Fuels

U.S. Retailers Reap ‘Gasolinazo’ Business

Mexico fuel deregulation pushes drivers across border for cheaper gas

CALEXICO, Calif. -- Mexico’s deregulation of its fuel market is providing a jolt of business for U.S. retailers in border towns.

In January, Mexico ended price controls on fuel as part of a deregulation of its fuel market, which the government had controlled since the late 1930s. The move, Bloomberg reported, is designed to increase outside competition and imports. But the resulting 20% spike in gas prices—referred to popularly as “gasolinazo”—has led to protests and supply crunches across Mexico.

It also means that many gas stations on the U.S. side of the border, including in California, are finding themselves at a price advantage to their Mexican counterparts. For example, the price of unleaded gasoline in Mexicali, Mexico, increased to the equivalent of $2.815 per gallon in January, according to Bloomberg. Meanwhile, 17 miles across the border in El Centro, Calif., fuel prices were $2.718 per gallon.  

Mexican consumers along the border have been heading north to take advantage of the lower gas prices.

In Calexico, Calif., gas stations reported a tripling in fuel sales and waits of an hour or more for fill-ups, according to The Desert Sun. The town of 40,000 sits across the border from Mexicali, where protesters had earlier blocked the road into the central fuel distribution center, causing local gas stations to run out of fuel. Federal police cleared the blockade, but waits for fuel in Mexicali were still more than an hour that same day.

“It’s great for us,” Juan Arce, the manager of two SoCo Express gas stations in Calexico, told the newspaper. “I do feel bad for the people to the south.” 

Several retailers in Calexico reported similar spikes in business. “It’s been more than double,” said Carlos Vera, manager of a Shell-branded site. On a high-volume day, the gas station typically sells 5,000 gallons of gas; the weekend of Jan. 7, it sold nearly 10,000. Its supplier has had to refill its underground storage tanks each day, Vera said.

Motorists were filling up gallon gasoline containers, empty laundry soap containers and even metal barrels to bring back into Mexico for family and friends.

“My friend hasn’t had gas in almost two weeks,” said Anabel Solorsano, who lives on the U.S. side and was filling up gallon containers to take into Mexico. 

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