Mexico suspends subsidy to stop Americans from crossing border for cheaper petrol

Mexico has suspended petrol subsidy in states close to the US border in a bid to stop Americans from driving across to fill up their tanks at subsidised rates.

Mexico’s finance ministry said there have been shortages because of the increasing rate of Americans crossing over to buy petrol. 

Petrol prices in the US have significantly gone up in the past weeks following the Russian-Ukraine war. Diesel price currently stands at $4.192 and it is expected to keep rising in the coming days. 

The price hikes pushed US drivers into Mexico for cheaper fuel sold in the neighbouring country.

But the Mexican government has now enforced a suspension of the petrol subsidy in border states from April 2-8. 

The affected border states include Tamaulipas, Nuevo Leon, Coahuila, Chihuahua, Sonora, Baja California and Tijuana.

Mexico’s finance ministry said “an imbalance between supply and demand” caused the petrol shortage in the states. 

“In the United States, gasoline prices are higher than in Mexico, and citizens of that country cross the border to stock up,” the ministry said.

Speaking with Reuters on Friday, Gabriel Yorio, Mexico’s deputy finance minister, said the country intends to use revenue from high oil prices to subsidise domestic petrol and diesel prices. 

Andres Manuel Lopez Obrador, Mexico’s president, had earlier promised to implement a subsidy policy that will insulate Mexicans from sharp spikes in fuel prices.