President Andrés Manuel López Obrador said he will not back down and compared the battle to his 2019 offensive against fuel thieves
Mexico’s President said on Wednesday he will call on the National Guard to protect gas delivery trucks after drivers and crews went on strike to protest government price controls.
President Andrés Manuel López Obrador said he will not back down and compared the battle to his 2019 offensive against fuel thieves.
Crews that distribute LP gas in Mexico’s capital went on strike on Tuesday after the government imposed price controls on the fuel that most Mexicans use to cook and heat water. The crews work on commission for the distributors.
Those independent trucks and their crews blocked entrances and vandalised trucks at gas tank farms around Mexico City, saying price controls will hurt their earnings.
Photos posted by local media showed masked men smashing the windows of some small gas tank trucks Tuesday to enforce the strike. Others parked their vehicles at entrances to tank farms to block them.
“Yesterday they said they could not go out (on deliveries) because they risked getting their vehicles vandalized,” Mr. López Obrador said. “The National Guard is going to intervene to protect the distributors.” Mr. López Obrador said he would consider filing criminal complaints. He has said in the past he wants to set up a state-owned gas distribution company to compete with the often-corrupt private tank trucks that fill roof-top gas tanks or distribute small portable gas cylinders.
Distributors often short-change customers on the amount of gas they deliver. Moreover, some charge as much as 50% profits margins, contributing to gas price increases of almost 50% in the last year.
The Mexican Association of Gas Distributors said on Tuesday it “distances itself from the actions by groups of independents who work on commission, who do not hold distribution permits and who are blocking plants, preventing us from going out and working to supply homes and businesses that need gas.” The association represents the owners of tank farms and some larger distribution chains that own fleets of trucks. The independents own or lease their own trucks, or run smaller operations delivering small portable LP cylinders to homes.
The association said it had warned the government about “the risks and impacts implicit” in imposing price controls.
Mexico imports much of its LP gas, and international prices have risen, leading to higher costs for Mexicans. Mr. López Obrador invoked emergency powers to decree a six-month price cap.
Experts had warned that price controls announced Sunday would probably lead to shortages, because the largely private gas distributors may refuse to operate under government-imposed profit margins.
Mexico’s anti-monopoly regulator criticised Mr. López Obrador’s maximum prices and warned that “price regulation could have consequences unintended by the decree, like shortages of LP gas.” Experts said the proposed price cap hearkens back to decades past when Mexico’s state-owned oil company Pemex imported LP gas and sold it at fixed prices to distributors. Now, private companies import much of the gas, and won’t do so if they lose money on it.
The government is under pressure to do something.
One of the President’s key promises has been that basic fuel prices won’t increase above the rate of inflation, and the largely privatized market for cooking gas cylinders has made that unobtainable.
Mexico’s inflation rate is currently hovering around 6%. Cooking gas is a major expenditure for almost 70% of Mexican households.
Mr. López Obrador has called the gas strike “an emergency situation,” and compared it the showdown he faced early in his administration in late 2018 and 2019.
Faced with increasing theft of gasoline and diesel by criminal gangs that drill illegal taps into government pipelines, the president shut down many pipelines. Fuel had to be moved by tanker trucks, and there were long lines at gas stations.