Mexican premium gasoline sales grew in pandemic

Premium gasoline in Mexico broke with the global trend of declining demand in 2020, almost doubling its share of sales by November from a year earlier as lower international prices and tax policies made it more competitive with regular gasoline.

Mexico's sales of 92-octane premium gasoline grew to 165,000 b/d in November, from 110,000 b/d in November 2019, according to the latest energy ministry data reported by state-owned Pemex.

The share of premium gasoline as a percentage of the total gasoline sold grew to 30pc in November, from 16pc a year earlier and 19pc in March, before more strict mobility restrictions were put in place. (See table for details.)

A narrower gap in the cost of premium gasoline over 87-octane regular gasoline contributed to the bump, said Victor Arellano, technical director of the Onexpo fuel retailers' association.

Premium gasoline was on average 8pc more expensive than regular gasoline from January-March 2020, before the pandemic, according to fuel prices reported to the energy regulatory commission (CRE) and tracked by Argus. Premium gasoline averaged Ps19.67/l ($3.75/USG) nationally during the first three months of 2020, while regular gasoline was sold at Ps18.24/l.

But from April that price gap diminished steadily to 5.9pc in November, and to 3.8pc on 15 January.

"When international prices are very low the gap is very small between both gasolines," Arellano said. "In Mexico that remaining difference could at times be erased by the excise tax (IEPS), as the premium pays a lower tax than regular gasoline, allowing consumers to prefer premium."

The base federal IEPS tax rate for 2021 is Ps5.1148/l for regular gasoline and Ps4.3192/l for premium gasoline. Premium is also recommended for some newer vehicles, Arellano said.

Despite the premium sales growth, overall gasoline demand in Mexico remained below 2019 levels during the 11 first months of 2020, both because of mobility restrictions and the economic impact of trying to slow the spread of Covid-19.

Mexico's economy is expected to have contracted by 9pc in 2020, the International Monetary Fund has said.

By Sergio Meana