Mexican fuel shortage worries industry as lines grow in capital

MEXICO CITY (Reuters) – Gasoline shortages in Mexico sparked by a government crackdown on fuel theft prompted warnings from business leaders that industries like carmaking will suffer if the problem persists, while lines at gas stations grew in the capital on Wednesday.

People walk past a gas station closed after running out of fuel in Mexico City, Mexico, January 9, 2019. REUTERS/Daniel Becerril

The drive to eradicate a crime that has drained billions of dollars from state coffers is President Andres Manuel Lopez Obrador’s first major move against chronic corruption since taking office on Dec. 1.

Criminal groups have been tapping pipelines and stealing tanker trucks laden with diesel and gasoline in the oil-producing country for years, often operating with apparent impunity.

However, by closing off pipelines and refineries while it tracked leakages, the government has triggered shortfalls and long lines at gas stations in several states, angering consumers and risking economic damage.

Lopez Obrador said fuel theft has dropped to the equivalent of 27 truckloads a day from “over a thousand” since he sent the army to police installations of state-oil company Petroleos Mexicanos (Pemex) last month. On Wednesday he vowed to hold firm in the fight.

“It would be easy to open the pipes and say: ‘the situation is normal again,’ but we will not knowingly allow the theft to persist … We’ll resist all pressures, whatever they are,” Lopez Obrador told a news conference.

Still, concern in industry is growing.

Juan Pablo Castanon, head of the powerful Mexican business lobby CCE, told Milenio television bottlenecks in fuel supply were starting to affect manufacturing.

“Not just workers in their movements to the workplace, but also production plants, particularly in the auto industry, which isn’t able to get enough fuel for new vehicles,” he said.

Alfredo Arzola, director of the automotive industry hub in the state of Guanajuato, a major carmaking area hard hit by the fuel problems, told Reuters assembly plants could begin idling within a week if no fix was found.

“Investments are being put at risk,” he said.

In Mexico City, lines of drivers snaked from gas stations making panic purchases out of fear supplies would run low, despite assurances from Lopez Obrador there was plenty of fuel available in the country.

Ernesto Villanueva, 34, said he had driven into town from the suburb of Iztapalapa to search for fuel on Tuesday night.

“It’s a bit easier to get at night, but last night already the gas was finished in that area. I’m telling my teammates to come here, buy a jug and we can stock up.”

Additional reporting by Anthony Esposito and Marianna Parraga; Editing by Tom Brown