"The growing strength and organization of criminal gangs, including their growing alliances with large Mexican [drug trafficking organiza[JUMP]tions], has changed the nature of midlevel and retail drug distribution in many local drug markets, even in suburban and rural areas," says the National Drug Intelligence Center report.

"As a result, disrupting illicit drug availability and distribution will become increasingly difficult for state and local law enforcement agencies."

According to the report, the Mexican connection benefits U.S. street gangs, as they are able to buy drugs directly from the cartels, which enables the gangs to flood the streets with less expensive drugs by cutting out midlevel wholesale dealers.

As an example, according to the report, members of the Chicago-based Latin Kings gang in Midland, Texas, now purchase cocaine directly from Mexican traffickers for $16,000 to $18,000 a kilogram. Those drugs then can be shipped directly to Chicago, where it would have cost the gang nearly $30,000 more to purchase a kilogram of cocaine from a midlevel wholesaler.

"With this savings," the report says, "the gang undersells other local dealers who do not have the capacity to buy large wholesale quantities directly from Mexican [drug trafficking organizations] in Mexico or along the Southwest border."

The street gangs also prove useful to the cartels. The report says drug traffickers use gang members in Mexico and, to a lesser extent, in the U.S., especially in Texas and California, to protect smuggling routes, collect debts and kill rival traffickers.

"Gang members who are U.S. citizens are a particularly valuable asset to Mexican [drug trafficking organizations] because they can normally cross the U.S.-Mexico border with less law enforcement scrutiny and therefore are less likely to have illicit drug loads interdicted," the report says.

Despite the worries of U.S. law enforcement, a vast majority of the violence still occurs on the Mexican side of the border. In 2009, according to unofficial estimates, as many as 8,000 people in Mexico, including 800 police and military officers, were killed as the cartels fought over smuggling corridors and responded to increased attention from authorities.

Most of the violence in the U.S. has been limited so far to cartel members in cities near the southwestern border, including Phoenix, where hundreds of drug-related kidnappings have been reported in recent years. According to the report, the kidnappings are generally the result of a dispute between an individual drug smuggler and a cartel's leadership.

The report says some assaults against U.S. Border Patrol agents are the work of cartel members. Assaults against Border Patrol agents increased 46 percent between fiscal 2006 and fiscal 2008, when 1,097 incidents took place.

Those incidents included the fatal shooting of an agent in Campo, Calif., who had been investigating suspicious activity. Agent Robert Rosas, 30, was fatally shot by an unknown assailant in July while responding to an area notorious for alien and drug smuggling, according to U.S. Customs and Border Protection (CBP). He is survived by a wife and two children.

Law enforcement authorities also reported continuing concerns regarding weapons and tens of billions of dollars in cash destined for the cartels that is smuggled from the U.S. into Mexico across the southwestern border.

Meanwhile, Mexican federal police Thursday arrested that country's so-called "King of Heroin," a powerful drug trafficker suspected of running hundreds of pounds of heroin into Southern California each year. Jose Antonio Medina, 36, nicknamed "Don Pepe," was arrested in the western state of Michoacan and is being held for prosecution.

Also on Thursday, 41 inmates escaped from a prison on Mexico's northern border, and two guards also disappeared. The state government of Tamaulipas said the prisoners escaped in the Mexican city of Matamoros, across from Brownsville, Texas. Most were being held on organized crime charges and drug trafficking.

Mexico said the prison director had been fired but gave no further information.