In the last two years, Mexico’s state-owned petroleum company, better known as PEMEX (Mexican Petroleum) reported losses that amount to over 7 billion USD.
Earlier this month, authorities confirmed the existence of over 6 thousand illegal tap sites on PEMEX’s pipelines, where criminal groups and drug traffickers syphoned gasoline at the expense of the company and its affiliates. Along with questionable infrastructure for the refinement of petroleum, Mexico’s present-day reality of oil-theft and its illicit circulation are defined by corruption, violence and extortion. The problem exists at the local, state and national scale. It implicates PEMEX, law enforcement, but most importantly, organized crime.
It is not simply a matter of administrative embezzlement: stolen gasoline is sold informally on streets, roads and other popular outlets. A significant amount is pumped back into gasoline stations that make a hefty profit by purchasing from illegal sources, chiefly organized crime. Mexican drug traffickers in fact own thousands of gas stations completely supplied with stolen gas that is sold both on Mexican and U.S. territory.
While former Mexican president Enrique Peña Nieto vowed to liberate the Mexican oil industry in 2013 through an Energy Reform that incited foreign companies such as BP, Shell and Exxon-Mobil to install and operate their own gasoline stations in Mexico, recently elected president Andres Manuel López Obrador (AMLO) has taken drastic measures —he claims will curtail gasoline theft— that have immediately caused a halt in the healthy flow of gasoline throughout the country.
Mexican states such as Hidalgo, Jalisco, Michoacán, Guanajuato and Queretaro have experienced a considerable shortage after AMLO’s government closed pipelines and opted to transport gasoline through trains and escorted truck tankers, despite the considerable increase in expenses that it implies.
Armed Defense and Military personnel have been assigned to safeguard over 40 storage and supply terminals and 6 refineries. Additionally, over 8 thousand individuals have been placed under investigation for irregular activities associated to the purchase, sale or distribution of stolen gasoline.
Considering that PEMEX supplies over 95% of gasoline sold in Mexico, the recent shortages definitely affect the share supplied to foreign oil companies. Yet, one of the most significant and overlooked consequences of AMLO’s offensive is the economic impact on the Mexican drug cartels share in the stolen gasoline business. This includes groups such as Los Zetas, the Gulf Cartel or the ever-growing CJNG, and beyond.
Since the advent of the Mexican War on Drugs officially deployed by the government of former President Felipe Calderon, the illegal trade of gasoline has been a principal source of income for Mexican organized crime. For over a decade, heavily armed drug traffickers have maximized their illicit profits by a complex involvement that ranges from illegal syphoning, transporting and distributing of gasoline in Mexico and the U.S. to the purchase and operation of gasoline stations that supply their own vehicles and oversee sales to the general public.
In short, drug cartels in Mexico will surely place foreign oil companies operating in the country as a dangerous threat to their lucrative profits. Drug traffickers have invested considerably —over 100 gas stations are owned by a single cartel, for instance— in the stolen gasoline business and they will not take the recent stall lightly.
With their profits at stake, they will turn to violence as a means to protect their cutthroat financial interests. Since drug cartels are embedded in the PEMEX administration, the labor syndicates and state authorities, they will resort to political pressure and anti-U.S. sentiment to feed the execution of direct violence through any and all means at their disposal, including the frontal assault on foreign gasoline stations.