Discourses on oil are controversial globally. As Chamberlain Peterside has noted, hydrocarbons remain a predominant source of energy supply for the global economy and have occupied the centre stage for over half a century (Peterside 2004), and it is no less the case in the Nigerian context. The case of Nigeria may be accounted for in a number of ways. One, Nigeria is reliant on oil for about 99% of its foreign exchange earnings. Two, the exploration and exploitation of oil have had continuous deleterious effects on the environment and wellbeing of the people in the oil communities. Three, oil exploration and exploitation and the lopsided allocation of its proceeds has consequently led to internal crisis as a result of agitation by the oil-owning communities for a greater share of the proceeds from oil and the adherence to international environmental standards. The crisis has taken on a new militarism – or, in the language of Nigerian state actors, ‘militancy’ – which has had far-reaching effects on the prices of oil in the spot market as well as overall oil exports from Nigeria. It is common knowledge that attacks on oil facilities by Niger Delta freedom fighters had until the current lull cut Nigeria's crude exports by half. Nonetheless, threats to oil exploitation are by no means from the insurgents alone; more compelling are the realities of alternatives to oil.
Political scientists glibly remark that politics is about the state and what it does. This assertion has continued to vindicate itself in both advanced and peripheral countries. Not even the vaunting of globalisation with its ‘roll back’ mantra has been able to tame the state. What rarely merits emphasis currently is the impact of the base or substructure on the formation of the state. With ‘the end of history’, this is understandable. The claim however does not deny the reality of existing relations of production on a global scale. Indeed oil has largely shaped the nature of the Nigerian state. The various ways in which it has shaped the political economy of the Nigerian state has been described by Teresa Turner (1978) as one involving the multinationals, compradors, and state elites. This is perhaps why Professor Biodun Jeyifo (2009) observed that Nigeria's political economy is underpinned by oil, which is the basis of its insertion into the global capitalist economy. The Nigerian state by virtue of its sole reliance on oil is a rentier state. The state collects rents from sales of oil and these are merely distributed through the bureaucratic mill where they are appropriated, misappropriated, and stolen outright. Unlike Algeria and Angola, local participation in the production process is negligible. It explains the dependency on expatriates in the sector and the country's continuing reliance on imports of refined oil products into the country, to the detriment of the country's current account balance.
To be sure, nowhere else can the politics of oil be understood better than in the state's relations to the oil industry, the oil-owning communities, and the general citizenry. Apart from the oil majors with whom it is in partnership, the state allocates oil blocs on the basis of patronage or political considerations. Oil theft, so-called illegal bunkering, is perpetrated largely by persons connected to the apparatus of the state. The Ogomudia Special Security Committee referred to them as a ‘“cartel or mafia” composed of highly placed and powerful individuals within society’. These powerful individuals include ‘a few criminally minded former military personnel’ (The Constitution 2007). Furthermore, local consumption of refined oil products such as petroleum, kerosene, and diesel has been influenced by the imaginary economics known as oil subsidy. Often driven by agencies of global governance such as the IMF and the World Bank, it has continued to fuel circles of inflation in an economy in which the informal sector is preponderant.
Lest we forget, the dynamics of oil exploration and exploitation is underpinned by a panoply of legal frameworks such as the Petroleum Act of 1969 which vests the entire ownership of all petroleum in the state. The Land Use Decree of 1978 also vests land ownership in the state. In 2003, the controversial onshore/offshore dichotomy sought further aggrandisement of the federal authorities. In addition, the 13% derivation enshrined in the 1999 Constitution and the Petroleum Industry Bill (PIB), with promises of a new fiscal regime, transparency, and accountability in the oil sector, also swell the legal nexus. The politics of oil, especially the appropriate derivation formula, stalemated the 2005 National Political Conference that sought to address critical national questions dogging the federation. The dynamics of oil are such that we can in fact talk about the permeability of oil in ways in which Senator Charles W. Tobey conceived of it in the American context: ‘Oil permeates a great deal of our life; it permeates the halls of legislatures, it permeates the Congress’ (Engler 1961). Similarly, the Nigerian narrative can be said to be about oil in all things.
In the last decades of oil exploration and exploitation, Nigeria has made over US$500 billion dollars from oil, but this has not changed the fortune of its citizens as the earnings are in the hands of a tiny percentage of the population who have stolen much of it. According to Paul Lubeck, Michael Watts, and Ronnie Lipschutz, citing Michael Ross, ‘Nigeria offers an archetypal example of the “paradox of oil” by which vast oil wealth begets extravagant corruption, deep poverty, polarized income distributions, and poor economic performance’ (Lubeck et al. 2007).
Given the global crisis which oil consumption has generated, advanced countries have begun in earnest to look for alternatives to hydrocarbon as a source of energy. As Michael Klare has rightly noted, ‘given the right investment and research policies – and the will to apply something other than force to energy supply issues – oil's historic role as the world's paramount fuel could relatively soon draw to a close’ (The Economist 2005, Klare 2008). The United States has made the search for viable alternatives to oil the cornerstone of its energy policy, and production of hydrogen fuel and biofuels like ethanol, methanol, and others is already proceeding at an industrial rate. The last US administration projected the production of about 35 billion gallons by 2017.
As for Nigeria, its proven reserves are estimated at 40 billion barrels. This figure could be augmented by new offshore findings. At the rate of 2.5 million barrels per day, the life index of the oil can be put at about 43 years. This merely brings home the fact that oil is finite and that the well will one day dry up. It is in this sense that we can talk about oil peak. I have even elsewhere predicted the transformation of oil as energy source in the not-too-distant future (Odion Akhaine 2008).
Fundamentally, the question is: what will be the shape of Nigeria where oil constitutes about 99% of the country's export revenues, 88% of government income and 50% of the GDP? Peterside (2004) also posed the same question and said:
It is safe to expect that in the lifetime of the current under-20 and -30 generation, Nigeria might run out of oil – ‘the goose that lays the golden egg’. What would then be of the body politic? Nigeria losing its oil wealth before ever achieving a significant stride toward industrialising, sufficiently diversifying its economy or creating a viable socio-economic platform for sustainable growth would portend serious trouble of unimaginable proportions. It would mark a truly ‘crude awakening’.
All hope is not lost. However, if the current minders of the state remain in power, the journey may be long. All things being equal, 43 years is enough for a great leap forward. It can be realised with an intense class struggle in which the current minders of state are displaced and replaced by progressive elites who must necessarily reorient the Nigerian economy from its current external orientation. I sincerely hope the new century will not pass us by.