LPG Prices Climb in Mexico

The price of liquefied petroleum petroleum gas (LPG), also referred to as propane and widely used in Mexico because of a lack of natural gas transportation infrastructure, has soared by 30% in the last month in the wake of cold weather that has pushed demand sharply higher in the US.

LPG, used in seven out of 10 households in Mexico, traded at 94.37 cents a gallon on January 9, a price not seen since October 2014. About 65% of the LPG used in Mexico is imported, primarily from US.

The weather-related issues are compounded by the fact that LPG distributors in Mexico are mostly small to medium sized businesses, with storage capacity of only two to three days, according to Alfredo Alvarez, lead energy partner for Mexico and Latin America with consulting and accounting firm EY.

In addition, he said the production of domestic LPG by Petroleos Mexicanos (Pemex) is at historic lows. Pemex produced 127,900 b/d of LPG in November, the lowest monthly total since 1990, according to Mexico’s energy ministry.