Mexico's Crime Groups Tapping Fuel From Pipelines

The extent of fuel theft from pipelines in Mexico is now so great that it is becoming "a serious financial burden for state-owned petroleum company, Pemex, , according to an expert at Rice University’s Baker Institute for Public Policy.

Adrian Duhalt outlines his insights in “Looting Fuel Pipelines in Mexico.”

"Mexico’s black market in gasoline has sharply increased since 2006," Duhalt said.

Illegal pipeline taps grew from 213 in 2006 to 6,873 in 2016, a 32-fold increase.

“While Pemex was the sole player in Mexico’s oil and gas industry, gasoline theft seemed to be something of a minor problem, a localized activity controlled by a few gangs,” Duhalt wrote. “Fuel theft, however, has grown over time -- partly due to a hands-off approach embraced by Mexican authorities for years, if not decades -- and has reportedly attracted the attention of more sophisticated criminal organizations seeking to diversify their illegal activities.”

Over the last few years, factors such as increased demand for stolen fuels, a weak rule of law and the lack of economic opportunities in local communities have played a crucial role in reshaping the configuration of the now widespread black market in stolen fuels, according to Duhalt.

"Illegal trade in fuels is booming, and this further incentivizes new entrants into this black market," he said.

“In the eyes of investors and trading partners, the increase in fuel theft in Mexico raises serious concerns related to the local business environment and the ability of Mexican authorities to implement effective changes within the energy sector and to guarantee investments, especially in onshore projects,” Duhalt wrote. 

“Confrontation with criminal gangs seems to be as certain as the government’s inability to prevent the thefts,” he said.

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