to 6.40 pesos per liter; while the price of Premium gasoline remained at 5.45 pesos. Each week, the Ministry of Finance publishes the new fuel prices in the Official Journal of the Federation (DOF), which take effect the following Saturday. These prices are adjusted based on the fluctuations in international oil prices. If prices rise, the Ministry tends to offer larger discounts or subsidies on the IEPS to prevent costs at gas stations from increasing. Conversely, if crude oil prices fall, the Ministry limits subsidies to increase revenue from the IEPS. The agreement to stabilize the cost of Magna gasoline states that the Ministry will continue to apply tax incentives and reductions in the IEPS to cushion potential increases in international prices. As of Friday, February 28, the national average cost per liter of Magna was 24.19 pesos, Premium was at 25.71 pesos, and diesel averaged 26.16 pesos per liter, according to data from PetroIntelligence.
It’s important to note that fluctuations in gasoline prices can have a significant impact on household economies and the costs of various industries. Maintaining a balance between subsidies and tax revenue is crucial for the government, especially in a context of volatile international prices. Consumers need to stay informed and consider alternatives that may help mitigate the effects of these changes on their household budget.
