Study warns that Ukraine war could trigger increase in fuel theft in Mexico

An international non-governmental organization has warned that Russia’s invasion of Ukraine could make fuel theft more lucrative and prevalent in Mexico.

Colloquially known as huachicoleo, stealing fuel is mainly accomplished with illegal taps on pipelines owned and operated by the state oil company Pemex, although thieves have also robbed refineries, hijacked tanker trucks and diverted fuel to secret tunnels.

Theft has cost Pemex billions of pesos in lost revenue, but the current federal government cracked down on the crime and has succeeded in reducing the quantity of fuel stolen, although 2021 was the third worst year ever in terms of the number of number of pipeline taps detected with over 11,000.

In a comprehensive report entitled Keeping Oil from the Fire: Tackling Mexico’s Fuel Theft Racket, the International Crisis Group (ICG) acknowledged that the government has managed to reduce the volume of stolen fuel, but asserted that “its claims of swift success seem premature.”

“Areas traversed by pipelines still have a higher average homicide rate than those that are not. Fuel theft was reportedly on the rise once again in 2021, and sanctions linked to Russia’s invasion of Ukraine could make the racket still more lucrative by ratcheting up fuel prices again,” the report said.

“… Recent spikes in fuel prices, the result of sanctions targeting Russian oil and gas in the wake of the invasion of Ukraine, will in all likelihood make fuel theft increasingly profitable for criminal groups and more damaging to state coffers,” the ICG said.

In addition, the pressure on security forces tasked with combatting huachicoleo will increase, the report said.

The war in Ukraine has not caused fuel prices in Mexico to increase as much as in some other countries, partially because the government has recently lifted the excise tax on gasoline and diesel.

The ICG – which describes itself as an organization working to prevent wars and shape policies that will build a more peaceful world – said that tackling collusion between state officials and organized crime, and supporting legal alternatives to crime through region-specific development plans, are the best ways to make lasting progress toward stopping huachicoleo.

The report noted that Mexico’s notorious criminal groups have diversified their interests to include the fuel theft racket.

“The specific allure of huachicoleo for criminal groups can be traced in part to a set of fiscal and energy reforms aimed at redressing losses incurred by the state-owned oil company, Pemex. These measures caused fuel prices to rise, creating higher profit margins for stolen petrol,” it said.

“New criminal groups branching into huachicoleo clashed as they sought to expand across Mexico, driving up homicide rates sharply in municipalities with pipelines running through them.”

Among the criminal groups that are or have been involved in fuel theft are the Zetas, the Gulf Cartel, the Santa Rosa de Lima Cartel and the Jalisco New Generation Cartel, as well as numerous smaller bands of huachicoleros (fuel thieves).

Puebla, especially an area known as the Red Triangle, and Guanajuato are among Mexico’s hotspots for huachicoleo, a crime that, like drug trafficking, has spawned its own culture, replete with a saint and huachicorridos – ballads that tell the stories of the thieves.

The ICG report noted that Georgina Trujillo Zentella, former chair of the energy committee in the lower house of Congress, said in 2011 that there is less risk in fuel theft than in the drug trade.

“You don’t have to risk crossing the border to look for a market. We all consume gasoline. We don’t all consume drugs,” she said.

The ICG also noted that President López Obrador suggested in late 2018 that as much as 80% of fuel theft is “orchestrated by elements of the state.”

The report cited one huachicolero who told the newspaper Milenio that fuel theft collusion “runs from MPs to municipal authorities to state secretaries to whatever you can imagine.”

“The police, municipal and state, are the ones you align with or you die,” the thief said.

The military, which has been used to guard pipelines, is also reportedly colluding with thieves, ICG said.

“Complicit officers reportedly coerce others into turning a blind eye or accepting kickbacks through violence or threats.  One white-collar operator working with the Jalisco New Generation Cartel stated that he had continued to profit from huachicoleo during López Obrador’s tenure thanks to ‘conversations [and] personal relationships’ with federal security forces, including military officers seconded to Pemex,” the report said.

The ICG added that approximately 90% of fuel theft cases go unpunished, despite the federal government’s crackdown.

Mexico News Daily