The Aftermath of Mexico's Fuel-Theft Epidemic: Examining the Texas Black Market and the Conspiracy to Trade in Stolen Condensate.

Authors

Luke B. Reinhart

Abstract

Organized crime has infiltrated the oil patch, creating a theft network with an annual value of $2–$4 billion. Over the past decade, Mexican drug cartels have plundered mass amounts of natural gas condensate produced by Petróleos Mexicanos (Pemex)—the governing Mexican agency for production and export of hydrocarbons. The Mexican government has not sat by idly. Pemex’s production losses have skyrocketed from $300 million, between 2006 and 2011, to an estimated $585 million in 2013 alone. Considering derivative costs associated with these thefts, Pemex’s annual losses reach into the billions. Diversified and driven by profits derived from the United States black market for stolen fuel, the cartels have remained undeterred despite Mexico’s equally diversified efforts to defend its “national patrimony.” Pemex has turned to United States courts for recourse, bringing with it theories of conspiracy and conversion. Pemex has filed three actions in the United States District Court for the Southern District of Texas since 2006, naming several oil and gas tycoons as defendants and alleging an overarching conspiracy to purchase $300 million in stolen condensate. Mexico’s financial struggles and inability to guard against fuel theft pose a direct threat to United States economic stability and national security, increase risks associated with United States investment, and spawn liability exposure for United States refineries as innocent end-users of stolen fuel. Given the growing trends in fuel theft and the Mexican government’s inability to reverse that trend in its own fields, there is no foreseeably effective stopgap on the horizon. Refineries located in targeted states, including Texas, face significant financial liabilities associated with purchasing stolen condensate. Without sufficient protective measures end-users could potentially forfeit multi-million-dollar purchases or damages mirroring those purchases.

Publisher

St. Mary's University School of Law

Recommended Citation

Luke B. Reinhart, The Aftermath of Mexico's Fuel-Theft Epidemic: Examining the Texas Black Market and the Conspiracy to Trade in Stolen Condensate., 45 St. Mary's L.J. (2014).
Available at: https://commons.stmarytx.edu/thestmaryslawjournal/vol45/iss4/4