Whenever anyone starts chanting “drill, baby, drill,” remember that we as a nation and as the citizens of that nation do not own a drop of oil or a milliliter of natural gas. Some of us as individuals and all of us as a nation own the land from which these resources are extracted. The individuals are persuaded to sell their “mineral rights” and we as a nation lease the land to private companies for the “mineral rights.” The individuals get a single, one-time payment. We get lease payments and royalties on any oil or gas removed from the site. Then, our government hands over subsidies and tax breaks and tax credits and allows tax sheltering so that basically, we pay the oil and gas companies to take our oil and gas off our hands.
Other countries don’t do it this way. The Saudis own their oil, or at least their royal family does and they use it to run the country. The Iranians own their oil. The Venezuelans own their oil. And the Nigerians own their oil. Not exactly a country you think of when you consider oil-producing nations, but Nigeria has oil and their economy is based on that oil.
But something has gone very wrong in Nigeria. The 160 million citizens of Nigeria are ticked off at their government, and with very good reason.
The Saudis, the Bahrainis, the Emirs of the United Arab Emirates, they bribe their citizens with oil profits to maintain their positions. They are the ultimate in cradle-to-grave welfare states. Nigerians are desperately poor. They don’t have the gleaming cities of Saudi Arabia, the cushy jobs, the top-level medical care. They don’t have a great education system or clean environment. What they have is incomes around $2 a day, an environment so polluted it’s toxic in too many places, no education, no health care, nothing to show for their hard work and sacrifice except a ridiculous gasoline subsidy that kept gas prices around $1.70 a gallon. The government, in their wisdom, decided that the gas subsidy was too high, so they cut it, raising gas prices to $3.50 a gallon overnight – almost two day’s income for enough gasoline to run a lawnmower.
Sometimes all it takes is one stupid thing to set off a revolution, and it seems the Nigerian government managed to find that one stupid thing, the proverbial “straw that broke the camel’s back.” Unless there is major progress in talks, the unions that represent the oil workers in Nigeria will go on strike on Monday or Tuesday. When they do, they will effectively cut off 8% of America’s foreign oil supply. The government is scrambling to negotiate with the union.
Nigeria’s 20,000 unionized oil workers could cut off 2.4 million barrels of crude oil a day, a move that could drive crude prices up by as much as $10 a barrel.
The thing is, Nigeria shouldn’t be in this position. All the experts say that Nigeria could be one of the fastest growing markets in the world, one of the strongest economies. The country is sitting on a vast wealth of minerals and resources, but isn’t mining them. It is literally not investing in itself and allowing political unrest to prevent international investment. It is allowing lax environmental laws to sicken, maim and kill its citizens. Things were supposed to change after the military junta who controlled the country for decades gave way to a civilian government, but things have only gone downhill.
The situation in Nigeria is not comparable to the Arab Spring. There is a theory in psychology called Maslow’s Hierarchy of Needs. It was developed in 1943 by Abraham Maslow. In its simplest form it says that our bodily needs – food, clothing, shelter, water, safety – are at the bottom of human need. At the top are the esoteric endeavors – intellectualism and the arts. In the middle are property, achievement, security of employment and resources, health. The Arab Spring is a middle level revolution. It is being driven by people who have had their basic needs met but want more personal fulfillment. Nigeria is a bottom level crisis. It’s about survival. It cannot be dealt with through diplomacy or even armed political conflict. But it can be manipulated by political interests, the kind of political interests who created the Cold War by offering two divergent answers to those basic needs – communism or capitalism, with a totalitarian regime to enforce one or the other. Nigeria doesn’t need a political or military intervention. It needs something totally new – an economic intervention by the non-governmental experts who can teach a better way to run an economy and a country. And it needs the West to put a lid on the oil speculation which drives up prices. Our gas and oil prices have not roller coastered this year because of real shortages or overages, but because a bunch of gamblers have raised the ante every time someone in the Middle East has farted. Nigeria would not impact our prices at the pump if the speculators weren’t allowed to use the oil market as a playground.