Oil Theft and Violence in Mexico

Abstract

Around the world, non-state armed actors have been linked to the illegal extraction of energy resources. This research note explores the case of Mexico. Anecdotal evidence suggests that criminal groups have been gaining control of energy infrastructure across the country. At the same time, oil tapping has been directly associated with criminal violence. Yet, there has not been a systematic effort to causally identify the relationship between illegal extraction and criminal violence. In this research note, we use the exogenous variation in international oil prices—as a measure of potential profits—to assess the effect of access to energy infrastructure on criminal-related violence. Our results show that increases in oil prices are associated with higher levels of homicide rates in municipalities with pipelines and in neighboring municipalities. Specifically, a standard price increase during this period is associated with approximately 20% more homicides per year in municipalities with gasoline pipelines. A locality-level analysis suggests a non-linear distance effect. Finally, we also explore criminal fragmentation as the mechanism connecting access to resources and violence. We find that access to pipelines is associated with higher presence of organized crime groups, but not necessarily with more fragmentation.