Mexico: Cooking Gas Prices Rise and Wages remain in the ditch

When the Mexican government of López Obrador (AMLO) wanted to adjust the price of LP gas, for domestic use, and to incorporate the new state company “Gas Bienestar” in the distribution, announcing on 28 July the Decree “Emergency Directive for the Welfare of the Liquefied Petroleum Gas Consumer”, the response of the owners and cartels of this lucrative business, which moves billions of pesos a day, was activated.

At least 80% of the population is affected by the shortage of LPG. The strike and the protest of the so-called “commission agents”, who are the ones who close the circuit in the attention to the end users, in an atmosphere of “tolerated informality”, with the delivery of cylinders or the refilling of stationary tanks, was the employers’ response, supported by this mass of informal workers who carry out the distribution. With this employers’ strike, the intention is clear: to force the government to back down on the gas price cap and the creation of the public company.

Over the years previous governments have allowed the exponential movement of gas prices. It currently sells for over 500 pesos. The minimum wage in Mexico does not exceed 150 pesos. To buy a tank of gas a worker would have to save more than 3 minimum wages and not spend on anything else. From the first minute of this Sunday, August 8, millions of people in the capital woke up to the news that the price of LP gas, both for stationary tanks and metal cylinders, will increase by 45 cents and 15 cents per kilogram and litre, respectively.

Amid the biggest rise in 20 years in the international price of LPG, the value of Mexican imports of the fuel between January and last May grew 67.5% to 1.299 billion dollars, according to the most updated data of the trade balance published by the National Institute of Geography and Statistics (INEGI). During the same period, the values of imports of gasoline and diesel – the two petroleum derivatives that Mexico imports most – grew at much more moderate rates of 3.2 per cent and 1.8 per cent, respectively. As a result, the share of LPG in the value of total Mexican imports of petroleum products from January to May grew from 8.3 per cent to 12.8 per cent from 2020 to 2021, while the share of gasoline fell from 52.5 per cent to 50 per cent and that of diesel from 22.9 per cent to 21.6 per cent. The notable rise in the value of imported LPG is mainly explained by the significant increase in the price of its main component, propane, whose international average price (Mont Belvieu, spot) between January and May rose 132% to 0.865 dollars per gallon compared to the same period in 2020. This increase is, according to data from the US Energy Information Administration (EIA), the largest observed for a comparable period since 2000, when it rose 111 per cent. In this context, the volume of LPG imported by Mexico during January-May grew just 6.8 per cent to an average of 194,000 barrels per day, according to data from the Mexican government’s Energy Secretariat.

Five large companies control the distribution of domestic gas, the main gas groups operating in Mexico are Tomás Zaragoza Fuentes’ Tomza Group, which controls most of the northwest region of the country from Baja California, along with Zeta Gas, owned by his brother Miguel Zaragoza Fuentes. This list of the G5 also includes Gas Uribe, headed by Óscar Uribe, which has a high penetration in the Valley of Mexico and its surroundings, where it also shares the market in this area with Vela Gas, owned by Lázaro Bello.

In the political confrontation, the opportunists want to present this conflict as a clash between the capitalist gas cartels on the one hand and the government and the workers on the other. AMLO has declared that “the government will not bow to the strike”; but immediately, conciliatory, he affirmed: “It has already been explained to them, it is an emergency measure that was taken, it is transitory until a balance is established in the prices, because they have gone too high and are affecting the popular economy” and he recognised that “it is not about all the distributors and commission agents”.

AMLO’s government and his 4T, like previous governments, only administers the interests of the bourgeoisie, the interests of big capital, even when it tries to find a “middle ground” between corporate profits, international prices and the purchasing power of the workers. The apparent confrontation between the government and the gas bosses should not confuse the workers. Even some calls for the nationalisation of the gas companies and their transfer to workers’ control, ends up being an approach that, although it sounds “radical”, really takes the workers’ movement away from the central struggle for wage increases. Once again opportunism is placing its booby traps in the path of the proletariat to take it away from the centre of its battle.

The Mexican workers’ movement must advance in its trade union and rank and file organisation and orient itself towards unity of action for wage increases and a reduction in the working day. The price of gas must be covered by a new wage that allows workers to pay their own and their families’ bills. In this struggle AMLO’s government is as much the enemy of the workers as are the capitalist gas cartels and the entire economy.