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Will Oil’s Upward Trend Hold?

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Crude prices are stuck in…

Fuel Theft Offensive Causes Gasoline Shortage In Mexico

Mexican drivers in several states are struggling to fill their tanks as the new government fights massive fuel theft by seeking to move more gasoline by tanker trucks instead of pipelines, Reuters reports, citing a local source who said a number of fuel stations in Guadalajara remained closed yesterday for lack of fuel and those that were open had long lines of drivers waiting for a fill-up.

Mexico’s military took control over 58 key fuel installations in the country in late December, including refineries, upon orders by new President Andres Manuel Lopez Obrador, who has vowed to fight corruption and fuel theft within and outside state-run energy company Pemex.  

Lopez Obrador unveiled a plan on December 27 to increase the presence of military and the use of the army in fighting rampant fuel theft that has been costing Mexico’s state firm Pemex billions of dollars annually.

According to Pemex’s own estimates, the losses from fuel theft over the past three years have reached US$7.5 billion (147 billion Mexican pesos). A lot of the theft is conducted by gangs who are quick to resort to violence as they fight among themselves for greater access to state fuels and also engage in extortion of oil workers, Reuters notes. According to Lopez Obrador, authorities are also involved in widespread fuel theft.

The fuel shortage could indeed create a problem for the Mexican economy, but judging from the new administration’s actions, the strategy seems to be a quick and final crackdown on the practice despite the discomfort it would create.

“I ask citizens for understanding and support, because we need to solve this problem together. We are trying to get it resolved soon,” Obrador said recently in a television address. This would involve costlier tanker truck transport and delays in supplies as one pipeline remains closed.

Reuters recalls a survey from 2017 that revealed fuel thieves had tapped into pipelines every 1.4 km on average. Pemex’s pipeline network totals 14,000 km.

By Irina Slav for Oilprice.com

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  • NickSJ on January 07 2019 said:
    With the military taking increased control of the state oil company, it looks like Mexico is moving in the direction of Venezuela, with fuel shortages as the predictable results. The idea of replacing pipelines with tanker trucks to reduce theft is laughable. The thieves will simply go after the trucks, which will make it easier to transport the stolen fuel

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