Epidemic of fuel thefts becomes crisis in Mexico
Situation robbing federal government of over $1B a year.
SAN SALVADOR HUIXCOLOTLA, MEXICO — Some of the day’s first customers pull into the produce market at dawn, but not with fruit and vegetables on their minds. They are looking for cheap, stolen gasoline.
On the edge of the market, dozens of vendors have set up shop, with stacks of 5-gallon containers full of stolen fuel and rubber hoses to siphon it.
“How much, cousin?” the vendors holler as they swarm the hundreds of motorists who drive through every day. The price is less than half what customers would pay at nearby gas stations.
The brisk, open gas trade is one of the more obvious manifestations of Mexico’s national fuel-theft epidemic. Thieves are siphoning gasoline and diesel fuel at recordhigh rates from the system — often by drilling taps into pipelines under cover of darkness — and are selling it on the black market around Mexico and perhaps even in the United States and Central America.
It is a worsening crisis that is robbing the federal government of more than $1 billion a year in stolen fuel and imperiling Mexico’s efforts to attract foreign investment in its energy industry as it ends more than seven decades of state monopoly.
And the government seems unable to stop it.
“The problem comes down to the fact that the rule of law is weak in Mexico,” said Dwight Dyer, an analyst of the Mexican energy sector. “This is a part of the market where the rule of law really needs to work for the private sector to say, ‘I really want to invest.’”
T h e r e l e n t l e s s r i s e i n thefts has been driven by the increasing involvement and sophistication of some of the nation’s largest, best organized and most ruthless criminal organizations, which have used bribery and violence to co-opt officials at all levels of government, including workers at Pemex, the state-owned energy company.
The criminal groups have also cultivated widespread support among local residents, some of whom have f ound l uc r a t ive e mployment with the gangs and many of whom are happy to pay the far lower prices for black-market fuel. In some places — particularly here in Puebla state, which has emerged as the epicenter of the crisis — the thieves are viewed as Robin Hood-style heroes who have changed the fortunes of once-impoverished towns overnight as proceeds from the trade flow into local economies.
More than 1.47 million gallons of fuel a day are stolen from throughout the system, from the refineries to the gas pump, federal officials said. From time to time, tanker trucks are hijacked. While the amount taken is equivalent to 1 to 2 percent of the total volume transported every day, it has an outsize effect on the ability of the Mexican government to attract private investors.
“It’s really a barrier for business,” said Carlos Murrieta Cummings, general director of industrial transformation for Pemex. “I don’t want to sound optimistic because the problem is very hard. I don’t want to minimize the problem.
“We need to take care of this from the production fields, at the refineries, at the distribution center, terminals, pipelines — everything,” he added. “We have this problem in many different places, not just in one part.”
For years a nagging but manageable issue for Pemex, g a s o l i n e t h e f t b e g a n t o worsen in the late 2000s amid an assault on organized crime led by Felipe Calderón, then the president. His strategy to dismantle transnational drug trafficking organizations created smaller subgroups that diversified their criminal enterprises, branching into gasoline theft.
With international gas prices soaring, fuel theft became particularly lucrative, officials said, and often much easier than trafficking drugs.
But the business could also be deadly, with illegal taps occasionally causing explosions. In 2010, at least 27 people were killed, scores injured and numerous homes destroyed when a pipeline blew up in San Martín Texmelucan de Labastida, a city in Puebla.
Despite Calderón’s vows to crush the fuel rings, they continued to grow.
“The truth is that Pemex didn’t give much importance to it,” said Eduardo Guerrero, a security consultant in Mexico City. “It was regarded as marginal losses.”
In 2009, the authorities discovered 462 illegal taps on the nation’s pipelines and estimated that fewer than 126,000 gallons a day were being lost. Last year they discovered 6,873 taps — a nearly fifteenfold increase.
Gangs most often target the 5,600 miles of pipeline that snake throughout Mexico and often pass through s par s e ly i nhabite d r ura l regions, carrying gasoline from refineries to distribution points.
The pipelines are mostly b u r i e d b u t a t a s h a l l ow depth, and they are easily uncovered with a shovel. The thieves perforate the pipelines with high-powered drills and install taps from which they draw the fuel. general director of industrial transformation for Pemex
They have even dug tunnels to the pipelines and diverted fuel through rubber hoses to stolen tanker trucks far away.
The plunder is then sold in markets like the one in San Salvador Huixcolotla, on roadsides, door-to-door or to shady gas station owners who then resell it.
Some stolen gas has also found its way into the United States and south into Central America, officials and analysts said.
In Puebla, the authorities discovered more than 1,500 illegal taps on pipelines last year, nearly double the number found in 2015 and nearly a quarter of the national total, Pemex officials said.
The crime is concentrated in this region of the state, a cluster of rural municipalities known as the Triángulo Rojo, or Red Triangle, through which a major pipeline carries gasoline and diesel fuel to Mexico City from a refinery and a port in the adjoining state of Veracruz.
T h e s u r ge i n c r i mi n a l employment has brought a sharp rise in income for many households in thi s impoverished region. Wages from farming, historically the main occupation here, cannot compete. Where a farmhand might earn $7 to $11 a day, residents said, a lookout for the fuel thieves can bring in upward of $54 a day.
On special occasions like Mother’s Day, the gangs will drive into villages in trucks loaded with gifts for townspeople, including televisions, blenders and other home appliances. The gangs have also started to pay for medical care and other community services.
A top municipal police official in the Red Triangle, requesting anonymity out of fear that he would be killed for speaking publicly about the issue, said that local loyalt y to the thieves was so deep that his officers were often impeded from entering certain neighborhoods even when responding to problems that had nothing to do with fuel theft.
But the criminal groups’ main weapon is corruption. From Pemex workers tipping off criminals about the most opportune time to drill, to local police officers paid to look the other way, the gas thieves have built their operations with widespread bribery backed by violence.
The criminals’ offer is clearcut, said a former municipal police official in the Red Triangle who requested anonymity: Either you collaborate and take money or you
resist and take a bullet.
Guerrero, the security consultant, predicted that further pressure in the Red Triangle might eventually set off a social uprising, including strikes and blockades.
“With every passing day, more families, more people depend on this market,” he said. “Forget about it. It’s going to be a nightmare when the government tries to control the market.”