Mexicans march to protest rise in gasoline prices
Ukraine slashes gas use as subsidies phased out
Hundreds of irate Mexicans marched in Mexico City on Sunday to protest a steep rise in gasoline prices. They carried signs denouncing President Enrique Pena Nieto, whose government announced last week that the price of gasoline would increase by as much as 20 percent to 0.88 dollars per liter on New Year’s Day, while diesel would rise by 16.5 percent to 0.83 dollars.
Pena Nieto has promised that fuel prices will eventually fall thanks to a landmark 2014 energy reform he instituted, which ended a sevendecade-old monopoly held by the state-run firm Pemex. The government plans to end subsidies and let the market dictate prices in March. But Mexicans will feel the pinch at the pump before they start falling.
The protesters marched Sun along Mexico City’s Reforma avenue towards the vast central square called the Zocalo. “With this news about gasoline I don’t know how much more we can take,” said Dulce Maria Coeta, a homemaker. “Even as it is, the minimum wage is not enough to buy groceries. Now, it will be even worse.”
Mexicans flocked to gas stations last week to fill their tanks before the price rise. News reports Sunday said some ran out of fuel. Pemex said this happened in less than one percent of its service stations. The protests are the latest headache for Pena Nieto. His popularity has plummeted below 25 percent this year due to his government’s failure to curb drug-related violence, disappointing economic growth and his unpopular decision to host Donald Trump before the anti-immigration Republican won the US presidential election.
The fall in global oil prices in recent years has forced the government to cut its budget and slash spending at Pemex. And the peso has fallen to historic lows due to Trump’s protectionist rhetoric against Mexico. The liberalization of gasoline prices was supposed to begin in 2018, but the government decided to start it now.
Ukraine slashes gas use
In other news, Ukraine yesterday reported a one-third drop in its use of natural gas and general energy savings that will be cheered by its financial backers from the International Monetary Fund. The IMF has long identified Ukraine as one of Europe’s most inefficient countries when it comes to fuel consumption.
A large part of the problem came from state subsidies that homes and enterprises had been awarded since Soviet times. That assistance was a vast drain on the budget and allowed Ukrainians to use gas cheaply and without conservation. This all changed last year as the government started to push up prices levied on home users. Many people saw their gas and energy bills double-a change that prompted some protests on the streets. Prices on companies had gone up even earlier. Data released by Ukraine’s main energy transport company showed gas use falling by 32.7 percent last year. Ukraine has not imported any blue fuel from Russia in 13 months because of a freeze in ties between the two neighbors and disputes over prices.
Most of the imports came from Slovakia. Ukraine also imported much smaller amounts from Hungary and Poland. The IMF has long demanded energy savings to be part of Ukraine’s austerity measures that were approved when the Fund awarded cash-starved Kiev a $17.5-billion (16.7-billion-euro) rescue package last year. Ukraine’s state energy company said last week that it could survive the winter without purchasing any Russian gas. Brussels is still trying to find a compromise between Kiev and Moscow that would reduce Ukraine’s demand from EU countries and lower prices for European consumers. Yet some analysts noted that the gas consumption figure was not all good news.
Ukraine’s economy shrank by nearly 10 percent last year and output at the country’s giant steel and chemical companies fell by even greater amounts. The reduced production meant that companies used less natural gas for conversion into energy. The Ukrainian economy is budgeted to grow by three percent this year and analysts will be watching closely to see what that does to gas consumption. A continued decline would mean that industries and homes really are being more efficient. A rise in gas use would imply that neither have done as much to cut down on wasteful consumption as the IMF had hoped. — Agencies