There is a great deal of controversy in Nigeria about the removal of the fuel subsidy. This subsidy., which reduces the price of domestic consumption
of refined oil products, has always been controversial. It arose because the government’s business of providing this subsidy resulted from its gross mismanagement of the refining of crude oil in the country. The local refineries are old, in a state of advanced disrepair and incapable of turning the vast quantities of Nigerian crude oil into a substance that anyone can use.

So Nigeria exports crude and imports refined products. However, to add to the total absurdity of this poor management, the largest refinery, at Kaduna, doesn’t
even use Nigerian crude oil It imports this from Venezuela. The root of Nigeria’s problems can be found at the Nigerian National Petroleum Company.
The NNPC is the apotheosis of bad management and the mother lode of Nigeria’s corruption. Nigeria is selling crude oil to foreign refiners and paying international prices, plus shipping, for the imported refined products (often made from Nigerian petroleum or illegally ‘bunkered’ crude whose revenues never reach the Treasury),  The difference in price between the high international price charged for imported refined products and the lower price charged for the
limited amounts of crude oil refined in Nigeria is wide. The commercial price of fuel in Nigeria has been pegged at the price of a comparable price from products refined in Nigeria, The government has allocated 450,000 barrels a day of Nigerian crude for use in Nigerian refineries or to be shipped abroad if Nigerian refineries cannot utilise the full 450,000 barrels. This was to pay for the subsidy – essentially keeping the price down to Nigerian refinery levels. Successive Presidents have frequently sought to raise the price of fuels to consumers. Under Ibrahim Babangida’s administration there were two attempts to remove the oil subsidy, but he had to go back on the decision. General Abacha attempted that too, but settled for a fuel price increase and not removal of the oil subsidy.
President Obasanjo, as well, raised the price of fuel after a long and conflicted struggle. A lot of this elevation in consumer price is due to greed as well as incompetence. The simple fact is that shortly before Obasanjo took office on May 29th 1999, the country was importing petroleum products at the cost
of $234.00 per ton during the Abacha and Abdulsalmi Abubakar regimes, but shortly after Obasanjo assumed office, this was reviewed upward without
rhyme or reason to $569.55 per ton; a whopping 143%. The fuel situation in the country is very difficult to regulate as, when prices are lowered or held static, the supply dries up and there are shortages. A small bunch of favoured importers are given the right to import fuel and they shamelessly abuse their
positions in restricting supply of refined products, even though they still get subsidized prices on the 450,000 barrels provided by the government. That
doesn’t count the 65,000 barrels a day the NNPC can’t account for and the 200,000 to 300,000 barrels a month stolen (‘bunkered’) every month. However dreadful and conflicted this problem of subsidy might be, it masks a far more serious problem which Nigeria will soon face. The world oil and gas
market is changing quickly and dramatically. Because Nigeria is unprepared it will be one of the market’s first casualties. The United States, the largest
importer of Nigerian crude oil and natural gas is disappearing as a Nigerian market. The U.S. is fast becoming self-sufficient in gas and almost so for oil as a result of the new methods of extracting oil and gas using shale tehnology. There is a substantial amount of oil and gas trapped in shale below a hard crust of rock not very far below the surface. In recent years there has been the development of a technology which can access these shale oil deposits and
deliver the entrapped oil and gas to the surface. These technologies include “horizontal oil well drilling” and “hydraulic fractioning or “fracking”. “The
first new technology is horizontal drilling, which allows one vertical well to tap widely into a whole layer of oil or gas. The second is hydraulic fracturing, or "fracking," which involves pumping mixtures of water and chemicals into certain rock formations, particularly shale rock. This breaks up the
shale to release the oil and gas that had been trapped in the rock. This "fracking" is a game- changer, unleashing our access to oil and gas that were
hitherto out of reach.”[1]Most
of these are on dry land and do not require deep sea wells or pumping stations. There have been massive finds of “continuous” formations of oil and gas in the continental U.S. Two of the biggest are the formations known as the Williston Basin (more commonly referred to as the Bakken Formation) and the Barrett
Formation. The Bakken is the largest domestic oil discovery since Alaska's Prudhoe Bay, and, on its own, has the potential to eliminate all American dependence on foreign oil. The Energy Information Administration (EIA) estimates its potential at 503 billion barrels. The Bakken is located in the western two-thirds of North
Dakota; western South Dakota; and extreme eastern Montana (and parts of Manitoba). It encompasses some 25,000 square miles in North Dakota, Montana, Saskatchewan and Manitoba. About two-thirds of the acreage is in western North Dakota, where the oil is trapped in a thin layer of dense rock nearly two miles beneath the surface. Companies use pressurized fluid and sand to break pores in the rock and prop them open to recover the
oil. Perhaps even bigger than the Bakken Formation is the Green River Formation of Colorado, Utah and Wyoming which holds the equivalent of 800 billion
barrels of recoverable oil—as much as the U.S. would use in 110 years, at current consumption levels, and three times the proven oil reserves of
Saudi Arabia, In short these two formations make available, within the borders of the US, more oil than all the other proven reserves on earth. Here are
the official estimates: 8-times as much oil as Saudi Arabia; 18- times as much oil as Iraq; 21- times as much oil as Kuwait’; 22-times as much oil as Iran
and 500 times as much oil as Yemen. That is just oil. The amount of gas is equally as impressive. Analysts estimate that the shale in the Marcellus Shale
zone contains between 168 trillion and 516 trillion cubic feet of natural gas, buried as deep as 9,000 feet below ground. Pennsylvania, where the nation's
first oil well was drilled in Titusville in 1859, has become the new Houston of the shale business and drilling has skyrocketed in recent years. In 2007, drillers had 27 wells tapping the Marcellus Shale in the state. The number shot up to 161 in 2008 and to 785 in 2009. Last year, a record 1,445 wells were drilled -- a 53-fold increase in four years. This year, 399 have been drilled as of March 31, according to the Pennsylvania Department of
Environmental Protection. Coal bed technology adds to this supply. The US Geological Survey has dramatically boosted its assessment of Marcellus shale
reserves in the Appalachian Basin to 84 Tcf of undiscovered, technically recoverable natural gas and 3.4 billion barrels of undiscovered, technically
recoverable natural gas liquids. The last time the USGS analysed the Marcellus resource was in 2002 when it reported about 2
Tcf of natural gas reserves and 0.01 billion barrels of natural gas liquids. While the latest assessment represents an increase in reserves by 42
times over the 2002 figures, the estimate is substantially less than the 410 Tcf of technically recoverable reserves developed by Intek, Inc in 2010 and used
by the Energy Information Administration in its 2011 Annual Energy Review. In the 59,000 acres of the Deep River basin in North Carolina
experts have concluded that Lee, Chatham and Moore counties alone ould produce enough natural gas from shale to make North Carolina self- sufficient for 40 years at current levels of consumption. The "fracking" revolution carries some further implications. Most electricity around the world is currently produced by coal. "Fracking" allows the coal to be replaced by much cleaner natural gas, which releases less than half as much in carbon emissions. Moreover, gas-fueled
power stations are fast and easy to spin up to full power. This makes them the perfect partner for solar and wind technologies, which need backup
power stations to take over the load when the wind drops or the sun goes down. In short, "fracking" means the world may have much more semi-clean energy available than was assumed when the Kyoto Protocol targets on CO2 emissions were first proposed. It is not a perfect cure because natural gas is still a fossil fuel and still emits carbon, but it changes the time horizons. At present there are environmental concerns which have impeded the spread of
fracking techniques globally,  Environmentalists have worried that hydraulic fracturing can pollute underground water sources and cause earthquakes. This is a soluble problem as the rush to ever new technology is obviating many of these concerns. Componies like Algepower in Vermont have
prouduced systems which will purify and recycle the fracking water to filter out pollutants, These problems are technically solvable and with the rush of big money into shale oil and gas production the lead times in their solution are very short. The problem for Europe, Africa and Asia is that, while they too have shale deposits, they lack the existing infrastructure to use it without enormous costs. The great advantage of North America is that it already has a vast network of oil and gas pipelines already built and functioning. It will take a great deal of infrastructural cash to construct a similar network of pipelines in Europe or Asia. It is
worse in Africa as the export of gas is achieved in cryological ‘trains’ which liquefy the gas and prepare it for long shipments in specially-built refrigerated gas ships. The gas in North America does noy have to be cryogenically treated (except for exports) and the shipping cost is very low or at least no hjgher tha decanting imported natural gas. The advantages of moving to a gas economy are many, in addition to their reduced carbon burden. Trucks, buses
and even naval vessels are being converted to gas power. Gas doesn’t have to be refined. It takes no cracking tower to produce energy that people can use. There are no bottom ends of the barrel to dispose of and many of the chemical byproducts (ethylene, fertilisers and polymers) can be made from gas as well as oil. What will this mean to Africa, and indeed Russia , whose economies are based on the export of oil and gas – giant economic monocultures? Russia
has all but lost its title as the world’s biggest producer of natural gas to the United States, and Moscow appears unlikely to reclaim the No. 1 spot. Russian gas output dropped 12 percent to 582 billion cubic meters by 2010 as demand in the key market, the European Union, slumped amid the economic crisis and an influx of cheaper supplies The Europeans are choosing between new import trains and pipelines to Russia. The pipelines look to be the more politically as well as economically expensive The United States is set to top that figure because of booming shale gas production and the beginning of a major US export trade in gas. Russia was protected from the drop in its gas production by becoming the largest supplier of oil. Now, with the burgeoning North American
shale oil available, the US will be able to withdraw from the world oil market and achieve autarky in energy within fifteen years That will dramatically
drive the price of oil down as vast oversupllies will develop. The large sums of money required to produce the energy yields in places like the
Stochkman fields in Siberia will not be enough to justify their production. This will have a dramatic effect on the market.
China has dscovered a large number of giant shale plays in north-eastern China which will further complicate the market. For Africa, especially Nigeria, the
effects of these changes will be devastating. For years Nigerians have refused to invest in agricultural production. It imports large quantities of food stuffs into the country while its own field lay fallow. It has not used its oil revenue to build a modern road system throughout the country. It has not built the
railroad links the country desperately needs. Energy production is marginal at best and a generator is required for even the smallest businesses to survive. In short Nigeria has wasted it resources and diverted the revenue streams for the personal gain of the elites. Angola has been investing
heavily in agriculture as it used to be a major breadbasket for Europe even though it, too, is a major oil producer. The Chinese, whose food needs exceed their
energy needs, are investing heavily in agricultural projects across Africa. They are investing as well in extractive industries. Nigeria has coal, butit doesn’t
use it. It has large deposits of tin but the trade is minimal. There is is uranium in eighteen Nigerian states but it has ignored the business. It is now fighting about the oil subsidy as the whole country is sinking into an economic morass that no tinkering will be able to fix. Forty years of neglect has cursed the country; both the military and the civilians are to blame. The time is rapidly running out on creating a plan to withstand the growing menace of North American shale oil and gas. It would be a very bold man who thought that the present Nigerian political leadership could ever properly address this challenge.

When the rich man made his feast of the poor man’s beans he forgot he was also eating the seeds of his future survival.