A future without petrodollars
An economic transition is taking place boldly on a global basis and tragically not many are aware of this process. Modes of production have been largely shaped by the development and transformation of productive forces and those conscious of this historical reality are always well positioned to inherit the emergent status quo. Fossil fuel, for instance, drove much of industrial production in the last century. Indeed, fossil fuel shaped geopolitics and countries were ready to wage war to have unfettered access to this source of energy. Ironically, it drove development and wellbeing in the advanced capitalist countries and birthed a new consumption pattern in some of the producer countries without a corresponding industrial foundation. The ruling elite in some of these countries became afflicted by Dutch disease, a situation in which abundant resource leads to the disarticulation of the economy without sectoral links and reinforcement. The elite in such countries regale themselves in luxurious living as though there would be no tomorrow.
Nevertheless, there is a growing awareness on the declining importance of fossil fuel in the face of emerging alternative energy sources. In this regard, some countries in the Middle East, like Saudi Arabia and UAE are investing in stocks on a transnational basis. These countries are not waiting for the day that fossil fuel will be officially pronounced invaluable. They are looking ahead, engaging in perspective planning of some sorts. The Saudis have a strategic ‘Vision 2030,’ a package of economic reforms designed to reduce dependence on oil revenues. It is floating part of its national oil firm Saudi Aramco on the stock exchange while diversifying its investments. Overall, its overseas investment holdings are expected to be increased from five per cent to 50 per cent. The country is hopeful of a future without oil.
Sadly, in this connection, Nigeria, Africa’s most populous country, is in bad shape. It has not shown sensitivity to the impending doomsday. Perhaps, it is totally unaware as its state actors feed fat on the dwindling petrodollars. There was a time that the Americans could bet their life for the Bonny Light, which they dubbed the ‘Sweet Crude’ that served the entire East Coast of America and mopped off about five per cent of the crude consumption from Nigeria. A few years back, America no longer needed Nigeria’s oil in large volumes. In 2012, it reduced import from Nigeria with a boost from Shale Oil in North Dakota. It has enough and its strategic reserve received a boost from Shale sources. According to Energy Information Administration (EIA), the United States’ crude oil imports from Nigeria plunged to 539,000 barrels per day in February from 4.87 million barrel per day in January. The Obama presidency was conscious of the fact that the consumption of fossil fuel drew America into unnecessary wars.
With the Americans out of our market loop, the Chinese and India came to the rescue. These new customers are already exerting their energy autonomy and no longer enamoured of the Nigerian crude. India, Nigeria’s largest importer of crude, reduced its demand in 2017 and began importing from the U.S. Asians’ craving, especially, South Korea, Taiwan and China for U.S. is engendering crude oil overhang for our country. South Korea overtook China as the number-two destination for U.S. crude behind Canada in 2018 with record high shipment of about 558,000 bpd in December of that year.
Since the last two years or thereabouts, Nigeria’s crude sale entered precarious times. Crude load wanders in the wide waters of the Atlantic looking for buyers. Amidst spirally external indebtedness, it is increasingly hard to come to terms with government’s capacity to cope with the impending disaster. It is largely pre-occupied with increasing production capacity and face challenges which former Minister of State for Petroleum Resources, Dr. Ukachukwu identified as “ineffective regulation, concentration and control of petroleum resources within limited set of license holders and joint venture funding issues. Others are high operating costs, unsustainable importation of petroleum products, limited refining capacity, insecurity in the Niger Delta, and dilapidated midstream oil network as a result of systemic inefficiencies and vandalism.”
Today, there are many energy sources ranging from biofuel, thermal, wind, hydro to solar. The new vocabulary in scholarship is now ‘‘energy democracy.’’ Many countries, such as Australia and Germany have set timelines for transition, especially to solar energy, weaning themselves off the use of fossil fuel. While Nigeria ought to be concerned about tapping these resources and occupying a strategic head-start in the continent, it is wasting resources on a wild goose chase in Chad Basin and Katsina in search of the fast fading product.
Doubtless, Nigeria’s central government needs to unknot the well-known constitutional constraints and vest mineral resources in the federating states to unleash an all-sector exploitation of resources for development and growth for the general wellbeing of the people. Refusal to make hay while the sun shines at this moment would lead to a harvest of Robert Kaplan’s resource war and the collapse of the country. All told, Nigeria is too important to be left drifting without critical thinking on a future without petrodollars. And so the governing elite at this moment should not allow politics to relegate governance issues about the future of a country that holds the key to shape the destiny of the black race.