25-07-02 With regular gasoline selling for about $ 2.11 a gallon (5.46 pesos a litre) on the Mexican side, the tens of thousands of northern Mexicans who routinely cross the border virtually all buy their gas in the United States. Along the southern border, Mexicans have flocked to Belize to buy its lower-priced gas.
As local sales plummeted, Petroleos Mexicanos -- known as Pemex -- reluctantly bowed to the law of supply and demand, slashing prices in May to 1.79 a gallon (4.64 pesos a litre) in Chetumal, a city along Mexico's southern border with Belize, and in Ciudad Juarez, a city of 1.3 mm just south of El Paso, Texas.
Sales immediately bounced back in Chetumal after the price cut made Mexican gasoline 3 cents cheaper than Belizean fuel. But sales have stayed sluggish in Ciudad Juarez, where US gas remains 44 cents cheaper, at about $ 1.35 a gallon. Mexican officials cut Juarez's gas prices again in June, to $ 1.62 a gallon (4.21 pesos a litre). Officials will evaluate the results.

The gap between US and Mexican prices nationwide has steadily widened since 1995, when the Mexican government started slowly raising the price monthly. Pemex faces no competition within Mexico due to a country ban on foreign-owned companies.
The government is still raising gas prices nationwide every month -- including in Chetumal and Ciudad Juarez. But officials hope the discount will persuade people to pay a bit more in Mexico to avoid the hassle of crossing an international border.
Despite the high prices, border residents, like most Mexicans, still support the idea of a monopoly for the state oil company. But they want the company -- whose profits are a mainstay of federal budgets -- to be kinder to consumers in setting prices.

The government receives one-third of its income from oil-related sales. The industrialized northern border region accounts for 10 % of those sales.
On the border, where many people cross routinely to work, shop or socialize, Pemex is just another option alongside names such as Shell, Exxon and Texaco. "There are no figures of how many Mexicans cross the border (to buy gasoline) but it could represent thousands of bpd," said George Baker, an expert on Mexico's oil industry.
Today many of Ciudad Juarez's gas stations -- privately owned franchises of Pemex -- face going broke, said Maria Antonieta Venzor, economic director at the Mexican Chamber of Commerce in Ciudad Juarez, which is participating in the pilot project. "Most sales are for only 50 pesos ($ 5) because people buy just enough to so they can get over to El Paso to fill up," she said.

Pemex now is remodelling its Ciudad Juarez stations. Once-bored attendants are donning eye-catching red hard hats and waving chequered flags to attract customers. Pemex is even advertising the fact that its gasoline is just the same as that north of the border. Gas sold in Mexico's northern states is refined in Texas because of a shortage of refineries south of the border.
"We want to get the word out that the gas sold along the border is American so people realize it is quality fuel and will start buying it here," Venzor said. Pemex has also had to compete against smugglers who bring in large quantities of the cheaper US fuel and sell it clandestinely in Mexico.

Mexican customs agents recently seized six shipments totalling 15,870 gallons (60,072 litres) of diesel and oil from several border crossings and the port of Veracruz. Pemex estimates 13 mm gallons (49.2 mm litres) of petroleum products worth more than $ 60 mm are smuggled into the country annually.
Venzor said local merchants hope the campaign will also keep people from crossing so they do more shopping on the Mexican side. Every week, Norma de Leon braves long lines and sweltering temperatures to cross the border, fill her gas tank and visit the strips malls and discount stores in El Paso.
De Leon, a 36-year-old mother of two, said she's also wary of the service at Mexican gas stations, where some attendants have been caught playing with the meters on pumps to make extra money. "It's not just the price," de Leon said. "It's the lack of confidence in Mexican gas."