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would be difficult to exaggerate the role of oil in the Nigerian economy. Since 1974, oil produced each year more than 90 percent of the first oil price shock in the Nigerian export revenues. In 2000, Nigeria received 99.6 percent of the export revenue of oil, making it the world’s most oil-dependent country.
Oil production also had a huge impact on the Nigerian domestic sector. One way to describe the impact of the oil produced by the look rents – ie, production costs in excess of the yields – the Nigerian economy. From 1970 to 1999, oil generated nearly $ 231 billion rents in the Nigerian economy, in constant dollars 1999th these awards since 1974 have constituted between 21 and 48 per cent of GDP.
Yet remarkable that these charges failed to raise incomes and Nigeria has done much to reduce poverty. Since 1970, Nigeria’s per capita income fell about four per cent, in constant dollars. Although the rate of poverty in Nigeria is never easy to measure, there is little sign that they have decreased over the last three decades.
This has not improved striking, given the size of Nigeria’s oil windfall. Will oil each year lease invested in a fund that yielded only five percent real interest, at the end of 1999, the fund would be worth $ 454 billion. If shared among the population, every man, woman and child receives about $ 3,750, which is about 15 years of wages.
Oil was also deeply influenced by the Nigerian government. Since the 1970s, the Nigerian government has received more than half a year in revenues – sometimes up to 85 percent – directly in the oil sector. These oil revenues are not only big, they are also highly volatile – that is, they can fluctuate dramatically from year to year the size, which is the size of government, and finance government programs, should fluctuate. For example, 1972-1975, government spending increased by 8.4 percent to 22.6 percent of GDP; In 1978, it fell to 14.2 percent of the economy.
There are few governments are able to cope with such volatility, and this is not surprising – in retrospect – that the Nigerian government was unable to meet a wise fiscal policy in the 1970s and 1980s, when oil prices fluctuated sharply. The decentralization of the management of the Nigerian government in voice revenues is even more difficult because much of the oil revenue is automatically passed on to the federal government to state and local governments. The ability of these governments to spend the funds wisely and limit corruption was low.
Nigeria’s oil wealth has also led to social and political unrest, particularly in the Niger Delta. The Igbo effort to secede from Nigeria, which is the 1967-1970 civil war, is deeply rooted ethnic tensions in Nigeria and colonial past; but the rebellion was encouraged by the presence of oil, and thus the belief that independence would be economically beneficial to the Igbo. Similarly, among the Ogoni and Ijaw peoples unrest in the Niger Delta in part be traced back to the desire to win a bigger share of the economic wealth of the region.
If the Nigerian crude oil will soon be depleted, these issues may recede in the past. But there is every reason to believe that over the next few decades, Nigeria’s dependence on oil exports remain exceptionally high; perhaps even grow. It is estimated Nigeria’s proven oil reserves range from 24000000000-31500000000 barrel [EIA 2003]; The current production rate of 2 million barrels per day, these reserves alone takes 32 to 43 years. Nigeria is estimated 124000000000000 cubic meters of proven natural gas reserves are the ninth largest reserve in the world; This rapidly expanding capacity to liquefy and export the gas, which will further raise the oil revenue.
International demand for Nigeria’s energy supply will almost certainly remain strong. World energy demand is expected to rise more than 50 percent over the next two decades; growth in demand for natural gas is expected, especially in the fast [CSIS 2000]. The high quality Nigerian oil, Nigeria and places outside the volatile Persian Gulf, suggest that global demand in the Nigerian oil and gas remain high in the coming decades. While this is good for the Nigerian petroleum sector poses major problems for the economy and the government.