Mexico's Drug Cartels are now threatening Mexico's oil industry

Soldiers stand guard after a fuel theft ring was broken up. Reuters. 

Mexico's Drug Cartels are now threatening Mexico's oil industry, stealing $1 billion a year in fuel. Reuters. Fuel theft is a large threat to Pemex, Mexico's state oil company, which makes $52 billion a year and accounts for 8% of the Mexican economy and one fifth of government income. The Cartels are interested in oil and fuel theft due to the lower risks involved and have been quite aggressive. Threats, kidnapping and murder of oil workers are common place with oil workers being given the same deal made famous by the cartels, "plata or plomo", "silver or lead". The thefts and threats have left the Mexican oil industry in shambles making much needed investments and improvements impossible and causing refineries to lose millions of dollars. The method of theft, placing taps on fuel lines, alone costs the government millions of dollars to fix. 

My Comment:

Very interesting and disturbing article from Reuters. I have long said that Reuters is one of the few actual news organizations left. Their reporting tends to be excellent and this long form article is a great example. If more news organizations made these kinds of reports, especially on a subject as neglected as the Mexican Drug War, they would go a long way to regaining some of their respect and prestige. 

It is not surprising that the Cartels are expanding to new sources of income. They have always dabbled in other things, such as kidnapping and general corruption, but this is a bit bigger than what they have already tried. Taking so much money out of such a critical part of Mexico's economy is pretty huge. Still, it makes a lot of sense for them to do so, diversity in income is usually a very good idea for anyone. 

Why would they focus on oil, and not something else? I think part of it is due to how hard it is to defend against. It's very hard to defend oil pipelines and fuel trucks as there are not enough guards to go around. And when you are threatening and killing oil employees it's easy to get them to look the other way. It's fairly easy money. It's a very low risk, high reward source of income for them and it's almost surprising that they haven't done this from the start. 

I also think that they may sense that the wind is blowing against the drug business. Donald Trump is obviously very focused on border security and his Attorney General Jeff Sessions is famously focused on the war on drugs. I am guessing they realize that they might have a lot less profits from drugs as the wall goes up and drug enforcement increases. With their main source of income under threat they will try and diversify. 

With the oil industry under threat, Mexico's already fragile economy could collapse. Their economy is already under threat due to America renegotiating NAFTA, deporting illegals and warning against tourism there. Their country is also generally incompetent and corrupt which always hurts the economy. 

I wonder if the cartels are starting to take some inspiration from ISIS. Much like the cartels, ISIS made a ton of money from stealing and producing oil. Though ISIS wasn't able to hold onto their territory, the cartels would have better luck. The whole world was attacking ISIS and destroying their oil trucks. The cartels only have each other and the government to compete with. Though I do believe that stealing oil and fuel isn't something new, just the scale of the operations.  

The drug cartels are a huge threat and I think there is a small chance that they could take over the government of Mexico itself. They are already one of the most profitable groups in the country and it looks like they are trying a hostile takeover of the state run oil company. Their actions against Pemex could cause the company to collapse or even be taken over by the cartels. If that does happen, it could be enough to push the Mexican government over the edge and could even fall under the control of the cartels. If that happens it's a whole new ball game in Mexico.