The temporary power outage at the start of a Mexican fuel marketers meeting outside Mexico City last week was an apt reminder of the challenges faced by the country’s nascent gasoline and diesel market.The blackout at the Onexpo 2017 event in Santa Fe lasted only about an hour, but for retailers — who until the beginning of this year operated in a highly controlled, Pemex-dominated business environment —the path forward continues to be unclear.
Stations have moved from selling at a government-set prices with a guaranteed gross margin of 7.5pc to a gradually liberalizing market in which they have to manage price risk.
“The gasoline station owners have never had to worry about setting a price,” the outgoing president of retailers’ association Onexpo Jose Angel Garcia said at the conference last week.
Beyond the price, federal officials are advising retailers that they will have to compete on other attributes, such as sprucing up bathrooms and convenience stores.
“They are having to transform from gas stations to service stations,” incoming Onexpo president Robert Diaz de Leon said.
Consultants and providers of other services, such as advanced monitoring technology, have sprung up to provide guidance to the sector where there are few dominant players. Big players with experience in competitive retail fuel markets have announced ambitious plans, including BP and most recently ExxonMobil, which plans to open its first Mobil-branded service station by the end of June. But this flip of the switch to bring in more competition is still full of uncertainties.
At the same time, the underpinnings of Mexico’s energy industry has never been so transparent. The energy regulatory commission (CRE) broadcasts its sessions online. Retail prices in the two states with liberalized prices so far are published daily on a CRE web page. Refinery production and fuel import statistics are released regularly. Only fuel theft statistics — which were previously reported — have fallen by the wayside as the country battles a ballooning and violent fuel theft problem.
The challenge is for the sector to learn how to use this data.
“This is all new to us,” one gasoline station owner from Chihuahua who asked not to be named said during a short shared taxi ride to the convention center. “We are going to have to learn how to manage this data.”
Like the glowing cell phones convention goers used as lights in the darkened ballroom earlier in the week, the retail sector will need to embrace the new data and technology to illuminate the path forward.