Economic security

Illicit Trade in Oil & Fuel: an Emerging Global Policy Challenge

Illicit trade in any of its forms—alcohol, tobacco, pharmaceuticals, diamonds, timber, ivory and oil—sits at the nexus of two social-economic disorders that challenge global stability.

Firstly, the global economy remains on unsteady footing, and governments are scrambling to stimulate growth, employment and investment in infrastructure and other public programs.

Secondly, the upswing in criminal activity and lawlessness—in some cases punctuated by terrorist acts—has left us all questioning our security for this generation and the next.

Illicit trade exacerbates both problems and presents governments with an immediate challenge to address their pervasive and significantly negative impacts on our economy and our civil society.

Economic Impacts Deriving from Illicit Trade in the Petroleum Sector

Every year, an estimated $133 billion of fuels are illegally stolen, adulterated, or defrauded from legitimate petroleum companies. Roughly 30% of Nigeria’s refined fuel products are smuggled into neighboring states and pipeline fuel theft in Mexico is at record levels.

This illegal activity creates an enormous drain on the global economy, crowds out billions from the legitimate economy and dislocates hundreds of thousands of jobs.

Equally significant are associated fiscal losses from tax evasion and subsidy abuses that deprive governments of revenues for vital public services and force higher burdens on taxpayers—especially in developing countries where petroleum industry royalties and tax payments finance development.