President Andres Manuel Lopez Obrador, known as AMLO, late last month launched a sweeping plan to stop rampant fuel theft, the first major move of his young administration against widespread corruption and organized crime.
Many of the “huachicoleros” as the fuel thieves are known, are affiliated with the drug cartels who for years have been tapping into the pipelines of the state-owned oil company, Pemex. According to Fox News, fuel thefts have become a more lucrative business for organized crime since traditional sources of revenue, like marijuana and opium, have declined.
Illegal taps of Pemex pipelines increased by 45 percent in the first 10 months of 2018, according to the company, and the total number of perforations was over 15,000, compared to 8,664 in the same period the previous year. Pemex claims it has had $7.6 billion worth of fuel stolen since 2016.
Mexico fuel shortage worries industry as lines in capital grow gUIcLkrUBd
— Yahoo Finance (@YahooFinance) January 10, 2019
AMLO’s policy in combating the fuel thefts has been to close a number of major fuel pipelines in the country and instead, use trucks and rail cars to transport the fuel, under armed guard. It is not the most efficient way to move fuel and is leaving places like Mexico City, México state, Querétaro, Hidalgo, Tlaxcala, Puebla, and Morelos facing gas shortages.
Channel News Asia notes that the unintended long lines at gas stations caused by the slowness in delivering fuel may have an impact on the country’s economy, as well as possibly damaging the president’s popularity if the shortages persist for a long time.
Direct effects of fuel shortage being seen
Some Mexican auto plants are feeling the pinch from the fuel shortage and may end up suspending operations if the government does not act quickly enough, reports Reuters.
Eduardo Solis, the president of the Mexican Auto Industry Association, has called for “urgent attention” from the government to avoid an even bigger crisis. “We need logistics to flow and that’s why, when there are blockages, our operations are put at risk. We are worried because it could lead to the suspension of a plant,” Solis said.
Solis cites the difficulty some workers are having getting to work and then points out that the lack of fuel will also increase the risk of parts not being delivered on time.
Latin America’s largest wholesale market, the Central de Abastos in Mexico City, has also been impacted by the fuel shortage. Both deliveries and sales have slowed way down. Generally, as many as 62,000 cars and trucks converge daily to buy and sell fruits, plants and other goods.
However, according to market records, many people are staying at home. “Forty to 50 percent of supply has been affected,” said Rafael Perez, 43, the purchasing director for Drinks Depot, a beverages wholesaler. “We are talking about suppliers from Hidalgo, Guerrero, Cuernavaca, Puebla, and Tlaxcala.”
