Last year, Abdalla S. El-Badri, Secretary General of the Organization of Petroleum Exporting Countries (OPEC) dismissed fears about the imminent replacement of petroleum with biofuels and other alternative sources of energy like wind, solar, or even agricultural products like sugarcane. Appearing at a media project in Abuja to meet OPEC’s statutory responsibility to member nations, El-Badri said, “the global debate about seeking alternative to oil would not yield result because of the strategic importance of oil.”
Secretary General El-Badri has more than 45 years of experience in the international oil and gas business. Why is it that those whom we assume to know better seem to deliberately mislead those of us who know little? The only plausible explanation is that they constantly look for ways to make their jobs relevant. In this instance, an elementary knowledge of modern economics or even cursory observations of global economic trends prove him wrong.
The dangers of believing that America will eternally depend on imported oil as the Secretary General has predicted are enormous. El-Badri said he “has been hearing this from the United States presidents in the last 30 years.” What he has also been hearing but fails to mention is that America is relentlessly seeking alternative sources of energy. The reasons why America is looking for alternatives are obvious: economic self-reliance and the ability to dictate the terms of diplomacy with the Middle East. Why should our economic sustainability depend on America’s inability to find alternative energy?
The White House energy and environment plan includes more than $80 billion in clean energy investments (www.whitehouse.gov/issues/energy_and_environment
). While it is true that America is improving on a whole lot of energy innovations, what should most concern Nigeria and any other country that exports oil to the United States is the kinds of cars Americans will be driving in the next 10 years.
For the first time in more than 10 years, the United States government has raised fuel economy standards for cars and trucks that will be produced in 2011, aiming at achieving better gas mileage. Car manufacturers are hard at work making more fuel efficient cars. For instance, the current leader on the U.S fuel economy list, the Toyota Prius, gets 48 miles a gallon in the city and 51 miles a gallon on the highway. Even Ford Motor Company boasts that it has four cars on the U.S government list of most fuel efficient cars.
The guiding principle of several American presidents has been to protect America from the economic and strategic risks associated with reliance on foreign oil. However, the Obama administration has intensified these efforts. Yet El-Badri insists that “there is no way America will not rely on oil from the Middle East or any other exported oil.” While many of us may need a little perspective, I am sure that the Secretary General knows about America’s oil deposits. What if America decides to drill in its backyard? We are all aware that those prospects featured prominently in America’s last presidential elections. Granted, the deposits may not hold enough for their oil needs, but such a decision would drastically reduce demand for imported oil.
El-Badri says he has been hearing about America’s plan to switch to alternative energy for 30 years. However, 30 years is a short period in any nation’s economic history. Just like in every other thing we Nigerians and Africans do, our concept of time is always deferred. While developed nations plan their economies ahead of time, we Nigerians and Africans do not tend to sense urgency based on time, even when the situation is dire. From all indications, however, finding or promoting alternative economic resources for Nigeria has become truly urgent. Besides America, many other countries have found the need to develop alternative sources of energy.
While we struggle to come to terms with America’s alternative energy innovations, Brazil has made even bigger strides in this direction. As far back as 1985, 91% of cars produced in Brazil that year ran on sugarcane ethanol. Britain, China and Japan have also intensified their efforts towards alternative energy. While these statistics point to a dwindling global oil fortune, the most dangerous effects of Nigeria’s reliance on oil as its only economic export is found at home.
Nigeria is the sixth largest producer of oil in the world, yet much of the population lives in abject poverty. Not only has Nigeria’s oil industry been completely mismanaged, it has also displaced and further impoverished Nigeria’s rural population.
Prior to its petroleum-based economy, Nigeria’s rural population played an active part in the country’s economic growth. Agriculture accounted for a good portion of exports. But since the oil boom of the 1970s, Nigeria’s agricultural sector, which had previously sustained rural Nigerians, has been totally mismanaged. Poorly conceived government programs have also been the order of the day. We are no longer the world’s major producers of cocoa, groundnuts, and palm oil. The effect is that Nigeria has continued on a downward spiral in rural economic growth.
The poor rural economy is a major reason why much of Nigeria’s population has been disempowered. The destiny of Nigeria has been torn away from them and placed in the hands of big oil companies and their cronies. And so far, they have not done a good job sharing our common resources. Emotions are now running high because of the gross mismanagement of oil resources, creating both political and street mobs.
The political and social tensions surrounding oil in Nigeria are palpable. This is only to be expected, given that 95% of Nigeria’s GDP comes from oil. Since 40% of Nigeria’s GDP is spent by the United States to develop alternative energy sources, it is only a matter of time before we see a quantifiable result which will force the trajectory of our petroleum-based economy downwards.
At the very least, these facts points to a very uncertain future for any economy such as Nigeria’s, where oil contributes 95% of its GDP. At least, the facts should compel us to cautious optimism
Hamilton Odunze Co-editor African Analyst