Drug Cartels Get Involved As Mexicans Rage, Protest Surging Gas Prices

Tyler Durden's picture

Even as Mexico has reasons to be concerned about the upcoming presidential inauguration of Donald Trump, who has vowed to make life, and especially trade relations, for Mexicans far more "complicated" under his administration, the population of Mexico has far more pressing problems at this moment, because just days after the finance ministry announced on December 27 that it would raise the price of gasoline by as much as 20.1% to 88 cents per liter while hiking diesel prices by 16.5% to 83 cents, the hikes went into effect on January 1, welcoming in the new year with a surge in the price of one of Mexico's most important staples and leading to widespread anger, protests and in some cases violence.

As Telesur reports, the people of Mexico "are entering the New Year in a state of rage and anxiety" with protests planned for Sunday to strongly denounce the government's huge hike in gasoline prices. The sharp rise in gasoline prices has been called the "gasolinazo" in Spanish, which roughly translates to "gasoline-punch."

The price increase comes as part of a planned liberalization of Mexico's energy market, which involves the move from subsidies that kept gas prices low to a market-based pricing scheme that will adjust prices at the pump based on supply and demand. And while Mexico's unpopular president Enrique Pena Nieto had promised that fuel prices will fall thanks to his 2014 energy reforms, which dismantled the seven-decade-old national ownership of petroleum resources by state-owned firm Pemex, the initial move in prices has been higher, and decidedly so, by roughly 20% for gasoline and slightly less for diesel.

The price ceiling will then be adjusted daily starting Feb. 18, before letting supply and demand determine them in March, although it is the immediate shock that is of concern to the peace and stability in Mexico.

Case in point, around 100 protestors blocked a service station in Acapulco on Friday, while on Saturday an assembly of popular organizations in Chihuahua state's capital pledged to block all commercial transportation from entering or exiting the city as a means toward paralyzing the economy and pressuring the federal government to reverse the hikes. The assembly of people's organizations also announced their intention to block major highways and railways in response to what they see as a neoliberal looting of Mexico and handover of its resources to private capital, according to a statement.

On Sunday, the day the price hikes went into effect, Excelsior reported that angry citizens protested in several spots of the capital, Mexico City, blocking roads, demanding a return to lower gas prices.

But before readers blow this off as just another protest by an angry population which fails to grasp the "global deflationary collapse" while focusing on "fringe, outlier events"  - at least in the words of central bankers -  things suddenly got serious when none other than the country's powerful Jalisco New Generation cartel has entered the fray, threatening to burn gas stations in response to the price hikes, according to Jalisco authorities cited by TeleSur.


Gunmen torched vehicles and blockaded roads during a military operation to
arrest two leaders of the Jalisco New Generation cartel.

"They are speculating in order to obtain million dollar profits from the majority of the people who don't make even a minimum wage, we have already realized that the (shortage) of fuel is because dealers don't want to sell fuel unless they can do so at a profit, all of our people are now ready to start the mission," the Mexican drug cartel stated in a WhatsApp message circulating in Jalisco.

"The CJNG, in support of the working class, commits itself to making burn all the gasoline stations that to December 30 of the current year, at 10:00 p.m." — before the price increases go into effect — "have not normalized the sale of fuel at the fair price," the message said, according to the Mexican news outlet Aristegui Noticias.

Making matters worse is that Mexico was already facing fuel shortages prior to the price hike, angering Mexicans in several states. Ahead of the price hike many people have said they'd hoard gasoline, buying it from stations that in many states are already dealing with supply shortages. Illegal gas sales have popped up, and protests have already taken place in some parts of the country, with more planned in the days of the new year.

"The fuel price increase causes outrage. People are right: it's not fair. I support each family, I share their outrage and anger," Aristoteles Sandoval, the governor of western Jalisco state, wrote on Twitter. Sandoval's criticism drew particular attention because he is a member of Pena Nieto's ruling Institutional Revolutionary Party or PRI. Furious opposition governors plan to meet with federal government officials next week to discuss the price hike.

Meanwhile, the unpopular price hike is also becoming a key political talking point: "We just had a security meeting (between governors and Pena Nieto) days ago and there was not one comment about this situation," said Mexico City's Mayor Miguel Angel Mancera, a member of the opposition Party of the Democratic Revolution or PRD.

The protests are the latest expression of widespread antipathy toward Pena Nieto, whose popularity according to Telesur has plummeted below 25% this year due to his government's widespread perception of collusion with cartels and failure to address drug-related violence, disappointing economic growth, violent repression of social movements and his unpopular decision to host Donald Trump before the anti-immigrant Republican won the U.S. presidential election.

Not helping matters, Finance Minister Jose Antonio Meade defended the fuel price increase, saying it would not trigger more inflation and that eventually the "final price for consumers will be among the most competitive in the world." For now, however, the response has been a negative one, with social media criticism leveled at Meade, who has been portrated as "chupasangre", or "bloodsucker."

   
In Mexico City, service station worker Maria de la Luz Lopez, quoted by Telesure, was worried that the price increases could hurt her. "I'm afraid that to compensate for the increase, (customers) will no longer give us tips," said Lopez who, like many in her field, does not earn a wage and depends on the generosity of drivers.

But ultimately, the price shock will hit those who are hurting the most. The increases would mean Mexicans, of whom 52% live in poverty, would spend more of their annual income on fuel than the residents of 59 other countries, according to data compiled by Bloomberg.

"We see the gasolinazo as an attack against the population, as a robbery, taking into account the levels of income of the population," Jose Narro, director of the workers' group Coordinadora Nacional Plan de Ayala, told Reforma.

Making matters worse, and refuting the promises of the finance minister, the Mexican central bank has warned that gas price increases would boost inflation at a time when the peso has already plunged against the US dollar due to the Trump victory.

With or without the involvement of the cartels, Mexico's economy is likely to undergo a turbulent period of decline, which will be music in the ears for Mexico's opposition politicians, such as leftist opposition leader Andres Manuel Lopez Obrador who is likely to benefit from Pena Nieto's error, and who has put blame for the gasolinazo on the shoulders of Pena Nieto's center-right Institutional Revolutionary Party and the conservative National Action Party, calling the former "corrupt and cynical" and the latter hypocrites.

The policy and its rollout have further diminished the perception of the Mexican president and his party, which has been a trend for some time.

"Mexicans were promised lower electricity prices, they got higher electricity prices. Mexicans were told austerity was needed, they got a congress that showers itself with bonuses," Dutch journalist Jan-Albert Hootsen, wrote on Facebook. "Mexicans were promised more security and a fairer justice state, they got homicide rates back at the level of 2012, the Ayotzinapa massacre and its botched investigation, etc."

"If you say one thing and are then time and time again perceived to do the exact opposite, what starts off as irritation among the public at some point will simply boil over," Hootsen concluded.

For those on the lookout for new gray, or even black swans, in the new year, keep an eye on the public mood in Mexico as a result of the now effected surge in gas prices.

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HerrDoktor's picture

Imagine the response of the Mexican media and people  when they get the wall they have been promised

Stuck on Zero's picture

Everytime I've tried to fill up at a Pemex station in Mexico the attendants have tried to rip us off.  It's almost as though they worked for the government.

Whoa Dammit's picture

"If you like your gasoline prices you can keep your gasoline prices"-- Mexico's unpopular president Enrique Pena Nieto had promised 

BTW is this photo from the article a new trend? Trump Your Mexican?

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017...

TBT or not TBT's picture

Your government needs that revenue to pay for the wall, muchachos!  

Déjà view's picture

Cartel...makes one wish they were burning in hell...don't want to 'meth' around with those devils...they can take ISIS to school! 

http://www.miscopy.com/1140/bestgore/brutal-beheading-man-peel-face/

ACP's picture

Can't build that wall soon enough.

Stoical's picture

Heh you folks still think the wall will happen, bless your hearts.

Sledge750's picture

I've been investing in Mexican ladder manufacturing.

Freddie's picture

Unless Trump sends the shit that has recently flooded in then it will be meaningless.  Cut off ALL benefits to anyone who was not born here with the past 20 years.   The scum GOP-e in Congress who did everything bama/Soros/Bibi wanted will do nothing.

DogeCoin's picture

You know what the solution is for you Mexicans? Easy, demand that your government make plata legal tender. Wait what? Plata is silver and also means money in Latin America?

Montani Semper Liberi's picture

A ella le gusta la gasolina (dame mas gasolina!)
Como le encanta la gasolina (dame mas gasolina!)

 - Daddy Yankee-

SoDamnMad's picture

Yeh, we are going to burn all the gas stations down until we get our way.  Prices are lowered.

What, no gas stations left to pump the cheap gas?  How can this be?  

HRH Feant's picture
HRH Feant (not verified) Jan 1, 2017 8:56 PM

Fucking butt hurt communists. This is what happens when you run out of other people's money asshats.

Hands off m yBox's picture

Don't they produce the Chevy Volt?

actionjacksonbrownie's picture

Yes, but they can't afford the gas to run the generator to charge the car!

Taint Boil's picture

It is hilarious if you think about it … an electric car is charged with electricity produced in a coal powered power station. Just the energy used to mine the materials, manufacture, transport and install the battery probably costs more than any gasoline savings.

Do-gooders are soooo fucking stupid.

TBT or not TBT's picture

Now it will be a No Va.  Badumpch. 

Mustafa Kemal's picture

Evidently, it was not great for sales

directaction's picture

Mexico flipped from a net exporter of petroleum products to a net importer of petroleum products in early 2016.
And that means no more oil export revenue, which means the national government has forever lost its biggest source of revenue.
That means harsh pain for the people of Mexico, and I do mean harsh economic pain, which is only going to increase as oil production continues its terminal decline.   

daveO's picture

Compare US production over the last 10 years vs. Mexican. Communism never works. When Mexican oil was nationalized, they had a comparable living standard to the US and they didn't need to wade across the river.

Tremain's picture

Bingo. Sadly very few get this.

Metastatic Debt's picture

The beano's can start harvesting their methane.

 

They'll be a net-positive for gas production.

 

navy62802's picture

Makes me remember back in 2008 when the average gas price in the US was over $4 per gallon.

F em all but 6's picture

ah hell. let em eat cake.

 

sarc/off

Yen Cross's picture

   No Pemex tankers to smuggle "yayo' into USA? That sucks-lol

boattrash's picture

You can bet they're "hot-tapping" a lot of pipelines. Not that that's anything new down there, but I bet they are moving shitloads of stolen fuel.

z89101's picture

Is Hillary involved?  /s Or UN's new Obama carbon tax? Nope - just natural resources ebbing hard. Humm...

Lumberjack's picture

Hmmmm...does Mexico have a rising version of Trump?

Mexico’s populist Amlo capitalises on economic woes

http://satprnews.com/2017/01/01/mexicos-populist-amlo-capitalises-on-eco...

Benjamin123's picture

Gee another white spaniard for presidente de Mejico?

Duc888's picture

 

 

Maybe Obama can run for President down there and fix everything.

boattrash's picture

Fuck that! Maybe Obama can go to Saudi Arabia and find his way to the execution list.

foxmuldar's picture

This time when he bows, they chop his head off. 

foxmuldar's picture

This time when he bows, they chop his head off. 

directaction's picture

The first thing Trump should do is to force Mexico to turn communist.
I'm talking about old-school kosher Stalinism.  
The Peoples Republic of Mexico will then build an impenetrable wall allowing no one to escape.  

Yen Cross's picture

 

  I like your thinking.  Mexico would be overrun by South-American zombies within months.

  The U.S. would be justified in building guard towers with lasers along the wall, East German style. Only this time, democracy is keeping the communists out.

Jethro's picture

Hmmmm, you might be on to something there.

Fathead Slim's picture
Fathead Slim (not verified) Jan 1, 2017 9:23 PM

"José Antonio Meade un chupasangre"

Now that's funny.

Yen Cross's picture

   Increasingly the $usd fish~bowl is shrinking. I feel like I'm living in a Habitrail ® in the middle of a croc infested swamp.

Skiprrrdog's picture

I would like to say I find this story troubling.. but... I would be lying...

What is the slowest thing in the world? A Mexican parade with only one set of jumper cables...

Skiprrrdog's picture

Didn't I hear that they are working on a car that runs on beans?

foxmuldar's picture

The female attendants get tips because they are often naked behind the counter. A little flash get a bigger tip. lol When's the last time you tipped anyone at a gas station.  In New Jersey you can't pump your own gas. Maybe they get tips for Christmas. I remember in the past when the mail man or person was left a tip at Christmas. Today the SOBs don't even get out of their vehicles to put mail in my box if Im parked in front of the box. So fuck them and their tips. LOL!

alpha-protagonist's picture

"...the breakfast was my idea."

SmittyinLA's picture

Mexican creditors didn't buy the ABENGOA bullshit either

all-priced-in's picture

What Mexico needs is about 11 million more Mexicans to boost the economy.

 

I happen to know exactly where they can get them.   

SmittyinLA's picture

California redux, they fixed CA electrical prices too, "we Enron'd some folks"

TBT or not TBT's picture

We Sacramento'ed some folks.