Due to attacks on refineries in Saudi Arabia there could be increases in fuel prices

September 17, 2019

The increase in oil prices after the attack on the Aramco facilities, the largest oil company in Saudi Arabia and one of the largest in the world, paralyzed half of the emirate's production and could have an impact on the cost of gasoline from Mexico in the next few days.

Photo: Energy & Commerce

Last Saturday, September 14, two of the most important oil plants in Saudi Arabia were destroyed, being bombarded, so far it is known, with 10 drones. The analyst Ramsés Pech pointed out that one of the repercussions of the attacks is that the Ministry of Finance must increase the fiscal stimulus to fuel and to contain disproportionate increases in prices.

The final cost of gasoline offered at the country's service stations is determined considering various factors, and the price of combustible is one of them. This Monday, September 16, the hydrocarbon increased over 20 percent.

In our country, gasoline prices are determined by five components:

• International references for gasoline prices
• Exchange rate
• Logistics costs
• Taxes
• The profit margin of service stations

Therefore, a greater stimulus to fuels is expected within 30 days, something that will negatively affect the income of taxes to the Federation via the Special Tax on Production and Services (IEPS for its initials in Spanish.)

For 2019, the target prices of the federal government of gasoline, which include the adjustment for inflation are: 19.50 pesos for Magna; 21.04 for Premium gasoline and 20.89 for diesel.

The President Andrés Manuel López Obrador expressed in his morning press conference that there would be no variations in the prices of gasoline.

"Despite this special external situation we are going to maintain stability."

The president also mention that officials from the Ministry of Finance and Pemex will hold a meeting to discuss the impact on the price of gasoline and the national economy.

Elaborated by CAINTRA, with information of Aristegui Noticias, Milenio, El Economista and Msn Noticias