My take is this, we need to come to grip with the price of oil and the world energy situation. Whether we like it or not, the United States have succeeded in bringing down global oil price on the back of their shale oil. Oil price rose all the way to $110, at its peak earlier in the year 2015, that peak is not coming back again. Anyone who made significant saving during the boom can go and enjoy, and any country, like Nigeria, that didn't , must somehow suck it up and move on. We are definitely back to the days of below $30 per barrel.
We grew up on that price range, oil was always $18 per barrel or $20 or $22 thereabout. I recall that at that time too, my mum used to buy petrol at N11 from the one total filling station at Iyaganku Ibadan. What am I saying? Was it not Obasanjo that grew oil price from N11 all the way to N75 per liter, before Jonathan took it all the way to the current price today? I recall that up until I got married in the mid 2000, I never took a keg to any filling station to buy fuel for a "gen". In fact people rarely bought fuel into kegs except to fuel their cars during fuel scarcity. The only thing I Know we bought into small kegs was kerosene for lighting our lamps when NEPA takes light (in our Nigerian parlance). We did not even have "Plant" as we called generators then, only the very rich had big plants that they put on when they had special occasions. The first generator I ever bought was in 2006 Feb, and it was a small Yamaha generator. that used fuel mixed with engine oil. This was before they were nicknamed "I beta pass my Neighbour" or "I beta pass" for short . Since then I have bought multiple generators, I am almost loosing count.
Coincidentally, I checked up on past oil prices from 1978 and was surprised to find out that from 1978 up till the end of 2003, crude oil price was at below $30 per barrel. It had risen from $28 to $31.85 dollars in Jan and February 2003, and then reverted. But from Jan 2004, it crossed the $30 mark on a permanent basis and rose all the way to $128.08 in July 2008, before crashing across 8 months to a low of $34.14 in Feb 2009, during the sub-prime crisis, before making the second ascent that lasted till 2015. So maybe coming to terms with the fact that oil has gone back to below $30 isn't a bad thing afterall. Within 1999 and 2003, when oil price ranged from $22 to $28, we made the most significant economic improvement ever in the history of this country. But as the price rose and the nation supposedly made more money, things deteriorated. Fuel price skyrocketed, power deteriorated completely. So if domestic fuel price was below N30 as at 2003 at a crude oil price of $30, maybe if we come to terms with the new crude oil price, then we can drop domestic fuel price to the same point it was then. Dropping domestic fuel price will boost the economy, and that is not a bad thing!
The faster we come to terms with the price of crude, the better for all of us. Sitting down and assuming it will rise again, the same old way it did in 2008 is a pipe dream. It ain't gonna happen (in my American accent). The circumstances that led to this drop in 2015 is not the same as the one that led to the drop in 2008/2009. The difference between crude price drop in 2008/2009 and the price drop now is that while the 2008 drop was caused by sub-prime issues in America, and subsequently around the world, the conditions fueling the drop now are different. There is a glut in the market due to overproduction by oil producing countries and under demand from those that traditional purchased. Usually you would have over-supply or under demand happening separately, but not here, they are happening concurrently causing double dip in price. OPEC, led by Saudi Arabia and now Iran has resolved to continue to act outside the cartels mandate to cut production and reduce glut, to maybe stabilize price. Kachikwu and Buhari, hear it loudly, those guys are in business for themselves, oil price is staying down! They do not care about the rest of you in OPEC period! So you better borrow yourselves brain as they say on the street. Secondly, America has said they will improve their energy supply, Shale oil has come to stay. America no longer buys from Nigeria or from anyone in particular at that, so the price is not going back up, under-demand has come to stay. If you ask me, it is going down to price as we knew it prior 2004.
Secondly America does not sell crude, and they do not subsidize fuel, yet they are more or less energy sufficient. The drive for lower energy price to boost their energy need and reduce domestic fuel price. China does the same with America. They understand the economics of growth and will vote hands and feet for cheaper crude. Chine has even primed their equipment to use the heavier fuel for their factory production, hence our lighter, sweeter crude has begun to miss the mark. But Nigeria, we do the reverse. We sell almost all our crude extract with less than significant refining. We beg, plead, or weakly lobby because our buyers have changed their strategic direction as far as purchasing crude is concerned. As at 2015 , we do not even come close to having energy talk more of being energy sufficient. We continue to seek higher crude oil price even when it is clear that price isn't going to rise again. We consume the cash we managed to acquire, from the little export we did, on importing fuel and then we subsidize the consumption of the outrageously expensive fuel we have imported - I call this "Reverse Business". Meanwhile the country is energy starved. We do not have enough energy to power our nation.
So maybe we need a strategic change, and instead of focusing on begging Saudi and Iran to stop producing oil, or wishing that Russia and the Nordic countries will also reduce their production, we need to realize that whether we like it or not, the oil cheese has moved, and we need to develop a new focus. I heard that as at December 2015, Nigeria had over 40 super tankers of crude on the high sea, unsold, meanwhile we have cues everywhere because of acute fuel shortages. Our new focus should be for us as a nation to not just become energy self-sufficient but to also help our neighbouring countries become energy sufficient. I had this odd feeling that if we refined and consumed all our current production locally, we may not be able to still meet our domestic utilization. So, I did a quick calculation, at the current rate of PMS consumption (which is barely inadequate and extremely expensive viz-a-viz its price, and the national per capital income), we use up 35-40million litres of PMS per day. With our 2.5million barrels (1 barrel = 159 litres, from where you obtain about 30 litres of PMS), we will produce just 70million barrels per day, which will just be sufficient to satisfy our PMS need, Just changing direction to internal refining and consumption first, will reduce our energy cost, create employment and revitalize our petrochemical industry. It will also boost our export of petrochemical products. So instead of focusing on export of crude, we need to change and focus firstly on meeting our internal energy needs.
Straight, our current crude oil export driven economy cannot lead us into the future we desire. The climate change summit that held in Paris in Nov/Dec 2015 should give us an indication of where the world is headed, everyone is improving and diversifying their energy sources. We need to proceed in that direction too. Countries are subsidizing production through tax breaks, Government led financing initiatives, Research and Development incentives to mention a few, and inadvertently reducing the cost of consumption, we need to toe the same line instead continuing to subsidize consumption. This is the change we seek!