The Treasury Ends the Subsidy for Regular Gasoline

After enjoying two consecutive weeks of discounts on the excise tax on production and services (IEPS), regular gasoline will not have a subsidy during the week from October 26 to November 1, as indicated by the Ministry of Finance and Public Credit (SHCP). Therefore, the IEPS rate for regular gasoline will be 6.17 pesos per liter. Additionally, neither premium gasoline nor diesel will receive discounts, as mentioned in the Federal Official Gazette (DOF).

What is the purpose of gasoline subsidies?

The per-liter rate for premium gasoline will be 5.21 pesos, while the diesel rate will be 6.78 pesos. When global oil and fuel prices increase, the Treasury typically offers a stimulus or subsidy on the IEPS rate for gasoline in Mexico to mitigate price increases in the local market. Granting subsidies results in lower IEPS revenue for the government.

Current Gasoline Prices According to PetroIntelligence, the average price per liter as of October 25 is 23.95 pesos for regular gasoline, 25.36 pesos for premium, and 25.53 pesos for diesel.

It is important to note that the decision to remove subsidies directly impacts consumers' wallets. As fuel prices rise, transportation costs also increase, leading to higher prices for other goods and services. This chain reaction can exert pressure on inflation, which might necessitate adjustments in the country’s monetary policies. Proper management of these subsidies is crucial for maintaining a balance in the Mexican economy.