‘Oil is the price’’ On June 23, 2005, a group of high-ranking government officials were convened in a ballroom of the Four Seasons Hotel in Washington, D.C., to respond to a simulated crisis in the global oil supply. The event was called “Oil ShockWave,” and it was organized by public-interest groups concerned with energy policy and national security. Among those seated beneath a wall-size map of the world were two former heads of the C.I.A., the president of the Council on Foreign Relations, and a member of the Joint Chiefs of Staff. The scenario they were handed was this:Civil conflict breaks out in northern Nigeria—an area rife with militancy and religious violence—and the Nigerian Army is forced to intervene. The situation deteriorates, and international oil companies decide to end operations in the oil-rich Niger River delta, resulting in a loss of 800,000 barrels a day on the world market. Since Nigerian oil is classified as “light sweet crude,” meaning that it requires very little refining, this makes it a particularly painful loss to the American market. Concurrently, in this scenario, a cold wave sweeping across the Northern Hemisphere boosts global demand. Because global oil production is already functioning at close to maximum capacity small disruptions in supply shudder through the system very quickly, and Nigeria plays a key role in bring about the stability of this global oil production. A net deficit of almost two million barrels a day is a significant shock to the market, and the price of a barrel of oil rapidly goes up. The United States could adjust almost indefinitely—people would drive less, for example, so demand would decline—but the country would find itself in an extremely vulnerable position. Not only does the American economy rely on access to vast amounts of cheap oil, but the American military—heavily mechanized and tactically dependent on air power—literally runs on oil. This would mean that there was virtually no cushion in the world market and that any other disruption a terrorist attack in Saudi Arabia, for example—would spike prices through the roof and the US cannot afford this to happen because of the reverse effect it will have on the US.According to the Oil ShockWave panel, near-simultaneous terrorist attacks on oil infrastructure around the world could easily send prices through the roof, and those prices, if sustained for more than a few weeks, would cascade disastrously to the American economy. Gasoline and heating oil would rise as well, which would force the median American family to spend a sizable percent of its income on gas and oil—more than double the current amount. Transportation costs would rise to the point where many freight companies would have to raise prices dramatically, cancel services, or declare bankruptcy. Fewer goods would be transported to fewer buyers—who would have less money anyway—so the economy would start to slow down. A slow economy would, in turn, force yet more industries to lay off workers or shut their doors. All this could easily trigger economic instability.
The last two major recessions in this country were triggered by a spike in oil prices, and a crisis in Nigeria—America’s fifth-largest oil supplier—could well be the next great triggering event. “The economic and national security risks of our dependence on oil—and especially on foreign oil—have reached unprecedented levels,” former C.I.A. director Robert warned in his introduction to the Oil ShockWave–study report. “To protect ourselves, we must transcend the narrow interests that have historically stood in the way of a coherent oil security strategy.”In January 2006, less than seven months after the first Oil ShockWave conference—almost as if they’d been given walk-on parts in the simulation—several boatloads of heavily armed Ijaw militants overran a Shell oil facility in the Niger delta and seized four Western oil workers. The militants called themselves the Movement for the Emancipation of the Niger Delta and said they were protesting the environmental devastation caused by the oil industry, as well as the appalling conditions in which most delta inhabitants live. There are no schools, medical clinics, or social services in most delta villages. There is no clean drinking water in delta villages. There are almost no paying jobs in delta villages. People eke out a living by fishing while, all around them, oil wells owned by foreign companies pump billions of dollars’ worth of oil a year. It was time, according to MEND, for this injustice to stop.
The immediate effect of the attack was a roughly 250,000-barrel-a-day drop in Nigerian oil production and a temporary bump in world oil prices. MEND’s demands included the release of two Ijaw leaders who were being held in prison, $1.5 billion in restitution for damage to the delicate delta environment, a 50 percent claim on all oil pumped out of the creeks, and development aid to the desperately poor villages of the delta. MEND threatened that, if these demands were not met—which they weren’t—it would wage war on the foreign oil companies in Nigeria.“Leave our land while you can or die in it,” a MEND spokesman warned in an e-mail statement after the attack. “Our aim is to totally destroy the capacity of the Nigerian government to export oil.” Lets us as Nigerian’s note that Nigerian oil is very vital to the American economy and the world at large we need to wake up, instead of destroying our God given gift, lets harness it properly so as to take the center stage in world economy.President Bush’s State Department declared in 2002 that—along with all other African oil imports—it was to be considered a “strategic national interest.” That essentially meant that the president could send in the U.S. military to protect our access to it[ but that will be a wrong move on the part of our president, knowing the US thirst for oil, good enough the current president hails from the Niger Delta region & that’s a good development for the US government].The problem was one of scale. The Nigerian military—as poorly equipped as it is—can protect any piece of oil infrastructure it wants by simply putting enough men on it. But Shell has more than 3,720 miles of oil and gas pipelines in the creeks, as well as 90 oil fields and 73 flow stations, and there is no way to guard them all. And moving the entire industry offshore isn’t a good option, either. Not only is deepwater drilling very expensive, but there are still immense oil and gas reserves under the Niger delta that have not yet been exploited. Nigerian oil production was cut by 25 percent, or about 600,000 barrels a day due to the constant attacks of the militants. That represented a loss of nearly 2 billion dollars a month to the Nigerian government.
In early October, two separate attacks in the creeks reportedly killed at least 27 Nigerian soldiers and sank or captured two navy gunboats. In response, militants claimed, Nigerian helicopters strafed and then torched an Ijaw village named Elem Tombia. No one was killed, but it was a clear escalation of the conflict in that area. (NOTE this write up is not in support of any organization, group or government, but to simply to open the eyes of Nigerians and highlight the value Nigeria as a united Nation brings to the world’s economy).