Mexican Drug Gangs Diversify Into Oil

Smuggling billions of dollars worth of narcotics across the Rio Grande apparently isn't enough for Mexican cartels. In recent years, they have expanded their activities in kidnapping, extortion, people smuggling and, of all things, petroleum siphoning.

The Mexican state-owned oil monopoly Petróleos Mexicanos, or Pemex, estimates some $720 million worth of oil products were stolen from it in 2008, slightly higher than 2007. The robberies have sapped the oil behemoth--the second-largest exporter to the U.S.--for years. But the number of discovered clandestine taps into national pipelines has steadily climbed in recent years, adding to frustrations over falling production at its prize field Cantarell.

"We suspect that some of this could be involved with narcotics," Mexico City-based Pemex spokesman Carlos Ramirez says of the thefts. Police also recently raided Pemex's central offices looking for information involving in-house ties to the black-market trading.

President Felipe Calderón has been trying to crack down on organized crime since he took office in December 2006. His national housecleaning efforts have led drug gangs to hedge risks to their bread-and-butter business by going into other lucrative markets like oil products, says Stephen Meiners, Latin America analyst for Stratfor, a global intelligence firm in Austin, Texas.

"They can't make as much money as they used to make solely on drug trafficking, and it's not like these organizations are going away any time soon," Meiners says. "So in the meantime, they are going to take advantage of a lot of other opportunities that come up. They are really diversifying their business model right now."