By Omoh Gabriel
Nigerian Governors are busy bickering over who gets what amount from oil revenue. Northern and Southern governors are at each others’ neck on a new formula for sharing the nation’s oil revenue. The fight over revenue has assumed a dangerous dimension.
No one seems to bother about thinking of how to increase the revenue coming into the common pool. Curiously, the world is leaving Nigeria behind. Recent research findings circulating in the international media on the available source of crude oil outside OPEC which portend danger for Nigeria’s economy, indicate that major oil importers already have alternative source of crude oil.
From the account of the findings, there may soon be a glut of supply in the market. Also, traditional importers of crude oil are developing their own source of oil supply and will soon be self-sufficient. This will happen in no distant time.
How prepared is Nigeria if crude oil suddenly drops to say $30 per barrel? Individual members of OPEC are not in any position to change the tide of the future of oil prices as the new trend portends. The oil cartel, OPEC which ensures some level of fair price for oil-producing countries is fast losing relevance.
Price of oil may soon plunge to an unrecoverable level that will spell doom for the economy, yet, governors and Nigerians are involved in bickering over sharing of oil revenue, and none is talking of a way forward from the impending oil doom.
OPEC has been a rallying point for most oil-producing countries to have a say in the determination of crude oil prices. It was in 1960 that OPEC foisted itself upon the world oil market and the price of crude oil then was about $3 per barrel and refined petrol was going for 31 cents a gallon. OPEC was a newborn then. Admittedly, way back then, OPEC was just a talking shop.
In 1972, the year before the Arab oil embargo, petrol had risen all the way up to 36 cents a gallon. The oil embargo was the first substantial show of pricing power by OPEC. Oil went from $3 a barrel to $12 within a year. By June 1974, the price of gas had also gone up to over 55 cents a gallon.
In the US, the voluntary gas rationing ensued, followed by government price controls that were disastrous, aggravating shortages and boosting the price of oil and gas even further.
Through the years that followed, OPEC became undisciplined and its pricing power slowly disintegrated into a kind of symbolism of what was and might be in the Middle East. In the West, they simply became a laughing stock. It was said that OPEC was all bark and no bite. But OPEC has made a nice little comeback. Crude oil had plummeted to the $30’s and OPEC had instituted major quota cuts.
In recent times, after the global financial melt down, OPEC didn’t have to convince oil customers that it meant business. It only had to convince the oil speculators. Oil has gone up so much that it has put the shaky global economic recovery at risk. It has even spurred the White House to talk about releasing emergency supplies into the market, like it did last year to little lasting effect.
But now the joke is on OPEC. It has become a victim of its own success. Expensive oil has animated a great deal of new oil exploration offshore and onshore. The US, the second largest importer of Nigeria crude oil is well on its way to weaning itself off OPEC oil.
Dakota oil output has passed Ecuador (an OPEC member) in oil production. Western oil producers are now involved in the production of crude via the tar sands, oil shale fracking, or deep-sea drilling. Technology and high oil prices have combined to birth a new oil era.
It’s impossible to ignore the mounting evidence. North American oil production will top a 40-year-old peak by 2016, says Bentek Energy. Even the US Department of Energy gets it. Its Energy Information Administration says that by 2020, U.S. oil production will grow another 20 per cent to 6.7 million barrels per day.
US dependence on OPEC oil is receding with every passing day. The Canadian oil sands hold the second-largest reserves of oil in the world, behind Saudi Arabia. Soon after the election, the White House will approve a pipeline that will transport a million barrels a day down to Texas refineries.
And offshore drilling is finally recovering from the setback of the Gulf oil spill. Before the end of the year, the rig count in the Gulf will be equal or higher than pre-Macondo levels. Big offshore discoveries are being made from the North Sea to the Falkland Islands.
Do the Nigerian governors have a clue that the death- knell is ringing for high oil prices and the revenue allocated to them monthly from there? What of the Federal Government and other members of OPEC? Cheap oil prices ushered OPEC into existence, and expensive oil has given the rest of the world a reason to look elsewhere for its oil fix. It took a while, but the US and others have found plenty of alternative ways to get oil. Soon, they won’t need OPEC anymore.
These new sources of oil are where oil companies are looking to invest. While the rest of the world is busy looking for a way out of OPEC oil as source of energy, Nigerian governors are here fighting on how to share the proceeds from oil. Very soon, there will be nothing to fight over, may be, and just may be, there will be peace in the land.