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story.lead_photo.caption A man with a container joins the line at one of the few gas stations open Tuesday in Mexico City after the government’s decision to curb pipeline deliveries led to fuel shortages around the country.

MEXICO CITY -- One of the world's biggest oil producers is facing a man-made crisis: Its gas stations are running out of gas.

There are mile-long lines at filling stations across central Mexico. In some states, public transportation has been halted. President Andres Manuel Lopez Obrador, facing his first major challenge, has urged the country not to panic.

But it was Lopez Obrador's war on fuel trafficking that led to the current crisis -- a fight against organized crime and corruption that has already proved complicated.

For years, Mexico has lost billions of dollars to fuel theft. Cartels hacked into pipelines each night, and corrupt employees of the country's national oil company, Pemex, helped siphon away even more fuel from Pemex installations, the government said. Last year, Mexico lost an average of 60,000 barrels of fuel to theft per day, according to Etellekt, a risk consultancy that studies the phenomenon.

As Lopez Obrador began his crackdown on fuel theft this week, he directed the government to shift the transportation of petroleum away from pipelines, an attempt to protect the many gallons stolen by people using hammers and buckets. Instead, the government began using trucks and rail cars to transport fuel, often escorted by soldiers and police. That distribution method has proved to be slower and less reliable.

"There is enough gasoline in the country," Lopez Obrador said to reassure the country at a Wednesday news conference. "But we cannot use the pipelines because there are networks that were created to steal gasoline, alternate networks."

It could be a politically costly battle for Lopez Obrador, as motorists expressed frustration after having to line up for hours, in some cases, to fill their tanks. Some stations have imposed 2.5- to 5-gallon limits on purchases.

Taxi driver Raymundo Cabrera Diaz had waited for an hour at a downtown Mexico City gas station and was running on empty as he reached the pumps.

"I haven't got anything; I made it here by a miracle," Cabrera Diaz said, motioning at his gas gauge. "Fuel theft had to be fought, but this is affecting the general public, drivers, people getting to work."

In the state of Guanajuato, The Associated Press reported 84 percent of gas stations were closed.

"We have already begun to have some concerns, calls, anguish, especially from companies in the [states of] Queretaro, Guanajuato and Jalisco, which are having supply problems and where production plants are being affected," said Juan Pablo Castanon, the head of Mexico's largest chamber of commerce, in an interview with Milenio, one of the country's biggest newspapers.

Still, security experts have praised Lopez Obrador's willingness to take on fuel theft, which was largely ignored under previous administrations as the problem spiraled out of control.

"We have a network of pipelines that are vulnerable to organized crime and by the corruption in the government. Previous administrations tolerated this for years," Ruben Salazar, the director of Etellekt, said in an interview. Salazar called Lopez Obrador's crackdown "an achievement" but said the administration has done a poor job of communicating its plans, failing to articulate a long-term vision for defeating the powerful fuel theft cartels.

He added one of the reasons for the gasoline shortage is probably because some gas stations had previously been buying stolen fuel on the black market, which has been mostly blocked under the current crackdown.

Some Mexicans were ready to sacrifice to combat the gangs, which have spread murderous violence in once-peaceful states like Puebla and Guanajuato as they fought over turf and customers.

"I think we are prepared to wait for a while in order to combat fuel theft," said Leonel Ivan, a family chauffeur who was also waiting in line to fill the tank of his red minivan.

The problem has been a long time brewing, and past administrations had done little to confront the huge problem: Violent, organized gangs drill an average of about 42 illegal taps into government pipelines every day in Mexico.

The taps often explode or leak, and the gangs often recruit entire neighborhoods to act as lookouts or confront military patrols trying to close the taps or seize stolen gasoline and diesel.

Mexico will have to decide whether to shift gasoline distribution away from its vulnerable pipelines more permanently, perhaps by purchasing a new fleet of fuel trucks. On Tuesday, Lopez Obrador appeared to suggest the pipelines would indeed remain closed for some time.

The other major question regarding Lopez Obrador's crackdown on fuel theft is how criminal groups will respond. Pemex estimates $7.4 billion in fuel has been stolen since 2016, and cartels are unlikely to accept such a loss in revenue without responding. In recent years, some of the country's most dangerous drug cartels have become increasingly involved in fuel theft.

"We need to worry about the safety of the president," Salazar said. "This is a business with a lot of interests, and they aren't going to take this crackdown lightly."

Information for this article was contributed by Kevin Sieff of The Washington Post and by Mark Stevenson of The Associated Press.

Business on 01/10/2019

Print Headline: Mexico cracks down on fuel theft

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