The WSJ suggests that this is a symptom of cartels fighting as enforcement shrinks the drug pie, while an industry expert wonders if Mexico will go the Nigeria route, which raises the scary possibility that successfully reducing drug trafficking could create even more instability in Mexico and in U.S. petroleum markets.
"The cartels are fighting for pieces of a shrinking pie. When you have no pie left...then you have to look for another illegal business to pay your people," said Ariel Moutsatsos, adviser for international affairs for the attorney general of Mexico.
Industry experts warned of the risks to Mexico from unchecked oil-smuggling. "You could eventually end up in the same situation that you have in Africa," said Wayne Wilson, managing director with Protiviti, a risk-management consulting firm. In Nigeria, violent gangs tap into oil pipelines and raid oil company facilities to steal hundreds of millions of dollars worth of oil each year."
If this is really what's taking shape in Mexico, then we may soon long for the good old days of drug cartels, but I think it's worth considering whether we're actually seeing anything new. There have been networks of diesel thieves near the border for years.
And it may be that more of the oil we buy is stolen than we realize. Oil tankers change hands as many as 300 times at sea, so there's no good way to track the ownership of oil--yet. And I've also been told by academics that as much as 10 percent of the oil coming into the port of Houston may be stolen. (Readers, feel free to diss this totally unverified information.)
For me, the question is not whether to start worrying, but how. Oil smuggling is, like oil futures market rigging, currently invisible but potentially very powerful. The trick is to start measuring it, and tracing out the networks of trade. If I were a policy maker, I'd ask the Department of Energy to start publishing an annual report on oil smuggling.
And for what it's worth, Mexico is not the only major US oil supplier with something funny going on around its pipelines. The Economist reports that a mysterious arcadian bomber has attacked an Encana pipeline in British Colombia six times in the past 10 months.
(Photo Credit: http://www.flickr.com/photos/kenjonbro/2824471343)