• Monday, July 15, 2024
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Washington, oil and Nigeria

Nigeria, oil and Yamani (1)

Such is the greasy nature of oil that it continues to spawn currents and counter-currents between and among nations. This heady mix has also been compounded by the fact that even within nations, oil has the capacity to generate turmoil and upset political calculations. At the moment, the oil market is in a spin. Crude oil prices are going up and this has consequences for the United States of America, OPEC-of which Nigeria is a member, and the major consuming nations like China, Japan, and South Korea.

For the American President, Joe Biden, one of his major problems is that his approval rating is going south. This is owed to the increase in the pump price of gasoline. Such indeed is the situation that a Canadian journalist has contended that OPEC has Joe Biden over a barrel.

In other words, Washington is currently on the defensive, courtesy of the exertions of OPEC. Certainly, the columnist put it very well when he pointed out that the political optics of a US president conceding that OPEC has him over a barrel are anything but good. On this note, it should be appreciated that Washington has just visited Abuja. This was when the American Secretary of State came calling.

Could he have visited us principally to confer with the Nigerian authorities on how to stem the offensive from this inter-governmental body, called OPEC? One may never know. For such indeed is the cloistered and opaque world of diplomacy. This much is clear, however; Biden is having some political problems on this issue. The magnitude of the problem can also be viewed from the fact that even members of his own party, the Democratic Party are very ambivalent about the issue. They appear to be speaking from both sides of the mouth.

Again, and as revealed by the Canadian columnist, eleven progressive Democratic senators including Elizabeth Warren of Massachusetts and Sherrod Brown of Ohio, wrote to Biden to express their support for his efforts to help families and businesses across the nation who are struggling to cope with soaring gasoline prices.

The oil prices, though high at the moment, must not go down too low. This is in the light of the interests of domestic producers within the US itself.

But according to the columnist, yet these same democratic senators remain hostile to more domestic oil production or increased imports from Canada. What much of the immediate foregoing has clearly demonstrated is that, more often than not, leadership can be a lonely venture. You are on your own, as we usually say in Nigeria. Predictably, therefore, Biden has taken matters into his own hands by causing a release from the strategic oil reserves in the bid to ensure a downward slide of the price of crude oil.

Beyond this seemingly unilateral measure, he is also acting in concert with other consumers like China, Japan, India, and South Korea, This is in the hope that they too will respectively release oil from their own reserves, with a view to achieving the same objective of driving down the prices. Even then, thanks to the greasy nature of oil, it is evident that the United States also has the capacity to drive a wedge within OPEC, and cause a division among members of this intergovernmental body. For instance, Washington till date has something of an organic alliance with Saudi Arabia, a swing producer within OPEC.

In the light of this alliance, she can always call on Riyadh to do her bidding such that, US objectives will be achieved. This is clearly a possibility if only because Saudi Arabia in turn depends partly on the superpower to guarantee its own stability within the volatile context of Middle-East politics. An aside is necessary here. Much of the immediate foregoing goes a long way to explain why the gruesome murder of Khashoggi has not substantially affected the tenor of US-Saudi Relations. But then we digress.

Read also: Oil price falls after petrol stocks drop more than expected

In the long term, therefore, and at the risk of sounding overtly optimistic, it is possible to say that Washington is on a winning run. Even then, such is the shifty world of oil that she cannot afford to push this particular thrust too far. The oil prices, though high at the moment, must not go down too low. This is in the light of the interests of domestic producers within the US itself.

Such is the high cost of producing oil through what is called the fracking method that, for them to stay in business, the price must not go down too low. Thus and as things stand, Biden must of necessity walk a fine line in order to cater to the various interests within and outside the United States.

As an oil producer, how does our own Nigeria fit into the various scenarios sketched above? As an oil producer, so to say, the country apparently stands to benefit from the rise in crude oil prices. But this is not exactly so. This is in view of the fact that with rising oil prices comes the bogey or menace of oil subsidy which the government continues to say is increasingly unbearable. This is clearly an anomalous situation. One would have thought that with rising oil prices, we should really be smiling. But no. This is because, such is the bankruptcy that afflicts oil policy here that, Nigeria cannot refine her oil and to this extent, an oil-producing country has to rely on imported refined oil for sustenance. Thus, deregulation is the touted mantra, since according to the proponents, the subsidy cannot be sustained. When this is truthfully disaggregated, what Nigeria seems to be embarking upon is import-driven deregulation? To say the least, this is absurd.

The absurdity can be seen vividly in the fact that the Nigerian people are in something of a bind here. When the oil prices are low, they have to contend with loud groaning from the government about a lean purse. Meanwhile, when prices are rising as it obtains now, they still have to contend with threats from the government, that the subsidy being paid on refined imported oil is too high. One way of seeing this is to contend that, there is no link between oil and social justice in Nigeria.

It is a far cry from what obtains in Washington as seen in the exertions of Biden, the American president. However, this is not to say that the government has been idle. Abuja also appears to have its own plans. For instance, the minister of finance spoke to the latest plan which seeks to give N5,000 naira to 40 million vulnerable and poor Nigerians in order to cushion the effects of oil subsidy removal. This is a one-way tunnel that leads to nowhere. For when the mathematics is done, the government courtesy of this policy will pay out 2.4 trillion naira annually. This is clearly, subsidy going out through the front- door and being introduced through the back door. Moreover, as it has been pointed out: how will these vulnerable and poor Nigerians be identified? Something tells me here that another meal is being prepared-and as usual, the vast majority of Nigerians will be excluded. Still, it is possible to say that despite the despair in much of the immediately foregoing, there is a ray of hope.

This tentative optimism can be observed in the fact that very soon and hopefully, the Dangote refinery will be on stream. If and when this obtains, the refinery will not be fed with OPEC-driven costs. Rather, it will utilize crude from here at costs that will largely depend on production. And to this extent, even what we currently pay for gasoline would or should be much less. One can only hope that this is not a pipe-dream.

For in a decadent situation, as witnessed in what passes for our oil policy, there are what can be called beneficiaries of decadence, that is, those who profit from the present and paradoxical situation of an oil-producing country, which lacks the capacity to refine its own oil.

In the light of the immediately foregoing, the last word must necessarily go to President Muhammed Buhari. Sir, please borrow a leaf from Biden. Do what is best for Nigeria and Nigerians under the circumstances. Let us have domestic refineries. Such that gasoline prices and other derivatives will be low; such that, the embarrassing issue of oil subsidy, will cease to be part of our national discourse. Needless to say here sir; the tolling bells of history are waiting.