Treasury sanctions CJNG fuel-smuggling ring as California gas tax hits 63.4 cents
The U.S. Treasury sanctioned two Mexican nationals and nine companies Tuesday for running a multimillion-dollar cross-border fuel-smuggling operation tied to the Jalisco New Generation Cartel. OFAC and FinCEN moved together. Treasury Secretary Scott Bessent said the cartels are pushing past narcotics into fuel to fund themselves, and every stolen gallon that crosses the border undercuts the jobber down the road who paid rack for his.
This matters to anyone selling legal product. Smuggled crude and refined fuel that dodges tax and duty competes on price with supply that carries the full load of both. The sanctions won't shut the pipeline overnight, but naming the front companies gives banks and counterparties a reason to walk away from the cash.
California's 63.4 cents
California's gas tax climbed to 63.4 cents a gallon with its latest increase, pushing the state's fuel taxes past 63 cents. Operators there already knew it was coming. It still lands on the street price, and it widens the gap with neighboring states that truckers and cross-border shoppers notice.
For a c-store running thin fuel margins, a higher tax base doesn't help the box. It raises the pump number customers stare at while you make your money inside on coffee and snacks. Volume-sensitive sites near the Nevada or Arizona line could feel some pull.
Fourteen straight draws
The SPR recorded its 14th consecutive weekly draw for the week ended June 26, per EIA's Weekly Petroleum Status Report out this morning. Fourteen weeks of pulling barrels out of federal storage is a long stretch, and it leaves less cushion if something disrupts supply this summer.
Propane tells a calmer story. U.S. inventories posted a smaller-than-expected build but sit well above seasonal levels, with production easing from its early-June highs. For propane marketers that means comfortable stocks heading into the back half of the build season, though the eased production is worth watching if summer demand firms up.
Ohio consolidation
Duncan Oil bought two c-stores and the fuel business of a fellow Ohio retailer, and President Ryan McDaniel called it the company's largest acquisition ever. Small chains keep getting rolled into bigger regional operators who can spread fixed costs across more gallons.
Fleming Brothers Oil, meanwhile, is exiting the convenience channel entirely. Two data points don't make a trend, but the direction has been steady for a while. The operators with scale keep buying, and the ones without it keep looking for the door. If you run a handful of sites, this is the market you're pricing your own business against.
What to watch
Whether the OFAC action actually chokes the cartel fuel revenue or just reshuffles the shell companies. Enforcement like this tends to force new fronts rather than end the trade, so watch for a second round of designations.
On price, crude eased this week and gasoline is holding near $2.90 wholesale, with the SPR draw and elevated propane stocks pulling in different directions. Watch next week's WPSR for whether the drawdown stretches to 15. And watch California's street prices to see how fast the higher tax shows up at the pump versus getting absorbed for a cycle.