The MasterBlog: United States: Rising Prices, Rising Fuel Thefts
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Friday, May 30, 2008

United States: Rising Prices, Rising Fuel Thefts


Strategic Forecasting, Inc.
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UNITED STATES: RISING PRICES, RISING FUEL THEFTS

Summary
High oil prices are making their mark in the criminal world, as more incidents of fuel theft are being reported. While stealing fuel is certainly not a new criminal enterprise, the risk of such thefts will increase as prices increase.

Analysis
The effects of high oil prices are not just hitting the economy; they are affecting the criminal world as well. Police are reporting more incidents of all kinds of fuel theft, ranging from siphoning gasoline from car tanks to hijacking fuel tankers to the organized theft of crude oil in West Texas. The FBI has established a new oil-theft task force to combat this type of crime, which recently has become very lucrative. Stealing fuel certainly is nothing new. But as prices increase, the risk of theft also will increase.

Since 2005, there have been nine fuel tanker thefts. Five of those incidents have taken place just since the beginning of 2008. A recent incident happened in Houston, Texas, on May 5, when a driver was held at gunpoint while the assailant hijacked the truck. On May 7, the truck was found --  empty. Most of these incidents have involved diesel fuel, which is more expensive than regular unleaded gasoline. Along with the fuel tanker thefts, smaller thefts occur daily and comprise a far greater proportion of the total fuel stolen nationwide in the United States.

Cargo theft has long been an issue for transporters. Expensive cargo -- including items such as televisions, computers and pharmaceutical products -- is routinely lifted by highway gangs, who might spend several days preparing their attacks. These gangs tend to strike targets as they are leaving distribution centers, are parked at rest stops or while the driver takes a break at a truck stop. A truckload of electronics might be worth several million dollars, and pharmaceutical product shipments can top $100 million; fuel tankers, in comparison, are much less profitable. The value of fuel tankers stolen in 2008 ranged from $10,000 to $20,000.

But what they lack in value, fuel tankers make up for in easy access. Compared to computers, televisions and other retail items with bar codes, fuel is much more difficult to track once it is stolen. The trailer is the only distinguishable attribute that police have when pursuing stolen fuel, because once the fuel is emptied into another tank, it is untraceable. Some trucks might be equipped with Global Positioning Systems or high-tech tracking devices -- but the valuable cargo is in the trailer, not the truck. A thief with his own truck can switch the trailer and be on his way without technological hindrance.  Fuel tankers are also far more plentiful and easier to find than trucks with million-dollar loads, so thieves need not spend days of surveillance to find what they are looking for. Simply waiting in a gas station parking lot or outside a refinery will sooner or later yield a target. Fuel is also easier to unload once it is stolen, especially if there are existing arran
 gements with a purchaser.

So far in 2008, about 17,000 gallons of fuel have been stolen in tanker hijackings -- a fairly modest amount. But smaller fuel thefts happen all the time and often go unreported, because the victims do not even realize what has happened. Police across the country are reporting levels of smaller-scale fuel thefts that have not been seen since the shortages in the 1970s. Thieves are siphoning fuel out of cars parked along the street or out of trucks parked at rest stops, grabbing 20, 50 or 80 gallons at a time depending on the vehicle. Because of their larger tanks, sport utility vehicles are targeted more often than smaller cars. If a vehicle has a locking fuel cap, thieves will simply drill a hole in the fuel tank and empty it from underneath the car. One thief in Pennsylvania outfitted a trailer with pumps and tanks and could steal up to 1,000 gallons of gasoline per trip from underground tanks at gas stations. Police eventually found the trailer, but the person behind it is
 still free. It is unknown how much fuel has been stolen by siphoning, but it is safe to say that it far outpaces the amount taken in the higher-profile tanker thefts.

It is hard to imagine that thieves like the one in Pennsylvania are finding uses for all that fuel by themselves. Behind the increase in fuel thefts is most certainly a black market of some kind. Gas station managers looking to earn a little more than the average profit of $0.02 per gallon might be willing to coordinate with a fuel theft ring, purchasing the stolen gasoline or diesel at a lower price and pocketing the difference. The thieves could also be selling the fuel directly to construction sites or companies that operate a large fleet of automobiles. However they are doing it, their activities appear to be organized and deliberate. The high price of gasoline and diesel has created a demand for cheaper fuel on the black market, and these people are exploiting it.

Gasoline and diesel are not the only energy commodities that are being stolen. On March 24, the FBI announced that it will be opening its first oil-field theft unit in Midland, Texas, after 600 barrels of crude oil were stolen in one night. As the price of oil goes up, the incentives to steal it also go up. Thieves are also putting more effort into hiding their endeavors by purchasing one well and then attributing stolen oil to its production so that they can then sell it on the market without raising suspicion.

Oil theft occurs all over the world and is a constant issue for countries such as Nigeria, India and Iraq. Pirates in the Gulf of Aden will hold oil tankers hostage in hopes of cashing in. Chinese pirates used to steal oil tankers, take them into port near Vietnam, repaint them and send them on to the import terminals as "different" ships. Similarly, gasoline thefts are occurring all over the world. In the United Kingdom, increased security measures are being implemented at gas stations to prevent people from driving off without paying. In South Africa, gangs will siphon diesel from busses and resell the fuel to truck drivers looking to cut their transport costs.

In the United States in 2005 and 2006, when fuel tankers were reported stolen, and the reports were sent to the FBI, and the Joint Terrorism Task Force got involved. Back then, hijacking a fuel tanker was perceived as a terrorist act because the vehicle was essentially a massive portable bomb. While this still remains a threat and the FBI is still involved with investigating fuel tanker hijackings, it is clear that the motives behind these thefts is economic gain, and the FBI is more focused on organized crime rings. The fuel inside these tankers has become an expensive commodity; selling the contents brings far more benefits than blowing them up.

As the price of oil, gasoline and diesel continues to increase, thieves will continue to have an incentive for coming up with ways to steal fuel, and consumers will have more of an incentive to buy stolen fuel -- at a discount. No doubt people are getting rich off of the rising price of oil -- and not just the Saudis.


Copyright 2008 Strategic Forecasting, Inc.



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