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129 comments on Nigeria – The Significance of the Bonga Offshore Oil Platform Attack
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129 comments on Nigeria – The Significance of the Bonga Offshore Oil Platform Attack
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The problem is oil brings in wealth, but doesn;t create a lot of jobs. So - there a lot of disenfranchised people that feel they should benefit from the new wealth, but are not needed to get the oil. Unfortunately their governments are not inclined to share the wealth. Mexico is attempting to solve their problem by encouraging their excess labor to go North.
The way I see it - the only answer for these governments is to do what we did during the depression - massive public works projects. Will they do it - probably not! So - look for more troubles.
Your point underscores two alternative "geopolitical feedback loops":
A) In the eyes of the average citizen, government fails to adequately distribute oil revenues. Result: violence, lower production & exports at higher cost.
or B) Government does its best to use oil wealth for the benefit of its citizens, and in doing so realizes that limiting production now to a certain extent 1) maximizes revenues, and 2) preserves oil wealth for future generations when it will likely be more valuable. Result: lower production & exports.
It's not a strictly A or B situation, but the danger (from the sense of oil supply) of avoiding one scenario is that the alternative may be just as bad, or worse... I agree that A is the most likely, but what happens if MEND "wins"? While they may fail at pursuing their own best interest due to corruption, short-sightedness, etc., their best interest may actually be to maintain lower levels of production...
Not to mention if you take option B, the US will call you a tyrant and accuse you of supporting terrorism. :)
More, the US (and the Western countries generally) and their corporations have systematically corrupted these gov'ts in order to get the oil (and other resources), and then turns around and calls them -- yes, corrupt -- when they in any way don't fully comply.
With respect to your (B) scenario, I'm skeptical that a government or rebel group would regard offshore oil operations as stable enough in the long term to consider saving those reserves for future generations. In the coming oil-short era, the country could easily lose access to offshore assets.
Onshore oil could more plausibly be kept in reserve. Sure, it could.
In the government's place, I would want to pump as much as possible from the offshore fields, then invest the resulting cash in some modernization project inside the country.
The plan is simpler than that.
Pump oil as fast as possible.
Deposit money in Switzerland.
Leave when there is nothing left to loot.
This is exactly the issue. I'm not saying that (B) is a likely scenario (rather, I think that A is far more likely in Africa), but just pointing out that (B) won't necessarily improve the export situation either. It would, I think, greatly improve the lives of the locals, but but it violates one of my laws of human behavior: any solution that requires many people to suddenly behave better than they have in the past is doomed to failure...
I can't remember where I read about it, but hasn't the per capita income in Saudi Arabia declined precipitously over the past 15 years despite oil expansion? I wish I could remember where I read about it, because it was a good article on how the concentration of wealth had the potential to increase social tensions. This would give more incentive for people to explore extremist groups and perpetuate the cycle.
EDIT: Here is some info on the per capita income piece. It doesn't delve into the ramifications, but it's interesting.
Yes, but its mainly due to importation of labor which is breeding like rabbits and creating a lot of uneducated youth that doesn't fit in. The locals are doing better than ever.
Isn't that a mite haughty of you sir? Even if it is a bit cheeky of the imported labor to engage in acts of procreation and such. Of course since they lack your erudition they would not understand why one might call you an arrogant xenophobe of an effete snob, now would they?
That might be so, but the link between income and population growth rate is well established. Rich people don't have as many children.
While not the same, I posted an average per capita GDP figure of $22,080 yesterdaay on another site, which was a rise Y/Y. This site shows estiamted 2007 Saudi per capita income at $20,700. Wikipedia provides a conflicting figure and this little historical context:
This item gives 2006 per capita income as SR55,216 or US$14,725 at current exchange rates. Juan Cole also has an item at his blog about current Saudi conditions, to which I posted the comment mentioned above.
The population is likely to top 30Million this year, while oil sales alone will likley top 1/2 Trillion.
To put this in perspective the GDP of the state of Calififornia is 1.7 Trillion.
http://en.wikipedia.org/wiki/Economy_of_California
Per capita personal income was $38,956
Population of California is 36 million.
http://quickfacts.census.gov/qfd/states/06000.html
Total Saudi GDP is 1.1 trillion.
http://en.wikipedia.org/wiki/Economy_of_Saudi_Arabia
Per Capita oil usage for California is 18 barrels a year or 1.7 mbpd.
http://www.statemaster.com/graph/ene_pet_con_percap-energy-oil-consumpti...
If I was doing the economic planning for the Kingdom I would want the oil prices to at least double or triple over the current prices. And if I was also aware of the mature nature of the oil fields and rising consumption I would be shooting for a final price 5-10 times the current price with a diversified petrochemical industry using the majority of the remaining oil and NG as feedstocks with fertilizer and plastics being major exports. The assumption is that production from Ghawar and the other old fields will pretty much collapse over the coming few years leaving Saudi with long term production levels between 6-3 mbpd and internal consumption around 3-4 mbd and a population between 40-60 million.
Outside of the price projection I'm using to figure out how much money Saudi needs to inject in its economy to bootstrap a more general one based on value add finished products and probably light manufacturing the Saudi's are actually taking all the right steps to reach the goal of a oil centric but diversified economy. My expectation for production may be pessimistic but they have to even with the current production estimates see oil at least double in price to transform their economy. Triple is quite reasonable. 5-10 times is needed if Ghawar is potentially on the verge of collapse in production because of water problems with horizontal wells.
Also one would think the goal is a much higher per capita income approaching 100k with a large slave work force. Take your pick on projections but its a safe bet that KSA will never increase production to encourage a lower world oil price.
I agree with your assessment, Memmel. As shown by my post, just trying to get basic figures to inform others isn't easy. The news bit by al-Jazerra posted at Juan Cole's blog linked above I found very interesting, which I tried to set forth in my comment at his site. Too many people are ignorant of the very complex challenges Saudis face, internally and externally, with the very rapid population growth being #1, IMO. Their whole oil and gas biz should be manned and managed indigenously, and its armed forces should be the equivalent of Israel, but Saudi fails on both accounts. Include food security, and the Saudis have a very steep hill to climb. Then as you mention, there's the need to produce value-added petrochmeical products, and to prepare for the day when the feedstocks slow to a drip. Ideally, there'd be a dynamic allowing the Middle Eastern countries to solve their shared problems in a cooperative manner. The Gulf Cooperation Council is the nascent vehicle providing that dynamic, and it now includes Iran, but they have a long road ahead and need to start by eliminating the Imperial presence and its divisive influence ASAP. Just that sort of alliance is the US and UK's worst scenario. The GCC should bury the Carter Doctrine in a very explicit fashion. Abdullah is probably the most independent Saudi King to date. Time will tell how erudite he is.
What would your source be for that little gem of information? The Secretaría de Gobernación? The Secretaría de Relaciones Exteriores, maybe?? Or would that be a quote from the Minuteman's Border Guard Bible?
Um, the fact that ten percent of the population of Mexico is already living in the US?
This is such conventional wisdom I'm surprised to see it being debated. One sees periodic reference to Mexican officials stating that, in candid moments, they'd have revolution if it weren't for the safety valve of the U.S. for the young and restless.