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 Business News | November 2006 
Hike in Gas Price is Blasted
 Kelly Arthur Garrett - El Universal
| | According to the Finance Secretariat, the increase in the cost of diesel and premium fuels is connected with the new requirement to drastically reduce the sulfur content in both. |
The price of subsidized milk distributed to the poorest of the poor through the federal Liconsa program went from 3.50 pesos a liter to 4.50 beginning Friday, a 28 percent increase.
Premium gasoline went up by 29 centavos per liter at the nationally owned Pemex pumps, and the price of a liter of diesel fuel increased by 16 centavos.
The government vigorously defended the increases Friday as "an act of responsibility" necessary for maintaining fiscal health.
"Nobody likes prices to go up," said presidential spokesperson Rubén Aguilar. "But a responsible government has the obligation to make these decisions for the benefit of society as a whole."
But opposition legislators were livid, staging mini-protests on the floor of the Chamber of Deputies and attempting to pass a "point of agreement" urging the Fox administration to repeal the hikes. The resolution, which needed a two-thirds majority, was defeated Thursday after Fox´s National Action Party voted as a bloc against it.
The Institutional Revolutionary Party (PRI), which nationalized oil and created the milk program during its seven decades of unchallenged rule, was the most vociferous in its opposition.
"It hurts the groups that are traditionally excluded from the formal economy," said PRI Deputy Jorge Toledo. "It´s insensitive that this kind of step is taken barely 15 days from the end of this administration´s term."
An independent expert interviewed by EL UNIVERSAL Friday shared the PRI´s concerns.
"The diesel price increase will impact the transportation, communications and energy sectors," said Alfred Coutiño, chief economist with Moodyseconomic.com. "This will create a cascade effect of price increases that will affect the poorest."
Tirso Martínez, president of the National Chamber of Cargo Transport, predicts a quick rise in transportation costs. "It was an increase the administration decided to implement unilaterally," he said, referring to the 16-centavo rise in the per-liter diesel fuel price. "If 3.7 percent doesn´t sound like much, the truth is it impacts up severely, since diesel is 20 percent of our operation costs."
According to the Finance Secretariat, the increase in the cost of diesel and premium fuels is connected with the new requirement to drastically reduce the sulfur content in both. Very low-sulfur diesel and premium gasoline is currently being phased in nationwide. Low-sulfur Magna gasoline is scheduled to come in 2008. |
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