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How Mexico's war on stolen gas is turning into a war on cash

Criminal gangs have been stealing gas in Mexico for decades, but in recent years, the situation has spun out of control. Putting a stop to corruption requires tracking money flows, which is hard to do in a country where cash is king.

How Mexico's war on stolen gas is turning into a war on cashiStock photo


| by Amy Castor — Editor, Networld Media Group

Gasoline is a hot political issue in Mexico. 

Criminal gangs have been tapping pipelines of Petroleos Mexicano, or Pemex, the state-owned petroleum company, and stealing gas for decades. But in recent years, the problem has spun out of control, resulting in $3 billion worth of gas being stolen last year.  

How do thieves do it? They drill holes into the pipelines to siphon gasoline and diesel. The thefts generally occur at night, and often in rural settings, which aren't well monitored.  

Small time thieves, organized crime gangs and corrupt Pemex employees all have a hand in the game. Once the ill-gotten fuel is obtained, it is typically resold to gas station owners via roadside stands and open air markets. Transactions are largely cash-based, making them difficult to track.  

AMLO's promise

Elected on a platform of stamping out corruption, President Andrés Manuel López Obrador — often called by his initials, AMLO — took office in December after a landslide victory

Since then, he has been raging war on the oil thieves, who in some cases have gotten so fearless that they drill illegal taps under warehouses in big cities and siphon off the entire contents of pipelines. 

The situation has gotten so bad that, in a move to get away from pipelines, the government directed the oil companies to transport fuel in trucks and rail cars at nearly 14 times the cost. But the new distribution systems lagged behind demand, and Pemex had to tell customers not to panic or hoard fuel.

Now AMLO's administration is mulling over a new line of attack — a plan to ban paying for gas or road tolls with cash, according to a source who spoke to Bloomberg

The plan to ban cash at the pump is still up in the air, the source said. It's likely a decision won't be made until the central bank rolls out its digital payments platform CoDi — short for Cobro Digital, which literally means "digital charge." 

The payment system, being built by the central bank Banco de México, known as Banxico, will allow customers to pay for purchases by scanning QR codes with their mobile phones.

Banking the unbanked

Mexico created CoDi to boost its economy and encourage the use of electronic transfers. On the face, the solution almost sounds like a good idea, except for a few major obstacles. 

For one, it requires users (both on the sending and receiving ends) to have bank accounts at one of the banks participating in the system. According to data from World Bank, more than half of Mexicans are unbanked. And many avoid bank accounts, so they won't have to pay taxes on what little income they make. 

Another problem is that cash is king in Mexico, where it is used for the majority of transactions, largely due how many goods are bought and sold in street markets and an illegal drug trade. It's not clear why people who get buy on a small amount of cash each day would even need to set up a bank account. 

As for AMLO, his anti-gas campaign fits in well with his promises for greater financial inclusion. Digital payments are easy to track. If people pay for gas digitally, then it becomes easier to connect the dots and put together a bigger story of who is behind the organized thefts, and potentially stop them in their tracks. 

But the reality of getting 130 million Mexicans — more than half of whom are unbanked — to switch to mobile payments, especially in rural areas, where infrastructure is lacking, and not everyone has a smartphone, could stand in the way. 


Amy Castor

Amy Castor has more than 20 years of experience in journalism and mass communications. In the last several years, she has gotten particularly interested cryptocurrencies, blockchain technologies and other evolving forms of payment. Her work has appeared in consumer and trade publications throughout the U.S., including CoinDesk, Forbes, and Bitcoin Magazine. She is now the editor of ATMmarketplace.com and WorldofMoney.com

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