Oil Thieves Convenient Scapegoats for Mexico’s Gasoline Shortages

A crackdown on oil theft has seen the president of Mexico stop major fuel pipelines, causing severe fuel shortages in parts of the country, but are oil thieves solely to blame for the current crisis?

President Andrés Manuel López Obrador announced on December 27, 2018, plans to combat rampant fuel theft from installations run by Petróleos Mexicanos (Pemex), the country’s state-owned oil company. Shortly after, soldiers set out to protect strategic oil facilities throughout the country, including shutting down a major oil pipeline at the Salamanca refinery in the central state of Guanajuato.

The closing of the Salamanca pipeline, which has been crippled by fuel thieves over the years, caused major fuel shortages in central Mexico. Instead of using the pipelines, the government began using trucks and train cars protected by soldiers and police to transport fuel, according to the Washington Post. However, this method has been slow and unreliable.

Despite the shortages, López Obrador is asking citizens not to panic and to support the crackdown.

“There is enough gasoline in the country … but we cannot use the pipelines because there are networks that were created to steal gasoline,” he said at a January 9 press conference.

SEE ALSO: Mexico News and Profiles

Oil thieves stole more than 2.2 billion liters (around 600 million gallons) of fuel from Pemex refineries in 2016, representing at least $1.5 billion in losses for the company. In 2017, incidents of oil theft recorded by Pemex reached record highs, jumping to 9,509 and shattering the 6,873 incidents recorded in 2016. A recent Rolling Stone report stated that the country’s oil and gas reserves “represent a potential source of wealth far greater than illegal narcotics could ever yield.”

Some experts have supported López Obrador’s decision to confront the oil theft industry that largely went unchecked in previous years.

“We have a network of pipelines that are vulnerable to organized crime and by the corruption in the government. Previous administrations tolerated this for years,” Ruben Salazar, the director of Etellekt Consultants, told the Washington Post.

Others have criticized the plan’s logistics and the way the president has communicated his strategy.

“If military intervention is the strategy, we do not have enough sailors, soldiers or policemen to defend or monitor the nearly 9,000 kilometers we have of pipelines 24 hours a day. […] It will not be long before organized crime begins to intervene,” analyst Gonzalo Monroy told CNN.

InSight Crime Analysis

Mexico’s oil theft industry is booming and has been a staple of organized crime in the country for years. But the criminal makeup of oil thieves, known locally as “huachicoleros,” has developed from small-time groups into more organized structures controlled by the country’s infamous cartels.

But while López Obrador has so far blamed his crackdown and the ensuing fuel shortages in large part on oil thieves, the situation is far more complex.

Oil theft would not be possible without the complicity of engineers and workers at Pemex’s refineries. Questions have also been raised as to whether the economic losses and discontent caused by the pipeline shutdown have outweighed the damages created by the oil thieves.

Layers of corruption within Pemex, including employees sharing maps of the pipelines and information on how best to pierce through them, help facilitate the illicit industry.

Indeed, López Obrador recently announced that the former head of security at Pemex, Eduardo León Trauwitz, is being investigated for his alleged role in helping facilitate oil theft, according to El Universal.

One source told Milenio in a 2017 interview that Pemex officials notify thieves of the exact time that oil will be passing through pipelines, in addition to providing them with the equipment needed to extract the oil safely. But the corruption extends beyond just Pemex’s workers.

SEE ALSO: Coverage of Oil Theft

“[Corruption] involves public prosecutors, municipal authorities, state secretaries, and goes as far up as you can imagine,” the source said.

To make matters worse, Pemex is facing serious fuel production issues. López Obrador himself admitted at a January 10 press conference that there are several Pemex refineries that have been shut down for a while or that are producing very little oil.

After an uptick in the number of barrels produced per day to start 2018, production started to fall in April, dropping from 375,000 barrels per day to just 188,000 barrels by the end of 2018, according to statistics from Mexico’s Energy Secretariat. In the middle of 2018, Pemex’s six main oil refineries were operating at just 40 percent of their capacity and producing the lowest amount of oil seen in the last 25 years, according to El Economista.

Pemex has also reduced its imports of gasoline from the United States since López Obrador took office a little more than a month ago, according to the Wall Street Journal, further compounding the current crisis.