World

Fuel Theft In Mexico Turns Deadly As Cartels Enter $1 Billion Black Market

The theft of fuel from Mexico’s pipeline system has been a lucrative criminal enterprise for many years, but the black market for gasoline has never experienced the deadly violence associated with the country’s drug wars.

That appears to be changing as organized crime moves to take control of the illegal consumer fuel trade, which now costs the country $1.1 billion per year, according to state-run oil giant Pemex. Long dominated by small bands of rural villagers, the sale of black market gas is increasingly controlled by larger gangs, which has caused a spike in both the amount of stolen fuel and the violence surrounding the booming business.

In early July, nine people were killed in a dispute between fuel thieves the state of Puebla, reports the Associated Press. Jesus Morales, the top police official in Puebla, said a gang of fuel distributors killed the fuel vendors that were unable to meet their sales quotas.

Fighting between government troops and fuel gangs has been even more intense. Dozens of people have been killed in battles with the Mexican military, as authorities have moved to crack down on the thousands of clandestine fuel taps placed throughout the country’s network of pipelines. A Mexican marine and four suspects were killed in a shootout Thursday between troops and one of Puebla’s leading fuel gangs.

The crackdown comes as Mexico introduces a series of reforms to lure foreign investment in the country’s valuable but aging, unsophisticated oil infrastructure.

One of those changes might be fueling the growth of the illegal gasoline market, reports Bloomberg Businessweek. Earlier this year, Mexico did away with fuel subsides that held down prices at Pemex stations. Retail gasoline prices immediately jumped by 20 percent, and theft grew even faster: In the first five months of 2017, illegal taps were up nearly 70 percent from a year earlier, according to Pemex.

Gasoline theft is now an industrial-scale enterprise in the central and eastern Mexican states where the country’s energy infrastructure is concentrated. The government has detected an average of about 20 taps a day so far this year, reports the AP.

Mexican authorities now fear that the surge in violence will scare off foreign companies that are worried about the security of their investments in the volatile energy sector.

“They are going to start in areas less vulnerable to fuel theft,” Alejandro Schtulmann, a Mexico City-based risk consultant, told Bloomberg Businessweek. “They will only invest more when they see that the situation is safer.”

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