By Paul Alejandro Sánchez, Analyst in energy, technology, and sustainability with a background in economics, geopolitics, public policy, and regulation. He analyzes global energy markets and the energy transition in a changing environment. Visiting professor at UC San Diego
A lesson in basic economics: the price of gasoline and diesel cannot be sustained by decree, even more so when the cost of raw materials and finished products rises faster than the margin of those who sell them. The Mexican government has opted to keep regular gasoline below 24 pesos per liter and then reduce diesel to 27 pesos, just as the crisis in the Middle East and the risk over Hormuz pushed international energy prices upward.
The objective is understandable: to prevent fuel from adding further to inflation. The problem is that price is also a signal, and when that signal is erased, someone ends up paying the difference.
Cheap gasoline generates scarcity and a regressive subsidy
Economic theory is quite straightforward. If the permitted price remains below the real market cost, consumption increases, the incentive to sell falls, and scarcity appears. With fuels, this does not occur in the abstract. It occurs at service stations that are already beginning to show signs of scarcity due to a lack of inventories or supply problems, and among business owners who can no longer absorb the difference between the price at which they buy and the price at which they are asked to sell.
The government can say that the agreement is voluntary, but the market does not operate through voluntarism; even PEMEX has increased its logistics costs per liter. If the price of crude oil increases, producing and importing gasoline costs more, and if logistics becomes more expensive, the margin is compressed.
A service station cannot sell indefinitely below its economic cost. It can hold out for a few days, it can compensate with other products, it can reduce its margin, it can wait for government support through incentives. But it cannot turn a recurring loss into a business model.
In addition, the low price sends the wrong signal to the consumer. When fuel is made artificially cheaper, the incentive to save, change habits, optimize routes, or migrate toward more efficient options is reduced.
The policy seeks to contain inflation, but at the same time it protects the consumption of those who use the most gasoline. That point matters because the gasoline subsidy is not progressive. It does not mainly benefit the poorest households, but rather those who own a car, travel more kilometers, or consume more liters.
This article was originally published by La Prensa OEM.
Date: May 26, 2026
Link: https://oem.com.mx/la-prensa/analisis/economia-101-controlar-el-precio-de-la-gasolina-produce-escasez-30199808 [Online]