Note on Mexican Gasoline Prices

[J Anoni]

I not only have been living in Mexico recently for the last 10 years or so, but I had lived in Mexico some in the 1980s and have been traveling to Mexico extensively since 1972.

As I remember upon coming here for a 6 month road trip in 1982 during the De La Madrid administration, that prices seemed astronomical. Beer was 33% higher than the USA, etc. At that time, if I remember correctly, the exchange rate was 132 to the dollar.

It was right after that, that all hell broke loose in Mexico economically and by 1985 the exchange rate had climbed to 2250 to the dollar. Bank interest rates were at 65%, but if you put money in the bank in pesos you lost your shirt.

The recent spike in prices could be an indication of a similar scenario about to play out in the near future, as what happened in the early to mid 1980s. Then again, who knows?

I do know one thing though, and that was that the mid 1980's devaluations sure did bring the prices down for anyone who was holding dollars. I had trouble spending US$500 month. Bananas were US 7? a kilo, a coke at a convenience store was US 5?. A toothbrush cost US 10?. Propane was US 11?/gallon. Gasoline hit a high of US 59?/gallon about 1987, after having been lower than that.

Maybe it is devaluation time for Mexico again.