What? Pemex isn’t my Only Option?

The History

Not anymore! Back in 1938, president Lázaro Cárdenas nationalized all oil companies in Mexico. This was done to help improve wages and working conditions of oil workers and stabilize the price of oil. Workers had tried to unionize, but oil companies pushed back and rejected demands. This came to a head with a lengthy strike. The president felt for the plight of his oil-working countrymen and decided it would be in the country’s best interest to nationalize all oil production, refinement, and sales. In June of 1938 PEMEX was created.

Now in present day, Mexico does not have the resources or technology to extract most of the oil reserves left in current fields and in deep waters. As a result oil production has declined almost 80% over the last 20 years! Like many government organizations in Mexico, Pemex has much corruption and many of its profits have been siphoned off for other government needs instead of being re-invested. This along with a weak economy has brought the desire to denationalize oil in Mexico and allow foreign investment. While the outcome is still uncertain, it is hoped that foreign investment will bring more jobs and money into the country while keeping gas prices affordable.

The Story

Just a couple weeks ago, the first overt sign of these changes showed up in Puerto Aventuras. The long time Pemex station was converted into a La Gas. They overhauled the convenience store and even set up a mini La Europea inside (nice selection of wine, liquor, and beer).

Right now, with the current exchange rate, regular gas in Mexico is 13.4 pesos a liter or about $2.75 USD / gallon. This is about 20% higher than the U.S. average (July 2016). I was curious what the change would mean for the price of fuel, so I did a quick comparison on the nearest Pemex and La Gas prices. They were identical. I found the station manager and talked to him about the prices. He said that for the next year they must maintain the same pricing as Pemex because it’s in the contract and also because they purchase their bulk fuel from Pemex which leaves little room to change pricing and maintain profit. After the initial year they will be free to buy fuel from competition and lower prices. He did not anticipate a huge difference, but he promised they would be cheaper.

The station experience at La Gas was very good. The attendants were very helpful, courteous, and there were even a couple of nice ladies walking around offering a free cup of coffee and newspaper while we waited. They even had a sign out front that said “Se trata de ti” meaning “It’s about you!”

I for one am looking forward to competition raising the bar for the Mexico gas station experience. I guess Pemex is going to have to invest in new signs that actually show the prices…