Precipitous drops in worldwide petroleum prices, which have reached 6-year historic lows, might affect the profitability of oil theft which has become part of the criminal portfolio in Mexico.
Oil prices have fallen nearly 55 percent since June 2014, to around $45 a barrel in January 2015.
In recent years, oil theft has become a major earner for Mexican criminal groups that are looking to diversify their operations. In 2014, state oil company PEMEX estimated that criminal actors stole $1.15 billion worth of oil, at nearly 27,000 barrels a day. El Pais reported that clandestine taps into pipelines are also at historic highs, with nearly 4,000 detected in 2014, compared to 2,800 in the previous year. Independent estimates from VICE indicate that the losses due to oil theft are possibly closer to $5 billion.
InSight Crime Analysis
Despite huge drops in oil prices throughout the latter half of 2014, oil theft reportedly increased by 33 percent over the last year. In fact, groups like the Zetas and the Gulf Cartel already have sophisticated distribution networks for their stolen oil, and reportedly control nearly 15 percent of the gasoline business in Mexico. These organizations now control tanker trucks and sell gas directly to service stations, acting as a de facto shadow market.
Criminal groups inundate the Mexican market with prices that are well below the fixed price set by the government. When oil prices peaked in June, they were selling gas for less than half of the official rate.
SEE ALSO: Coverage of Oil Theft
Mexican organized crime’s foothold in the oil industry is another example of how these groups have diversified their income. As older criminal empires have crumbled, and the competition for drug routes has intensified, Mexico has seen a rise in other criminal activities like kidnapping, extortion, and oil theft. If oil prices continue to fall, and the potential profits on offer from oil theft start to slide, Mexico’s criminal groups may yet refocus their attention elsewhere, including the sale of other types of contraband goods.