On 26 December 2016, the
Mexican government announced that gasoline prices would rise by up to 20% in January as result of the transition towards eliminating
price controls. Beginning with the
Mexican oil expropriation in 1938, the government controlled the country's entire
petroleum industry, including both production and retail sales. The
state-owned company,
Pemex, held a monopoly on all
gasoline sales in the country, and prices were set by the government. In 2013, the newly elected President
Enrique Peña Nieto began the process of
privatizing Mexico's oil industry, which would eventually allow private companies to establish their own gas stations. The Mexican government planned to transition to market prices gradually throughout 2017. Finance Minister
José Antonio Meade explained that the price hike was "an important change," which would "allow prices to reflect costs, and avoid artificial distortions." The rise in gasoline prices was also a result of the government ending
subsidies to the oil industry and may have been motivated by projected budget deficits because of the
Mexican peso's weakening value relative to the
US dollar. The price hike, scheduled to begin on 1 January 2017, coincided with an economy marked by high
inflation in addition to the weak peso.
Donald Trump's recent
election as president of the
United States led to uncertainty, as he had campaigned on strong economic
protectionism. Furthermore, Peña Nieto was experiencing historically-low
approval ratings and was involved in numerous scandals. Tensions in Mexico were also raised by the high homicide rates associated with the continued
Mexican drug war, which had begun over ten years earlier. ==Protests==