On Monday, prices of Brent crude hit their highest level of $94 in more than seven years, as some in the market think it is now a question of when — not if — oil hits triple digits above $100, somewhere it has not been since 2014.
Based on Organization of Petroleum Exporting Countries (OPEC) data, the only time in history when average crude oil price reached $100 was in 2011 ($107), 2012 ($109.45) and 2013 ($105.87).
This period translated to improved economic activities as Nigeria recorded an average oil production of 2011 (2.5 million bpd), 2012(1.9 million bpd) and 2013 (2.2 million bpd).
“With the current system in place, Nigeria needs more than a miracle to have an oil boom at N150,” Joe Nwakwue, a former chair of the Society of Petroleum Engineers (SPE), says.
analysis shows an oil price increase from $14 per barrel in 1979 to $35 per barrel in 1981 could mean an oil boom for Nigeria’s 1981 population of 75.4 million people, because an oil export revenue of $24.9 billion led to an oil revenue per capita of $330. However, $35 means little or nothing for Nigeria’s current population of over 200 million people.
Also, a higher oil price from $10 per barrel to $147 per barrel in 2008 may be enough for a population of 150.3 million because of $54.9 million oil revenue, which leads to an oil revenue per capita of $0.365, but certainly not in 2021.
In the face of dwindling incomes, the government has held on against the call for full deregulation.
“Nigeria is like a man who is dying from dehydration despite being in the midst of a ferocious rainfall,” notes economist Festus Ogbobine.
The struggle against subsidy has a strong historical socio-political context, in which organized labour is central. Occupy Nigeria, which has become a reference in civil unrest, shut down the country for almost two weeks in 2012 following the government’s first bold step at ending petrol subsidy, which the Goodluck Jonathan administration said claimed $18 billion in 2011.
Recent attempts at ending the age-long social scheme with the petrol consumption figures from the authorities ranging from between 50 million litres per day to around 103 million litres, have been similarly stalled by endless negotiations between the government and labour unions.
Experts say perhaps, there is no better time to end the scourge than now. The national debt stocks had hit N32.9 trillion in December. While the government regrets mounting debts and declining financial capacity, the cost of governance, which subsidy is just a part of, has continued to rise.
