Reuters

(Bloomberg) -- Mexico’s fuel market liberalization has done something rarely seen before: make California’s pump prices look cheap.

Drivers are flooding across the border to southern California to fill up on gasoline, after protesters blocking distribution centers near the Baja California capital of Mexicali caused stations to run dry. Antunez’s Shell gas station in Calexico is just five blocks away from the Mexican border and rarely has business been as busy as now. Mexicali drivers wait four to five hours to cross into the U.S. just to fill their fuel tanks and then wait another two hours to cross back into Mexico again.

“Right now, it’s crazy,” Rodrigo Marquez, 30, a station employee, said in a telephone interview. “We are having a lot, lot of people, everybody is fueling up their tanks.”

As Mexico opens a formerly monopolized market to foreign competitors for the first time in nearly eight decades, the government increased fuel prices to attract imports and outside competition. The 20 percent hike, dubbed a ‘gasolinazo,’ or fuel-price slam, sparked protests across the country that curtailed fuel distribution, leaving Petroleos Mexicanos, or Pemex, struggling to keep its stations supplied.

California Cheaper

Unleaded prices in Mexicali were raised in January to 16.17 pesos a liter, or $2.815 a gallon. Seventeen miles north across the border in El Centro, California, pump prices jumped 7.1 cents a gallon overnight to average $2.736 as of 1:20 p.m. New York time Wednesday, according to GasBuddy, a price tracking company.

"There is a very important commercial exchange happening in the border region," said Jose Angel Garcia, the president of Mexico gasoline retailer association Onexpo. "There are trucks with large tanks being used to bring fuel into Mexico from the U.S."

Pemex said in a tweet it removed blockades in Mexicali’s fuel distribution center early Wednesday. As of Tuesday, wait times at the Calexico/Mexicali border were twice as long as normal, according to Best Time to Cross the Border, a website created by a University of California-San Diego team.

The demand from Mexico may continue to push up prices in Southern California, where prices near the border were up 11.8 cents from last week, according to GasBuddy.

Long Lines

As many as 10 cars can be seen lining up at Antunez’s to fill their tank and the station is having to resupply their own tanks about once a day versus once every three to four days normally, Marquez said. 

The state’s gas prices are notoriously volatile and sensitive to supply interruptions due to its geographic isolation from the rest of the country’s refining and pipeline distribution systems, according to Patrick DeHaan, senior analyst at GasBuddy.

"There certainly could be some disruption if motorists coming across the border overwhelm California systems," DeHaan said.

--With assistance from Amy Stillman and Adam Williams To contact the reporters on this story: Laura Blewitt in Houston at lblewitt@bloomberg.net, Robert Tuttle in Calgary at rtuttle@bloomberg.net. To contact the editors responsible for this story: Margot Habiby at mhabiby@bloomberg.net, David Marino, Carlos Caminada

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