Gasoline Prices

Last Saturday, gasoline prices increased, again. The magna gasoline increased 8 cents, the Premium 4 and the Diesel 8. Juan Pablo González, President of Amegas, stated that they had requested the authorities no more raises in the Premium’s prices because people was no longer eager to buy it.

When I read this news I immediately related it to the economics class because of several reasons. First of all I remembered that we discussed in class that we, as Mexicans, don’t have the freedom that other countries have when it comes to choosing the type of gasoline we consume. We pretty much confine to what our government gives us and this is a very strong determinant of our country’s economy. If we had several companies producing gasoline for us, I think a lot of things would be different. In my opinion, it would be better to have more firms and the freedom to choose because when the prices increase we have no other option than to accept it and move on, but with other alternatives we could still have our chances to find the best deal for us as consumers.

Second of all, I related the news article to everything I’ve learned about supply and demand. What the President of the Amegas stated is just another form to say that since the price is increasing so much, demand is falling due to the laws we’ve studied. I think this is something so logical that the government should already know what the consequences of their acts will be and maybe they’re willing to pay for them. But another option is that perhaps they haven’t realized how much customers they’ll lose because of the decisions they’re taking, and seeing it from another point of view, they haven’t realized how much Mexicans will be affected.

Applying the supply and demand laws, I think that the government should pay attention to what Juan Pablo González says and stop raising the prices. Why? Because if they’re increasing the prices that means they need to make more money. But if they lose the incentive in people to consume, they won’t get the money they need. I think they’re going the wrong way and they should know that lowering or maintaining their prices will attract much more customers and hence, more profit than if they stay with a few clients that are willing to pay that exaggerated amount of money.

Anyway, I hope that soon we have much more reforms that will improve Mexico and its economy, now that we’re finally getting out of the terrible crisis. By now, we must conform with our only gasoline provider and with its raising prices, until someone decides to try something different and hopefully better.