Pemex: Energy Sovereignty or Risk to the Sovereign

Pemex reached the first quarter of 2026 in a critical situation, reporting losses of 46 billion pesos, financial debt close to 79 billion dollars, and liquid hydrocarbon production of barely 1.65 million barrels per day, well below the official target. Added to this were accidents, fires, and spills at key facilities, reflecting not only financial fragility, but also operational deterioration and deterioration in industrial safety.

These results dismantle the logic that prevailed between 2018 and 2024, the idea that it was enough to return absolute control over production, assignments, and budget to Pemex; in addition to reducing its fiscal burden and transferring public resources to it, in order to rescue it in six years.

The accumulated government support was enormous, between fiscal benefits and foregone oil revenues. However, production continued to fall and the company ended up more dependent on the State, with less operational capacity and without reversing the structural decline of its fields.

Pemex Inherited Liabilities and Losses Despite Fiscal Support

The model promoted during the previous administration sought to recentralize the energy sector around Pemex. Oil rounds were suspended, open competition was halted, and the state-owned oil company was favored as the axis of energy sovereignty. Although the Profit-Sharing Duty was reduced and transfers for debt, refining, and infrastructure increased, the productivity of the support was low.

Pemex failed to increase production or improve profitability, and ended up with greater liabilities, debts to suppliers, and fiscal dependence.

The administration of Claudia Sheinbaum inherited a financially exhausted company and began a different shift. The 2024 constitutional reform transformed Pemex into a State Public Enterprise and eliminated part of the regulatory architecture created in 2013.

The new approach seeks to prioritize liquidity, refinancing, and financial restructuring through a new fiscal regime, mixed contracts, and extraordinary government support. However, the results have not been sufficient either, production remains below targets and the company continues to report losses even in an international environment of high oil prices.

At this point, the problem ceased to be exclusively a business problem and began to affect the sovereign. Growing transfers to Pemex have reduced the State’s net oil revenue and put pressure on Mexico’s public finances. Moody’s, Fitch, and S&P have explicitly linked the country’s fiscal deterioration to the permanent support for the oil company.

While major international oil companies took advantage of the recent upward cycle in crude oil prices to generate record profits, Pemex continued losing money because of its debt, low productivity, and operational problems.

Saving Pemex Requires Public Value, Not Political Symbolism

The central conclusion is that saving Pemex only makes sense if the objective is to restore public value for Mexico and not simply to preserve the company as a political symbol. That would imply establishing clear metrics for:

  • Profitability, production, and safety.
  • Conditioning any fiscal support.
  • Segmenting profitable businesses from those that destroy value.
  • Recovering competition and credible technical regulation.
  • Prioritizing maintenance and industrial safety.

The model that gave Pemex resources, fiscal relief, regulatory control, and unrestricted political support has already been tested, and the result was not energy sovereignty, but growing pressure on the country’s sovereign rating.

This article was originally published by La Prensa OEM.
Date: June 5, 2026
Link: https://oem.com.mx/la-prensa/analisis/opinion-por-paul-alejandro-sanchez-30370677 [Online]

Economics 101: Controlling the Price of Gasoline Produces Scarcity

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]

Fuel Subsidies Return, but With the Same Fiscal Risk as Always

The disruptions in the Strait of Hormuz have caused shocks in global energy markets, which have resulted in fuel shortages in several net-importing countries, which have had to implement fuel rationing measures at service stations. In Thailand, service stations recorded panic buying and applied limits on sales or bans on filling containers. In Indonesia, authorities confirmed sufficient diesel reserves after stopping their imports of this product, although they warned about pressure on subsidies that could affect other budgetary programs.

Countries such as Sri Lanka established mandatory gasoline rationing through a QR code system that limits weekly purchases to 15 liters per private vehicle. Pakistan, for its part, reduced the workweek to four days for public employees and cut fuel allocations for government agencies by 50 percent.

Mexico, however, maintains a degree of security in fuel supply thanks to its proximity to the United States market and to its local oil production, which allows stable flows of refined products through regional supply chains. However, the price has increased significantly in the last month; diesel went from an average price of $26.35 pesos on February 28 to $28.73 on March 27, registering an increase of more than $2.00 at the pump. Similarly, premium gasoline went from $25.70 to $27.77, while regular gasoline still remains, in general, at the voluntary cap of $23.99.

Considering the effects on the international price, the SHCP has had to publish new subsidies since March 13, in order to avoid a greater increase in prices, beginning with a 35.21% reduction in the IEPS on diesel, which increased to 70.28% for this week. This means that, in addition to the $2.00 increase in the average price of diesel, the Treasury stops collecting an additional $5.17 pesos per liter, plus its corresponding 16% VAT. The situation is more moderate for gasoline, where the subsidy for this week is $1.55 for regular and $0.45 for premium.

Although the mechanism seeks to contain the transfer of international increases to the final consumer through weekly tax subsidies, the current policy follows the pattern applied in 2022 and 2023, when IEPS subsidies generated a total revenue loss of up to 297 billion pesos.

The current adjustments to the IEPS respond to the same logic of balancing domestic prices and external volatility derived from the disruption in Hormuz; the underlying idea is not to pass on the full effect and generate inflation, as is beginning to be observed in freer markets such as the United States. However, it still represents a fiscal risk for the country’s public finances, which no longer have as many export surpluses as in previous years.

The evolution of maritime flows will determine the duration of these measures in Mexico and in the rest of the affected countries. However, an easy end is not in sight soon, so it is possible that we will first see additional subsidies for diesel and gasoline.

This article was originally published by La Prensa OEM.
Date: April 6, 2026
Link: https://oem.com.mx/la-prensa/analisis/opinion-por-paul-alejandro-sanchez-campos-regresan-los-estimulos-a-los-combustibles-pero-con-el-riesgo-fiscal-de-siem-29348527 [Online]