‘Gasolinazo’ infuriates Mexico, taints flagship energy reform

Bloomberg

Mexico is bracing for a series of protests as the opposition threatens a “peaceful revolution,” after the government of President Enrique Pena Nieto announced plans to raise gasoline prices by the most in two decades. Gasoline will soar as much as 20 percent in January as the nation moves away from subsidies that have burnt a hole in public coffers, the Finance Ministry led by Jose Antonio Meade announced this week. The price slam, or “gasolinazo” in Spanish, is going to hit hard, with Mexicans tying with South Africans to spend more of their annual income on fuel than residents of 59 other countries. The hike may taint Pena Nieto’s flagship energy reform passed in 2013, emboldening opposition leaders such as Andres Manuel Lopez Obrador to strike out against overhaul that opened the industry to foreign investment for the first time in almost eight decades.
“This is very grave, because it will give a bad name to the energy reform, even though it isn’t the fault of the reform,” said Alejandro Schtulmann, president of Mexico City-based political-risk advisory firm Empra. “Lopez Obrador could empower his rhetoric by saying he’ll make changes to the energy reform.”
Pena Nieto had said overhaul would help lower energy prices by increasing competition. Now, hashtag #ReformaEnergetica has become a trending on twitter, with many people saying they’d hoard fuel from gas stations that are already suffering shortages in several states.