Mexican Drug Cartels Now in the Oil Business

Things are tough all over — even for Mexican drug dealers.

Feeling the pinch thanks to the crackdown by Mexican President Felipe Calderon, and having lost millions of dollars in seized contraband, Mexico’s drug cartels are having trouble maintaining their bottom line. Facing difficulty in moving their product north, they have to sell more of it domestically. But the trouble there is that Mexican customers refuse to pay the high prices that the traffickers are used to getting from Americans and Canadians.


So what’s a drug lord to do? Answer: Diversify.

The Mexican cartels have already expanded into prostitution, extortion, kidnapping, and immigrant smuggling. Now, they’re dabbling in … the oil business?

Move over, J.R. Ewing. Make room for Joaquin “El Chapo” Guzman. There is no evidence that the leader of the Sinoloa drug cartel — a billionaire businessman who came in at No. 701 on Forbes magazine’s list of the world’s wealthiest people — was involved in this latest scheme. But anything is possible. Stranger things have happened south of the border.

And these events are stranger than most. According to the U.S. Justice Department, American oil refineries bought millions of dollars worth of stolen oil last year siphoned from Mexican government pipelines and smuggled north across the border. Here’s how it works: Drug gangs tap into pipelines in remote regions of the country — or sometimes even build pipelines of their own to divert the flow — and siphon off hundreds of millions of dollars worth of oil.

Then all these poachers need is a market. And, as with illegal drugs and illegal immigrants, there’s a market up north. Apparently, the lure of cut-rate crude is tough to resist for some. At least one U.S. oil executive, who was apparently at the receiving end of the scheme, has pleaded guilty to conspiracy. Donald Schroeder, president of Houston-based Trammo Petroleum, agreed to pay a $2 million fine and still faces the possibility of jail time when he is sentenced in December.


Meanwhile, the U.S. Homeland Security Department intends to return $2.4 million to Mexico as a result of a bi-national investigation. Authorities expect more arrests and more seizures of stolen oil. No telling how deep this well goes.

It’s a daring stunt. But given what drug dealers consider a normal day at the office, stealing oil must be a walk in the park.

Not surprisingly, the man who has been leading the crackdown on the cartels is hopping mad over the oil theft. After all, in Mexico, oil is a natural resource. It’s a nationally owned product. And so Calderón sees this kind of crime as an offense against the state and a theft of what he called Mexico’s “national heritage.” It’s also an obvious a slap against Calderón. Imagine stealing oil, selling it, and then taking the profit and using it to buy guns to fight the same government you’ve just robbed.

This scheme is also a sign of just how resourceful and resilient the drug cartels really are. Clearly, these characters aren’t just ruthless. They’re also as crafty as they come. They are worthy adversaries. And they won’t be easy to defeat. But defeat them Mexico must, with the help of the United States.

U.S. authorities have to do their part in terms of enforcement. They should crack down on drug demand in this country and step up the arrests and prosecutions of gunrunners who help arm drug traffickers. But they should also continue to prosecute to the fullest extent of the law any U.S. citizen who is complicit in this sort of bi-national criminal enterprise.


There is a tendency on this side of the border to blame every criminal venture involving Mexico on the Mexicans, even when there are Americans acting as accomplices. But what’s the point of that? Whether the illicit commodity is drugs, illegal immigrants, or now hijacked oil, the moral is the same: If you dry up the market on this side of the border, you can put the bad guys out of business.

Otherwise, you’re just wasting time, energy, and resources for the sake of photo-ops — while the criminals go off in search of new customers, fresh markets, and willing associates. And you can bet, they’ll always find all three.


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