Pemex to lower gas prices to compete with US filling stations

In an unprecedented move, Mexico's state-owned oil monopoly will lower gas prices and compete head-on in price with US filling stations along the 2,000-mile border. President Vicente Fox, who made the announcement during a visit to the Pacific coast state of Guerrero, said the discounted gas will be available after Dec. 1 at nearly 500 gas stations within about 10 miles of the US-Mexico border.
With regular gasoline selling for more than $ 2 a gallon in Mexico, tens of thousands of Mexicans routinely cross the border to buy their gas in the United States. The gap between US and Mexican prices nationwide has steadily widened since 1995, when the Mexican government started raising the price each month. Petroleos Mexicanos -- known as Pemex -- faces no competition within Mexico due to a ban on foreign-owned oil companies.

Pemex now will set the price of gasoline in each major border city according to the weekly price of regular unleaded gasoline on the US side. Thus, Tijuana's gas will be sold for the same amount as gas in San Diego, while Ciudad Juarez's will be set to equal prices in El Paso, Texas.
The move comes after Pemex slashed prices by 40 % in Ciudad Juarez in October and saw sales bounce back in the border's largest city. Before the price cut, many Juarez gas stations -- privately owned franchises of Pemex -- were close to going broke.

Pemex officials, who met with border gas providers, also asked stations to improve service to help win back consumer trust. Many border residents say they are leery to return to Mexican gas stations, where some attendants have been caught tampering with meters on pumps to make extra money.
The boost in sales could help government coffers. The government receives one-third of its income from oil-related sales, and the industrialized northern border region -- even with US competition -- has accounted for 10 % of those sales. Officials also hope to stop smugglers who sell US gas clandestinely from their homes.