Why Is There A Gas Shortage in Mexico?

If you’ve been hit by the gas shortage in Mexico, then you’re not alone. Across 9 states in Central Mexico, people have been feeling the pinch as gas stations are selling their reserves—if they haven’t already run out. The livelihood of many Mexicans and immigrants have been affected as so many business sectors depend on gasoline. However, it is important to note that the stolen fuel equates to 60% of the funds that Mexico has allocated toward pensions for the elderly.

 

WHERE THE GAS SHORTAGE IN MEXICO STARTED:

The gasoline shortage crisis began in early 2018 when it came to light that Mexican criminals called huachicoleros were diverting gasoline from the pipeline. Sapping $1 billion USD in annual revenue, this has deterred foreign investment which Mexico depends upon to modernize. Pemex generates about 52 billion USD a year—roughly one-fifth of the government’s income. After a 2014 energy reform which was meant to revitalize Mexican industry and economy, major deterrents born from government corruption and organized crime have impeded growth spurring action from the Mexican government.

It seems that much of the siphoning of funds from Pemex is done by targeting fuel refineries which have become outdated and insecure due to lack of investment. 2017 budget allocated $18.92 billion MXN to upgrade outdated refineries and boost security—compared to the $39.77 billion MXN spent in 2014. Employees are extorted into cooperating, and the number of unauthorized taps quintupled between 2011 and 2016. They were counted at 8,664 in 2017—and 12,581 in 2018. Repairing these unauthorized taps numbers almost $100 million USD a year, ten times what they used to cost in 2010.

The top four Mexican states account for over half the illegal gasoline taps in Mexico. These states are:

  1. Puebla – 1,815
  2. Hidalgo – 1,726
  3. Guanajuato – 1,547
  4. Veracruz – 1,338

During the entire presidency of Vicente Fox (2000 to 2006), only 890 gasoline taps were reported. By the next presidency (2006 to 2012) there were 4,865. Now, three times as many illegal taps are laid down every single year. Toward the start of the next decade, from 2009 to 2016, thieves had tapped the 14,000-kilometer network of pipelines every .86 miles. This reduced production to 700,000 barrels per day in 2017—half of what it was at its peak in 1994. Furthermore, an end to Mexican subsidies on gasoline—as part of the energy reform of 2014—has brought up the value of gasoline by 25%, despite the global prices of oil falling by 75% during the last four years.

 

OTHER CORPORATIONS WITH GAS SHORTAGE IN MEXICO:

Pemex is not alone in taking losses. Those private companies that depend on the Pemex pipelines have also been hit by disastrous losses. With roughly 500 gas stations in Mexico, BP has also seen losses of about a quarter of their average capacity. To make matters worse, during the gas shortage in Mexico, Pemex has said that Pemex will provide its own stations before supplying those of private investors using their own infrastructure.

Mobil is another privatized gasoline company in Mexico. Their infrastructure is completely separate from Pemex—unlike BP which has leased usage of the Pemex pipelines. Mobil has been unaffected by the gas shortage in Mexico. Enrique Arroyo, president of Queretaro’s gas station association has this to say, “Fortunately, here in the state we have Mobil, it’s helped us a lot. . . [Without it] practically all the stations would be closed.”

 

COLLABORATION BY THREE PEMEX OFFICIALS:

Theft on this scale could not have been implemented alone. Pemex’s new management has been aware for some time that some officials were complicit in the theft of petroleum, and after extensive logistical research, they determined the identity of the persons involved. These individuals were apparently caught by leaving the pressure going on the pipeline, and then analyzing the system pressure of the pipeline, which led to discovering a great loss in one particular section.

On December 20th, these individuals were officially released. A week later, three Pemex officials were charged with allegedly collaborating with criminals in the theft of gasoline in Mexico. Their names have not been released so as to not affect the due process of their criminal proceedings.

Upon removing these three Pemex officials, the amount of stolen petrol decreased from 43,000 stolen barrels on December 20th to 19,000 stolen barrels by December 25th. Mexico’s new president AMLO toted a theory that only 20% of theft is actually from pipelines, and that the vast majority may be systematically siphoned from within Pemex itself. He called on Pemex employees to stay vigilant and report corruption to authorities.

 

SECURITY OF FUEL REFINERIES IN MEXICO:

Part of AMLO’s push to decrease fuel theft in Mexico is to deploy 4,000 soldiers to guard Mexico’s petroleum storage facilities and oil refineries. In total, six refineries, 39 storage facilities, and 12 pumping stations will be protected by soldiers—many of which will be marines. Bringing in members of Mexico’s armed forces is part of AMLO’s comprehensive plan to combat fuel theft in Mexico. The new Mexican president revealed that 15 government departments have been brought into this operation. He has high hopes that this will help protect gasoline refinery workers, as well as the precious fuel.

 

THE GAS SHORTAGE IN MEXICO:

Another part of AMLO’s comprehensive plan to secure Mexico’s fuel is to close the pipelines that run fuel from the refineries at Salamanca, Guanajuato, Hidalgo, and Tula. In their place, he has employed the use of tanker trucks to ship fuel from one location to another. AMLO called on the citizens to be patient seeing as how the gas shortage in Mexico is a result of his new measures to curb gasoline theft in Mexico. He implored Mexicans to not buy gasoline from illegitimate sources.

AMLO released a statement to the press saying, “The shortage problem in some very localized parts [of the country]. . . has to do with the change that was made to transport fuel in takers more than in pipelines. So, as these changes are being made, there may be shortages at some points. . . I reiterate, help us by not buying anything stolen, in this case: fuel. [I make the call] to citizens, companies, because there was a case in which construction companies were being supplied with stolen gasoline and diesel. . . We all have to behave well, we all have to help.”

Over 70 gas stations in Queretaro have been affected by the gas shortage in Mexico, where 50 have been forced to close. Enrique Arroyo, president of the gas station association of the state of Queretaro, said, “The reality is that we don’t have a date, we haven’t received a response. [Pemex expects] that the delivery of the product via pipeline will be reestablished to the region soon, but at the moment they’re continuing to bring fuel [by tanker] from San Jose Iturbide [Guanajuato] but it’s taking too long.”

In Guanajuato, nearly all of the state has been affected. The gas shortage in Mexico has affected the municipalities of Celaya, Comonfort, Irapuato, Leon, Irapuato, Guanajuato, Apaseo El Alto, Salamanca, and Apaseo El Grande—among others. In the State of Mexico, Temscaltepec, Tejupilco, and Valle de Bravo have largely been affected. In Tamaulipas, Reynosa, Nuevo Laredo, and Matamoros have been affected by the gas shortage in Mexico. In Puebla, the gas shortage in Mexico has affected Acatzingo, Tecamachalco, and Tepeaca. This is not to mention that the gas shortage in Mexico has affected the states of Guadalajara, Jalisco, Pachuca, and Hidalgo. In Michoacan, Morelia, Charo, Tarimbaro, and Alvaro Obregon have been affected by the gas shortage in Mexico, as well as at least six other municipalities.

 

WHO IS AFFECTED BY THE GAS SHORTAGE IN MEXICO:

It began with four states being largely affected by the gas shortage in Mexico, but within two days, nine states had been affected: Queretaro, State of Mexico, Nuevo Leon, Tamaulipas, Hidalgo, Jalisco, Puebla, Guanajuato, and above all Michoacan—where 90% of gas stations have been affected.

The gas shortage in Mexico has affected nearly every business. Employees who cannot get to work, or taxi drivers who depend on gasoline as their livelihood. From farmers to taco stands, nearly everyone is affected. Many businesses have had to temporarily close down because neither employees nor customers can make it to the establishment. Gasoline station workers have almost all been affected. Without gasoline, they have had to turn clients away, and many are closed temporarily. These gas station attendants who depend on tips are frightened as to what the future will hold.

WeExpats has even heard that natural gas in San Miguel de Allende has been affected, making it difficult for people to heat their homes in the coldest months of the year. Motorists all across Central Mexico have been left stranded.  In many regions, the country has come to a virtual standstill. What are your experiences? We would love to hear from you! Comment below.

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