World

Drivers running on empty say Mexico must fix fuel shortage blamed on massive theft

Bloomberg

Hugo Ramirez Sanchez walked an hour to find an open fuel station in the Cuauhtemoc neighborhood of Mexico City, after his car ran out of gasoline. Jorge Mendoza had a stressful 50-minute drive from his home on an almost empty tank.

Across central Mexico, drivers are running on empty or lining up for hours at service stations, as the government’s efforts to rein in fuel theft compound a nationwide gasoline shortage. More than one-fourth of Mexico City’s 400 gasoline stations are facing problems, Mexico City Mayor Claudia Sheinbaum said in a Twitter video, while assuring viewers that supply would normalize Wednesday. The states of Mexico, Hidalgo, Jalisco, Michoacan, Guanajuato and Queretaro are among the worst affected.

“The government is saying it’s not a shortage, but this is a shortage,” said Mendoza, gesturing at the two lines of cars snaking down the street from the Pemex-branded fuel station. “Now I am going to be late for my clients and maybe they won’t call me back.”

President Andres Manuel Lopez Obrador has sought to curb rampant gasoline theft, which costs state-owned Petroleos Mexicanos about $3.5 billion a year. But his strategy has caused major distribution delays at a time of high seasonal demand.

To stop the theft, the government has shut and increased surveillance of pipelines, relying on slower-moving — and more expensive — tanker trucks to transport fuel across the country. It’s also deployed the army to Pemex fuel terminals and refineries, which are already operating at about a third of their capacity due to prolonged maintenance cycles and under-investment. The country also lacks fuel storage infrastructure.

The distribution issues have exacerbated bottlenecks at Mexico’s ports, where a record number of fuel tankers have been waiting to unload their cargoes following weather-related ports closures over the past several months.

Tanker ships transporting at least 8.3 million barrels of gasoline, diesel and jet fuel waited to unload outside of the ports of Pajaritos, Tuxpan and Tampico late Tuesday, with some there since Dec. 23, shipping reports obtained by Bloomberg show. Demurrage, or fees for detaining vessels beyond the scheduled time, typically costs about $22,000 to $24,000 per day.

The fight against illegal pipeline taps by fuel thieves known as “huachicoleros” will take some time, and gasoline supply will begin to normalize bit by bit, Lopez Obrador said in an interview with El Financiero Bloomberg TV late Tuesday. “We have enough gasoline, there’s no problem, it’s a matter of distribution,” he said.

Many Mexicans, however, are running out of patience. “Why didn’t the president consult citizens about this plan like he’s done with everything else?” said Mendoza, shaking his head. “This is not panic purchasing. If I don’t fill up my car right now, I’m screwed.”