When the U.S housing market collapsed in 2007, little did anyone, including leading economists, market makers, and legislators know that it would lead to the collapse of the world economy. Today, the U.S remains a struggling economy with massive unemployment, up to 15% in some states and close to 25% for minorities in other states.
No one can accuse the U.S. of being a one horse economy. The housing industry was just one of the thousands of industries that make up the American economy. Yet its collapse created economic tsunamis across the world, and most countries affected, including the U.S have yet to recover.
One of president Obama's dreams is to reduce U.S. dependence on foreign oil. In fact this dream is also shared by most Americans, and it has nothing to do with Nigeria’s future except that if it comes true, it would become Nigeria’s nightmare.
With the whole world clamoring for green energy, the consequences for a country like Nigeria where 95% of its foreign earnings comes from oil and 65% of government spending is from oil revenue is very scary.
Nigeria’s new president touched on this dilemma recently on his Facebook page where he wrote of, “moving the economy away from dependence on foreign oil to a more sustainable sources of income as agriculture and its allied industries.” Leaders like former EFCC chairman Malam Nuhu Ribadu and other Governors like Lagos state’s Babatunde Fashola have also mentioned on the dangers of over dependence on oil.
Nigeria can truly be described as a one horse economy. Even with Nigeria’s sole dependence on oil revenue for income, the danger of such dependency is not apparent to the people of Nigeria and its leaders, and where it is apparent, there does not seem to be the urgency to address it.
Even the Chinese are investing in electric cars to hedge their bets against future dependence on imported oil. The China National offshore Oil Corporation is a major investor in Coda automotive, a California company that plans to deliver 100 miles between charges car later this year. By 2050, over 40% of cars on the road could be electric.
Companies like Coda automotive wants to do away with gas electric hybrid altogether.
Last week, an electric car dealership, named Zap opened in my backyard, at the Riverside auto center in California. Since California is a trail blazer, I can see hundreds or even thousands of dealers opening shops in the next 10 years.
According to a fortune magazine article of March 2010, “The U.S. Government’s mandate for renewable energy is 36 billion gallons of biofuel in U.S fuel supply, up from 12 billion today. The U.S government is also in the process of guaranteeing $4 billion to build the longest ethanol pipe line in the world stretching for 1800 miles across seven states carrying 240,000 barrels of ethanol per day linking refineries and corn fields in the Midwest to fuel consuming markets in the east coast.”
“The Obama government has also announced an $8billion loan guaranty to Georgia utility Southern Company to build two large nuclear reactors.” According to Fortune magazine, America has been searching for energy independence for almost 40 years.
With R&D and massive government and private investments, the U.S has found ways to access previously inaccessible amounts of natural gas that is cleaner than coal and oil that can make the country more self reliant.
With its massive oil sands, Canada could be supplying up to 6million barrels of crude to the US within a year. Even if Obama’s dream is delayed, countries like Canada could easily replace Nigeria’s oil exports to the U.S within a few years.
Can America afford energy revolution? As a Nigerian American, living in America, I am caught between the rock and a hard place. Reducing foreign dependence oil is a priority to me also because I am tired of paying $3.50 per gallon to fill my gas tank. However, if the U.S. succeeds in reducing its dependence on foreign oil, countries like Nigerian will be brought to their knees very fast because they depend on oil exports to America for almost 95% of their foreign exchange earnings.
Should Nigerians include in their prayers that Obama fails in his dream of reducing American dependency on foreign oil. If Obama were to succeed, Nigeria will be in a world of hurt, because Nigeria ships over 1 million barrels of oil to the U.S. daily.
President Obama's campaign promise to Americans was to wean them off their dependence on foreign oil. Nigeria is the 4th largest oil exporter to the U.S. So if The U.S. Stops importing Nigeria's number source of revenue, what will happen to the Nigerian people? Are the Nigerian leaders prepared for this eventuality? Are the Nigerian leaders even planning for this eventuality? To say that the U.S. is seeking oil independence is an understatement.
The U.S. has been seeking energy independence for over four decades. Every successive U.S. Government has at one time or the other nursed the idea of making the U.S. Energy independent. The U.S. has a reason to want energy independence. After all, every war that the American people have been involved with in the last 40 years probably had something to do with oil. In the last 8 years, American has been bogged down in Iraq and Afghanistan where over $1trillion of American tax payer’s money has been spent under the pretence of containing terrorism, but if you ask the average Americans, they will tell you that we are in Iraq because of oil.
America's bases and thousands of soldiers stationed around the world are not unconnected with securing a steady oil supply for the insatiable appetite of the American consumer for oil. Even though the U. S. has only 4% of the world population, we consume 25% of world oil supply.
As Americans, we allow our leaders to dream, after all, President Kennedy once dreamed about the U.S. going to the moon, and when he set the goal for the U.S. to put an American on the moon, most observers may have labeled his goal a dream. Dr. Martin Luther King Jr. once had a dream that one day a little white girl will hold hands with a black girl, in other words, America will be fully integrated. Today we have a Black President. So, as far as the Obama's administration is concerned, energy independence for Americans may not remain a dream for too long. In addition to massive government investment in renewable energy, the private sector has pumped billions into R. &D which has led to trillions of previously inaccessible sources of domestic natural gas for the U.S.
In an article written by Phillip Emeagwalli the eminent Nigerian who has been "extolled" as "one of the great minds of the information age, he said, "Africa must produce or perish" He was imagining a world without oil and what the consequences might be. What about a world where oil is no longer relevant and there are alternatives for the Nigerian oil? For example, if the world were to suddenly produce more automobiles that run on batteries, more nuclear power is built to produce electricity, and every house hold in the U.S. converts to natural gas instead of oil to heat their homes. Under this scenario, the U.S. begins to reduce its dependence on Nigeria's oil and in five years, or 60 months, Nigeria's revenue from oil goes from $200 billion a year to $150, $100, and $20billion. Is Nigeria ready for a life without oil revenue?
Even though Nigerians may not believe that this could happen, but please don't discount the American dream. President Obama’s dream is the American dream and it is alive and well. It is this writer's dream as an American, but also as a Nigerian, I don't want it to be Nigeria's nightmare. As an American, I worry about my country that is dependent on foreign oil and as a Nigerian, I fear for my county that is dependent on oil as its main source of income. So if President Obama’s dream becomes a reality, it is our job to make sure it does not turn into a nightmare for Nigeria. In my next piece, I will discuss several ways that Nigeria can accelerate and diversify its revenue base.
Toyin Dawodu is the Managing Partner of Capital Investment Group, a California based Diversified Investment Company focused on infrastructure development in Africa. Email:[email protected]