In Mexico, Why Gas Prices Are Up And The Peso Is Down

Jan 4, 2017
Originally published on January 4, 2017 12:39 pm
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DAVID GREENE, HOST:

And let's turn now to Mexico. Gas prices skyrocketed there on January 1, sparking days of nationwide protests. And then the Mexican peso took yet another plunge after news yesterday that Ford is canceling plans to build a new billion-and-a-half-dollar auto plant in the country. The car company had for months been the brunt of harsh criticism by incoming president Donald Trump. Here's NPR's Carrie Kahn from Mexico City.

CARRIE KAHN, BYLINE: The peso dropped nearly a full percentage point on news that Ford was pulling the plug on its new plant in Mexico. The latest plunge comes on top of the nosedive the Mexican currency took immediately after Trump's electoral victory. Now gas prices are up by as much as 20 percent nationwide, and 2017 is looking gloomy for Mexicans.

(SOUNDBITE OF POTS BANGING)

KAHN: So they've been protesting all week across the country, from these pot-banging demonstrators in Oaxaca to truck drivers blocking major highways and picketers at local gas stations.

(SOUNDBITE OF PROTEST)

UNIDENTIFIED PROTESTERS: (Chanting in Spanish).

KAHN: These demonstrators shouted slogans demanding Mexican President Enrique Pena Nieto resign. His Treasury Secretary, Jose Antonio Meade, defended the hikes on the Aristegui Noticias website.

(SOUNDBITE OF ARCHIVED RECORDING)

TREASURY SECRETARY JOSE ANTONIO MEADE: (Speaking Spanish).

KAHN: "This is the necessary step we had to take," says Meade. He says the government can no longer subsidize the price of gasoline as it has done for years, especially now that worldwide oil prices are rising. Three years ago, Mexico overhauled its energy laws to allow for the first time in more than 80 years foreign investment in the country's energy infrastructure. Officials say that as new players enter the gasoline market, prices will become competitive and come down. That's a promise not too many Mexicans are believing these days as they see their currency plunging and prices rising. Carrie Kahn, NPR News, Mexico City. Transcript provided by NPR, Copyright NPR.