Officials seal an illegal pipeline tap. Workers seal an illegal pipeline tap.

Cartels are winners with higher gas prices

Their profit margin has gone up with the 15%-20% gasolinazo

The federal government might have avoided a big tax hike or painful spending cuts with its gasoline price increase Sunday, but organized crime will reap the benefits.

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Wholesale and retail fuel sales, an already profitable business for the Jalisco New Generation and Gulf cartels and cells of Los Zetas and Los Caballeros Templarios, became more so with the New Year’s gasolinazo, a word used to describe the blow delivered by a gas price increase.

The 15%-20% rise in fuel prices has given the cartels a much healthier profit margin on their sales, said University of Texas researcher Guadalupe Correa Cabrera in a report yesterday by the news website Infobae.

“This puts them at an advantage.”

Cartel prices are already much lower than retail to begin with, a factor that could win new customers while guaranteeing they continue to retain their existing market share.

As a consumer in a Guadalajara shopping center asked Milenio, “Where will I buy my gasoline, from someone who sells it for 10 pesos or someone else who sells it for 18?”

For drug cartels, the market for stolen fuel has been growing steadily more profitable over the years, and it is a market that has remained stable due to corruption within Pemex, said Correa Cabrera, who explained that petroleum theft would not be as extensive if it were not for people on the inside who do nothing to prevent it.

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The practice is well established. At the start of the war against the narcos, in 2006, there were 200 illegal pipeline taps discovered. The number had soared to more than 5,000 by 2015.

According to estimates by the Senate, gasoline and diesel thieves earned US $238 million from their activities in 2011. By 2014 that figure had reached nearly $1.12 billion.

The thefts are not carried through pipeline taps alone. Tanker trucks are also targets. Sales, meanwhile, range from pre-filled, one-gallon containers retailed directly to customers to supplying gas stations with deliveries by tanker.

Correa Cabrera describes the operations as mafias that operate like a large corporate organization, with different divisions for kidnapping, trafficking in migrants and other crimes. Stealing petroleum, however, requires special management, in which the participation of Pemex employees cannot be ruled out, he said.

The federal government last year toughened penalties for petroleum theft with jail terms up to 25 years. But the move has not served to arrest the crime.

The gasolinazo, it appears, will do the opposite.

Source: Infobae (sp), Milenio (sp)

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