Some 600 people have been arrested, one policeman killed and around 300 stores looted as protests intensify in Mexico following the weekend decision to hike fuel prices by 20 percent, the Associated Press reports.

Citing Mexican business chambers, the news agency said that supplies of basic goods and fuel are under threat as protesters blockade highways, ports and terminals and the situation intensifies to chaos on the streets and looting.

As one of the more difficult to implement parts of the government’s sweeping energy reforms, deregulation required a 20 percent increase in fuel prices that has enraged the population.

On New Year’s Day, when the policy took effect, the cost of a gallon of standard-grade unleaded fuel was US$2.95, up 14 percent from the price of US$2.60 on 31 December. The price of premium fuel rose by up to 20 percent, according to the LA Times.

This situation is critical for Mexican President Enrique Peña Nieto, who had promised that fuel prices would go down with the energy sector reforms.

Protests were easily sparked by opposition politicians who fed on the sudden removal of decades of set fuel prices and heavy subsidies for a population that is not accustomed to fuel price increases.

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The government only announced the deregulation of gas prices on 27 December, as part of the wider reforms being implemented to end the oil and gas monopoly enjoyed for decades by corruption-scandalized state-run Pemex.

The reforms will allow foreign companies to operate in Mexico’s lucrative oil and gas sector for the first time.

The Mexican president is calling for calm but has so far failed to convince the protesters that the alternative to fuel deregulation would have been much more painful for the economy. The government says that by March the market will be allowed to dictate fuel prices.

On Tuesday, Pemex warned that the blockades were affecting the distribution of fuel and that it had reached a "critical situation" in the northern states of Chihuahua and Durango and the central state of Morelos.

By Charles Kennedy of Oilprice.com

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