President Claudia Sheinbaum of Mexico is committed to maintaining price caps on gasoline and diesel, setting regular gasoline at below MX$24 per liter and diesel at MX$28.30 per liter, down from a peak that had exceeded MX$30 in some regions. This policy is primarily aimed at controlling inflation and protecting the purchasing power of families, particularly those with lower incomes. Sheinbaum revealed that the weekly cost to the treasury for this subsidy is approximately $2.5 billion, with the net cost after accounting for Pemex's export earnings being around $5 billion per week to sustain the price caps.
The fuel price containment strategy employs two main mechanisms. First, there's a voluntary agreement with fuel station operators, which began in February 2025 and has been reinforced in April 2026. This agreement, though described as non-mandatory, has been widely observed. Second, the government uses fiscal policy through the Special Tax on Production and Services (IEPS), reducing the portion of the tax charged at the pump. For instance, in early April after a crude price spike due to the US-Iran conflict, the diesel IEPS stimulus reached 81.2%, meaning the government absorbed nearly the full statutory rate of MX$7.36 per liter, costing about MX$20 billion in revenue.
The policy's continuation is a direct response to global oil price volatility, exacerbated by geopolitical tensions like the US-Iran conflict and the closure of the Strait of Hormuz, which pushed Brent crude to $107 per barrel. Without these interventions, Sheinbaum estimated diesel prices could have reached MX$35 per liter, leading to broader inflationary pressures. While the policy has shown results, such as a 12% minimum wage increase in 2026 with less erosion of purchasing power, it has drawn concerns from financial analysts. Alejandro Sandoval of the Mexican Institute of Finance Executives (IMEF) warned that the forgone IEPS revenue represents a future financial challenge, noting Mexico's increasing reliance on fuel IEPS rather than oil revenues.
Despite the government's efforts, compliance from fuel retailers remains a challenge. A PROFECO review in April 2026 found that approximately 45% of diesel-selling stations were still selling above the agreed MX$28.30 cap. Sheinbaum has indicated that audits by the SAT (tax authority) could be conducted on non-compliant operators and has scheduled further meetings with the sector to push for adherence.
This pricing strategy, which has evolved over the past year, has grown more complex amidst volatile global oil markets. The government continues to monitor and adjust its stimulus percentages weekly, demonstrating a proactive approach to managing domestic fuel prices in a turbulent international environment.
