Why Regular Gasoline in México is 50% More Expensive than in the US

Regular gasoline in México is currently 50% more expensive than in the United States, a reduction compared to the gap of more than 60% that existed at the beginning of the year, thanks to the fact that the Mexican federal government once again granted fiscal stimuli to fuel.

However, the situation is far from what it was in mid-2022, when in the midst of the aggressive increases in energy prices internationally due to the war in Ukraine, gasoline became cheaper in México than in the neighboring country to the North.

This was even presumed by President Andrés Manuel López Obrador, who even claimed that on the country’s northern border, American motorists crossed into México to fill up their tanks at a lower price.

Currently, in México, regular or Magna gasoline is priced at 23.26 pesos per liter on average nationwide. In the United States, it is sold at 15.64 pesos for the same unit, hence in our country the liter of fuel is 48.74% or 7.62 pesos more expensive.

These prices were calculated based on data from the Mexican platform PETROIntelligence (which monitors gasoline prices nationwide) and the Energy Information Administration (EIA) of the United States.

According to specialists, the difference in price between both countries is due to different factors, but mainly because in México consumers must pay many more taxes for gasoline.

At the current price, in the United States, 2.50 pesos in taxes are paid nationwide for each liter of regular gasoline. While in México 9.11 pesos in taxes are paid, that is, more than three times what is in the northern neighbor.

It must be remembered that in México, the government charges two taxes on gasoline: the Special Tax on Production and Services (IEPS) and the Value Added Tax (VAT). From IEPS, 5.39 pesos per liter are paid and VAT, 3.72 pesos.

Currently, the federal government provides a fiscal stimulus to Magna gasoline and does not charge the full IEPS fee. As at the beginning of 2024 there were no fiscal stimuli and the entire IEPS was collected, the difference in the retail price between México and the United States was greater.

Source: eleconomista.com.mx

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