U.S. authorities report that Mexican drug cartels are now smuggling fuel from the United States back into Mexico, a shift from their previous operations of bringing illegally obtained oil into the U.S. This scheme allows cartels to sell fuel at full price while avoiding taxes. The U.S. Treasury Department estimates that up to one-third of all fuel sold in Mexico may be illicit, resulting in significant tax revenue losses for the Mexican government.
Fuel smuggling has become the second-largest source of income for cartels, following drug trafficking. The Trump administration recently imposed financial sanctions on individuals and firms linked to the Jalisco New Generation Cartel (CJNG) in response to this issue. Treasury Secretary Scott Bessent emphasized the cartels' expansion beyond traditional drug trafficking.
The State Department has identified fuel theft as a threat to legitimate U.S. businesses and the financial system. The smuggling is driven by Mexico's strict fuel import regulations and the price differences between the two countries. Smugglers, known as huachicoleros, bypass licensed importers and sell fuel directly to smaller distributors, avoiding duties.
The operation involves U.S. fuel traders selling fuel to huachicoleros, who then transport it across the border, often mislabeling it. U.S. banks have been alerted to monitor suspicious transactions, resulting in numerous reports of questionable activity totaling over $7 billion. The Sinaloa Cartel and the Gulf Cartel have also been implicated in fuel smuggling activities, with CJNG being the most prominent.
In addition to fuel smuggling, CJNG is involved in timeshare fraud, particularly in Puerto Vallarta, where victims are misled into purchasing non-existent timeshares and are then scammed further by operators posing as law firms. This operation has also been taken over by the cartel.