Mexican Drug Cartels Now in the Oil Business
They are smart, ruthless, adaptive, and deadly. And it will take both the U.S. and Mexico to defeat them.
Things are tough all over — even for Mexican drug dealers.
Feeling the pinch thanks to the crackdown by Mexican President Felipe Calderon, and having lost millions of dollars in seized contraband, Mexico’s drug cartels are having trouble maintaining their bottom line. Facing difficulty in moving their product north, they have to sell more of it domestically. But the trouble there is that Mexican customers refuse to pay the high prices that the traffickers are used to getting from Americans and Canadians.
So what’s a drug lord to do? Answer: Diversify.
The Mexican cartels have already expanded into prostitution, extortion, kidnapping, and immigrant smuggling. Now, they’re dabbling in … the oil business?
Move over, J.R. Ewing. Make room for Joaquin “El Chapo” Guzman. There is no evidence that the leader of the Sinoloa drug cartel — a billionaire businessman who came in at No. 701 on Forbes magazine’s list of the world’s wealthiest people — was involved in this latest scheme. But anything is possible. Stranger things have happened south of the border.
And these events are stranger than most. According to the U.S. Justice Department, American oil refineries bought millions of dollars worth of stolen oil last year siphoned from Mexican government pipelines and smuggled north across the border. Here’s how it works: Drug gangs tap into pipelines in remote regions of the country — or sometimes even build pipelines of their own to divert the flow — and siphon off hundreds of millions of dollars worth of oil.
Then all these poachers need is a market. And, as with illegal drugs and illegal immigrants, there’s a market up north. Apparently, the lure of cut-rate crude is tough to resist for some. At least one U.S. oil executive, who was apparently at the receiving end of the scheme, has pleaded guilty to conspiracy. Donald Schroeder, president of Houston-based Trammo Petroleum, agreed to pay a $2 million fine and still faces the possibility of jail time when he is sentenced in December.
Meanwhile, the U.S. Homeland Security Department intends to return $2.4 million to Mexico as a result of a bi-national investigation. Authorities expect more arrests and more seizures of stolen oil. No telling how deep this well goes.
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Ruben Navarrette Jr. is a member of the editorial board of the San Diego Union Tribune, a nationally syndicated columnist, a frequent lecturer, and a regular contributor to CNN.com.
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15 Comments
1. RightwingHippieChick:“U.S. authorities have to do their part in terms of enforcement. They should crack down on drug demand in this country(…)”
It’s not possible — even the brutal Iranian mullahs and their evil justice/torture machine have not managed to put people off drugs, Iran is the junkie capital of the world.
And the US has tried for years to ‘crack down’ with lots of different approaches, yet we see no results(other than costs and full prisons), so, tell us, what could they possibly do different to make your dream of a drug-free US work?
Sep 3, 2009 - 2:02 am 2. Pajamas Media » Mexican Drug Cartels Now in the Oil Business | Headlines Today:[...] [...]
Sep 3, 2009 - 4:04 am 3. Gary Ogletree:We need to supply our own drugs and oil. And deport every wetback to Mexico.
Sep 3, 2009 - 4:30 am 4. Pajamas Media » Mexican Drug Cartels Now in the Oil Business | GA Publications:[...] [...]
Sep 3, 2009 - 5:54 am 5. EndtheProhibition:“U.S. authorities have to do their part in terms of enforcement. They should crack down on drug demand in this country(…)”
After seventy years of marijuana prohibition it’s obvious that we can’t end the demand for marijuana. But it is possible and easy to end the demand for *cartel* marijuana – and that’s all we need to do to end the thousands of brutal murders they’re committing every year.
We need to demand the right to commercially produce and sell marijuana to adults. By undercutting cartel prices we’ll strip them of their marijuana customers and eliminate two-thirds of their incomes. That’ll end their incentive and ability to continue the brutal murders they’re committing every day.
Sep 3, 2009 - 6:49 am 6. Old Soldier:Guzman sounds like a Joe Kennedy in the making. He leveraged prohibition booze-smuggling into legal importer to owning oil companies to a political “dynasty.”
Look for Senator Guzman then Presidente Guzman in a few years.
Sep 3, 2009 - 8:34 am 7. urbanleftbehind:#6
Thats what #3 and #5, bad cop and good cop, dont want to happen. Thus, let us produce it ourselves and enjoy it before the bureaucrats tax the s*&^ out of it.
Sep 3, 2009 - 9:14 am 8. urbanleftbehind:Also, 6,
Dont forget to update future Presidente Guzman’s bio with “for-profit surgical and other medical care provider” following the passage of Obama care in the U.S.
Sep 3, 2009 - 9:18 am 9. Steve DeMarcus:If we were drilling our own oil in this country there would be no market for this. Our democrats and the EPA and the environmental lefties have crippled our country and even worse Obama is in with this crowd. We need to start drilling and developing oil shale here in the United States.
Jobs would almost instantly increase and with all the satellite industries would do much more than any stimulus package at any cost that the congress comes up with. Start in Alaska where I am sure they won’t mind one bit.
Sep 3, 2009 - 10:25 am 10. Free Quark:Legalize drugs. That will take the crime out of it. What we have now is Prohibition all over again. Since repeal, we haven’t had any liquor sellers shooting it out in the street.
There’s a lesson to be learned here.
Sep 3, 2009 - 10:40 am 11. Jim Baker:We don’t legalize recreational drugs because, like cigarettes and alcohol, their use can hurt other people. Just making them legal doesn’t eliminate that situation. It just tolerates drug impairment, and I say impairment because the object of recreational drug use is impairment. Do we then have to pass laws to keep drug users from driving, to make them smoke outside in designated drug use areas, and set a legal age for acceptable drug use, this followed by laws to prevent legal users from supplying minors? We already have huge problems trying to enforce the alcohol and tobacco consumption restrictions, we already have, just to minimize the collateral damage caused by abuse of those drugs. And, does anyone really believe they will get recreational drugs cheaper if they are legalized? The governments will immediately hike the prices back up through excessive taxation. Silly and weak minded drug users will still pay the same exorbitant prices for their, feel all better now, drugs. That is enough of this ‘no harm’ crap about legalizing marijuana and other fine recreational drugs. Since we do have lots of liquor users shooting it out in the street, what is this lesson #10?
Sep 3, 2009 - 12:29 pm 12. ajacksonian:The lesson is that we do not have organized crime having shootouts in the streets, moving into local and state government to corrupt it, that we don’t have bootleg liquor poisoning people, and that the problems of liquor abuse were overblown by moralists looking enforce morality via Public Law.
It doesn’t work.
If the worry is about public safety then pass laws on public safety. Driving while impaired would make a good first start on the effects of drugs on driving. Ditto aircraft. Specific problems that have definite public safety issues can and should be addressed.
Our prohibition of various narcotics has created one Narco-Terrorist group that has taken decades to curb and is still not eradicated, and to a great social and physical cost to Colombia. Likewise Hezbollah has gotten into the cocaine trade from the Tri-Border Area of S. America shipping drugs by the ton to such places as St. Petersburg… in Russia. The Red Mafia has one organization that stretches from the Golden Triangle, has its own airfleet, and has leveraged that into the natural gas business now being run from Kiev. Even with its master operator in jail, his number 2 man is expanding the business, which includes such things as white slavery, international prostitution, and trying to get its hands on uranium to sell to folks like al Qaeda as the Europeans have documented. One international gun runner makes a fortune via the Bekaa Valley trade that his family has controlled for generations, and with him in the federal slammer his organization somehow continues to run drugs, guns and much else. The Taliban and Hezb-i-Islami both take in enough from the Afghan drug trade to run operations, with the second one stretching to Europe as it was behind the London Ricin plot. I would estimate that if the drug trade could be put under legal controls, we would get a handle on drying up at least three transnational terrorist organizations responsible for hundreds, if not thousands of deaths per annum globally.
Yes we would have a social cost in the US.
We have liberty to address that. As it is we give up our liberty for illusive security, and crowding our jails with small time users and pushers. When I see terrorist operations able to fund the purchase of SAMs and other high tech equipment with illegal narcotics funds, I see a massive problem in the offing as ‘police’ are not set up to deal with heavy weapons. Mind you, it would help if we could get some help from international banking, but these operations are so large and so diverse that it is impossible to even TRACK some of these deals. The Bank of NY penetration discovered in the 1990’s had only low level operators convicted, and the entire system used to commit those crimes was so complex that the combined FBI, MI-5 and INTERPOL have been unable to unravel it.
So we get a few social problems that need to be dealt with at a local level? Yes, we do. We are an inventive people, we have liberty to help make good decisions, and perhaps adults should stop acting like children and expecting government to save them from every ill and start talking WITH children to inform them of the real ills of these things and not try to go overboard with hyperbole. As it is the problems that showed up in the streets of Chicago under Capone in the ’20s are now global and showing up worldwide and intensifying over time to the point where decent sized Nations cannot handle the problem of transnational organized crime and transnational terrorism. But then a few people driving while high is a great bane… stopping it at the cost of hundreds dead, governments corrupted, our international banking system becoming untrustworthy… why those are just prices we must pay for that little bit of good, now, isn’t it?
Sep 3, 2009 - 5:07 pm 13. Jim Baker:How do you get from the legaliztion of recreational drugs to the end of international organized crime rings. Criminals are criminals and they won’t become good citizens because you make a few illegal drugs legal. That was the thesis of this article. The problem isn’t whether the drugs are legal, it is whether or not people use them. I am not financing drug cartels by making the possesion of drugs a crime, but people who use these drugs do guarantee the cartels a reward for their trafficking.
Sep 3, 2009 - 7:58 pm 14. Mike2:A good point was made that the criminal punishments for the users could be reduced to save government the ridiculus expense of imprisonment of the merely stupid. Unfortunately, history shows that the money saved would never be returned to the taxpayers and would instead be spent in ways that have often proven to be even more useless, like drug counciling.
As you may have guessed, I have no sympathy for people who deliberately abuse their bodies and finance terrorists by purchasing and ingesting toxic chemicals to get a little bit of feel good impairment.
What it will take, Mr. Navarrete, is to legalize certain drugs in this country, give heroin away for free and make ourselves energy independent by drilling here and constructing nuclear power plants.
Sep 3, 2009 - 8:43 pm 15. Bill Williams:I’ve seen enough episodes of “Intervention” and come across enough real-live people living excuse-driven lives because of their “recreational drug use” to tell me that legalizing drugs is not the answer.
Sep 9, 2009 - 2:07 pm