The robbery of oil and gasoline—or huachicoleo, as it’s known in Mexico—has become an increasingly prominent issue in oil-producing countries around the world. In recent weeks, the matter has become a headlining topic in Mexico, where newly-inaugurated President Andrés Manuel López Obrador established controversial reforms to begin combating the crime networks that allow for fuel theft. This initiative has caused widespread gasoline shortages throughout several states in Mexico, pushing the gasoline industry and huachicoleo to national and international headlines. In an incident related to fuel theft and this recent gasoline shortage, over 80 were killed on Friday, January 18 due to a pipeline explosion in the state of Hidalgo. In light of the President’s crackdown on fuel theft and this recent tragedy, it is imperative to understand what exactly huachicoleo is and why it’s such a big problem today.
As one of the world’s largest oil producers, gasoline and crude oil are essential to the functioning of Mexico’s economy. While the petroleum industry has provided Mexico with economic advantages in the global economy, however, it has also led to a rise in criminal activity related to oil production. For decades, huachicoleros, or fuel thieves, have targeted the country’s gasoline supply in order to use or sell it on the black market, often using the profits to feed other criminal networks. However, in recent years the practice has become even more commonplace as powerful cartels try to reduce their dependence on the narcotics trade and seek other forms of income (Forbes).
Experts from Pemex, Mexico’s state-owned petroleum company, claim that the practice of huachicoleo has cost the government billions of dollars over the years, with an estimated $7.4 billion in fuel stolen since 2016 (The Washington Post). In the past year, the state reportedly lost over 60 billion pesos ($3 billion USD) to the practice of fuel theft (BBC Mundo), with huachicoleros stealing or sabotaging the production of an estimated 60,000 barrels of fuel each day (The Washington Post). Though the practice has been around for decades, it has become especially prevalent in the past 10 years; in 2016, Pemex reported that their pipeline system had been tapped by thieves nearly 7,000 times, versus only 211 times in 2006 (Forbes).
The criminal networks that engage in the practice of huachicoleo are extremely complex, and have worked to infiltrate the state-owned Pemex and to refine the practice to make it as efficient as possible. These huachicoleros set up networks and temporary work sites, or ‘bodegas’, along oil pipelines and monitor the movement of fuel so that they tap the lines at the proper time. They extract the fuel by slowly drilling small holes into the pipeline, siphoning gasoline out, then sealing up the holes to avoid detection. The thieves must be extremely careful and take necessary precautions to ensure that the pipe does not overheat or catch fire during the extraction, which could result in disaster--as it did on September 20 (El Universal). Though this type of illegal extraction once took hours to complete, experienced huachicoleros can now finish this process in less than 40 minutes, making it extremely difficult for authorities to locate or stop them in time.
The thieves then then take the stolen fuel, or huachicol, and either sell it to gasoline distributors or sell it on the side of the road for a fraction of the normal price. Since gasoline is heavily taxed in Mexico, purchasing stolen fuel is an attractive option for many; however, doing so can be risky and detracts necessary revenue from Pemex and the Mexican government.
Fuel theft around the world
Though huachicoleo has become a major theme in Mexican politics in recent years, however, Mexico is far from the only country affected by the practice of fuel theft. Fuel theft and smuggling is quite common in many developing countries that produce large amounts of oil, and in countries bordering major oil-producing regions. Though it takes unique forms and names in different contexts, the practice of fuel theft can be extremely lucrative, and is a prominent source of income for criminal organizations around the world.
One country that is especially known for fuel theft is Nigeria, where the practice is known as ‘bunkering’ and where thieves generally target the production of crude oil instead of gasoline. Like in Mexico, the practice of bunkering in Nigeria relies on keen knowledge of fuel production and transportation, and on the help of corrupt government officials (Forbes). Bunkering in Nigeria helps to fund criminal organizations and militant groups such as the Movement for the Emancipation of the Niger Delta (MEND), and is used to bribe corrupt government officials. The practice of oil theft in Nigeria has gained international attention due to some of the horrifying accidents that have ensued as a result. A recent incident, comparable to the recent one in Mexico, was in October 2018 when a pipeline leaked and burst into flames, killing at least sixty people (Reuters). Leakages, explosions, and other accidents like this occur often in Nigeria as a result of oil theft and pipeline sabotage.
Another example is the Middle Eastern country of Azerbaijan, where members of organized criminal groups target crude oil production to steal and smuggle into other nearby countries. Thailand is also particularly involved in the smuggling of stolen fuel, taking advantage of its low oil prices to sell discounted fuel to neighboring countries where the cost is comparably much higher (Forbes).
Experts warn against the purchase and use of stolen fuel, not only because of the moral concerns associated with funding criminal organizations, but also because this fuel is often diluted with other substances, reducing the quality and posing risks to the vehicles or machines that use it. Additionally, as can be seen with the accidents in Mexico and Nigeria, the market for fuel theft can have potentially devastating effects on communities, the economy, and the environment.
The situation in Mexico
Although fuel theft is not a new problem in Mexico, in recent weeks it has grabbed national and international headlines due to a recent controversial government initiative to combat the practice of huachicoleo, and a related pipeline accident that killed nearly 90 people. Just a few months after taking office, in early January President López Obrador decided to temporarily shut down at least four of Pemex’s 13 main gasoline pipelines in a bid to cut thieves off from access to fuel in parts of the country where the crime is common (BBC Mundo).
This decision comes partially as a response to an incident on January 8, when Pemex officials discovered a leakage in the Tuxpan-Azcapotzalco pipeline and ultimately determined that it was the result of sabotage. As a result of this crime, and as part of the newly-inaugurated president’s proclaimed commitment to combating corruption within Mexico’s government structures, López Obrador made the decision to stop the flow of oil through a number of Pemex’s main pipelines. The President has claimed that corruption within Pemex and the complicity of past administrations has allowed for huachicoleo to become so rampant, demanding urgent change. The International Monetary Fund (IMF) publicly endorsed the initiative (BBC Mundo).
While this strategy might be effective in cutting off criminals’ supply of fuel, however, it also obstructs legal industries in the affected states from accessing the same resources. This initiative has essentially halted the sale and use of gasoline in 7 of Mexico’s states: México, Michoacán, Guanajuato, Aguascalientes, Jalisco, Querétaro and Tamaulipas. The result has been the largest gasoline shortage in the country’s history, leading residents of the affected states into panic as they scramble to locate available gasoline. The shortage has cut off Mexico City—the country’s capital and one of the world’s most populous cities—from gasoline, effectively paralyzing the city’s normal activities. Many cities in the affected states have completely shut down public transportation systems, making it impossible for millions of residents to attend work or school.
The transport of fuel is not meant to be suspended completely, however. According to the government plan, the fuel that would normally travel through these pipelines must now be transported using trucks and rail cars, which are to be escorted by national police or military officers. However, due to limited transportation resources, this method has proven inadequate. State-owned fuel corporation Pemex only has 1,600 vehicles to transport gasoline in this way, each of which can carry between 30,000 and 40,000 liters of gasoline. Pemex officials have demanded the rental of over 3,000 more of such vehicles to meet the need of fuel transportation that these pipelines otherwise would have fulfilled (BBC Mundo).
As a result of the fuel shortage, many citizens are in a state of crisis, unable to continue normal activities such as work to provide for their families. However, the president has failed to echo this sense of urgency, instead advising citizens not to panic. He has stated that the current situation is not a ‘shortage’, since there is plenty of gasoline in the country; rather, he claims that the issue is one of distribution, with Pemex failing to transport necessary amounts of fuel across the country. He also mentioned in a speech that the shortage is likely due to the fact that many Pemex gas stations had been previously buying huachicol, with the new government crackdown leading to a sudden freeze of supply for those providers (Washington Post).
Only a few weeks after President López Obrador declared this anti-huachicol initiative, on Saturday, January 19, a pipeline exploded and killed dozens of people in the state of Hidalgo. The pipeline initially burst as a result of tampering from huachicoleros, sending gasoline spraying through the air around it. Because Hidalgo had been experiencing severe gasoline shortages, hundreds of residents rushed to the pipeline to collect the free fuel. However, a few hours after the pipe burst, it exploded, severely injuring those nearby. By the end of the weekend, the death toll had risen to 89, with dozens more in the hospital with related injuries.
Despite the fuel shortages, President López Obrador has defended his initiative, holding that it is necessary in order to dismantle the criminal networks at play behind the practice of huachicoleo. In light of the recent tragedy in Hidalgo, some critics may be quick to blame the president for cutting citizens off from fuel and driving them to collect gasoline from a burst pipeline. However, López Obrador is likely to use the incident to defend his initiative, and to serve as an example of the tragic negative consequences of oil theft.
Though the crackdown has affected the operation of key industries, and though many state officials claim that they can not endure much more of the shortage, the president has made no indications that the pipelines would be reopened anytime soon. Ironically, however, some critics predict that the initiative and ensuing shortage of gasoline from traditional sources may actually lead to an increase in the demand for stolen fuel as an alternative--and the tragedy in Hidalgo may be an example of this. The president has not commented on this possibility.
This radical strategy has fomented considerable anger among the affected populations, and is likely to be a sensitive topic in the coming weeks due to the recent explosion. The initiative is also expected to be unpopular with Mexican cartels, who have historically had a strong relationship with the government. Though the new president’s approach may ultimately prove to be an effective method to combat the practice of gasoline theft and corruption within Pemex, it has undeniably made him some enemies in the early stages of his presidency. With some citizens questioning their political support, and officials worried for the physical safety of López Obrador from cartels, people around the world are intrigued to watch how the recent initiative will impact the country, and how leaders will react to the ensuing gasoline shortage.