Drivers Running on Empty Say Mexico Must Fix Fuel Shortage

(Bloomberg) -- Hugo Ramirez Sanchez walked an hour to find an open fuel station in the Cuauhtemoc neighborhood of Mexico City, after his car ran out of gasoline. Jorge Mendoza had a stressful 50-minute drive from his home on an almost empty tank.

Across central Mexico, drivers are running on empty or lining up for hours at service stations, as the government’s efforts to rein in fuel theft compound a nationwide gasoline shortage. More than one-fourth of Mexico City’s 400 gasoline stations are facing problems, Mexico City mayor Claudia Sheinbaum said in a Twitter video, while assuring viewers that supply would normalize Wednesday. The states of Mexico, Hidalgo, Jalisco, Michoacan, Guanajuato and Queretaro are among the worst affected.

The distribution issues have exacerbated bottlenecks at Mexico’s ports, where fuel tankers have been waiting to unload their cargoes following weather-related ports closures.

"The government is saying it’s not a shortage, but this is a shortage,” said Mendoza, gesturing at the two lines of cars snaking down the street from the Pemex-branded fuel station. “Now I am going to be late for my clients and maybe they won’t call me back.”

President Andres Manuel Lopez Obrador has sought to curb rampant gasoline theft, which costs state-owned Petroleos Mexicanos about $3.5 billion a year. But his strategy has caused major distribution delays at a time of high seasonal demand.

Distribution Issues

To stop the theft, the government has shut and increased surveillance of pipelines, relying on slower-moving -- and more expensive -- tanker trucks to transport fuel across the country. It’s also deployed the army to Pemex fuel terminals and refineries, which are already operating at about a third of their capacity due to prolonged maintenance cycles and under-investment. The country also lacks fuel storage infrastructure.

Mexico City’s key Tuxpan-Azcapotzalco fuel pipeline has been down after numerous illegal taps, causing further delivery delays, President Lopez Obrador said during his morning press conference on Thursday. He also said that Mexico is producing about 200,000 barrels of gasoline a day.

At least 15 tankers carrying 2.3 million barrels of gasoline, diesel and jet fuel were waiting late Wednesday at the port of Pajaritos to unload, with some there since December 25, shipping reports seen by Bloomberg show. Another 14 tankers with 3.5 million barrels waited to discharge at Tuxpan and seven more carrying 840,000 barrels are at Tampico. Demurrage, or fees for detaining vessels beyond the scheduled time, typically run about $22,000 to $24,000 a day.

Bit by Bit

The fight against illegal pipeline taps by fuel thieves known as “huachicoleros” will take some time, and gasoline supply will begin to normalize bit by bit, Lopez Obrador said in an interview with El Financiero Bloomberg TV late Tuesday. “We have enough gasoline, there’s no problem, it’s a matter of distribution,” he said.

Many Mexicans, however, are running out of patience. “Why didn’t the president consult citizens about this plan like he’s done with everything else?” said Mendoza, shaking his head. “This is not panic purchasing. If I don’t fill up my car right now, I’m screwed.”

To contact the reporter on this story: Amy Stillman in Mexico City at astillman7@bloomberg.net

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Mike Jeffers

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