Just having a chart with a senior colleague this morning about the decline in oil price to less than $75 per barrel; the implication will be enormous on Nigeria whose sole dependency on oil oil revenue is as high as 80%. U.S. oil production, which has increased to nearly 9 million barrels per day and is expected to average 9.4 million barrels per day in 2015, we have negative impact on Nigeria; many oil majors may not want to go ahead with new investments. Madam Ngozi Okonj0 Iwella has expressed her fear recently; many senior colleague express more fear.
Please what is your own take.

There may be no money from oil from 2015 oh.......................

All major oil driven economies understand the unpredictability of oil price. I don't think the Nigerian Government is an exception ... I hope I'm not wrong.

The United States is aggressively pursuing an "oil independency" program that seems to be working well for now. There is increase oil exploration in the Gulf of Mexico and also shale-oil production on land. As a fact, US has stopped buying Nigerian crude. So, Nigeria needs to seriously explore other market areas for crude sales.

LESS DOLLARS TO PAY FOR IMPORTS= FUEL, CARS, HOUSES ABROAD, EDUCATION ABROAD, SHOES, CLOTHES, LAPTOPS, BLACKBERRY, IPHONES, PRIVATE JETS, IMPORTED HAIR, ELECTRONICS,


WILL RESULT IN LESS AVAILABLE DOLLAR SINCE CRUDE BRINGS IN FOREIGN CURRENCY,

WHICH IS USED TO BUY IMPORTS

RESULTING IN INCREASE IN PRICE OF DOLLAR DUE TO HIGHER DEMAND OF DOLLAR AND LESS DOLLAR DUE TO LOWER CRUDE OIL REVENUE

LONG TERM SOLUTION; IMPORT SUBSTITUTION AND PRODUCTION OF ALL AND MOST IMPORTS IN NIGERIA.....AND POWER

it means that we ,as Nigerians should refocus on agriculture and generate more revenue from it.We need to add value to our products to compete well outside.Nigerians can do it

Laird:
LESS DOLLARS TO PAY FOR IMPORTS= FUEL, CARS, HOUSES ABROAD, EDUCATION ABROAD, SHOES, CLOTHES, LAPTOPS, BLACKBERRY, IPHONES, PRIVATE JETS, IMPORTED HAIR, ELECTRONICS,


WILL RESULT IN LESS AVAILABLE DOLLAR SINCE CRUDE BRINGS IN FOREIGN CURRENCY,

WHICH IS USED TO BUY IMPORTS

RESULTING IN INCREASE IN PRICE OF DOLLAR DUE TO HIGHER DEMAND OF DOLLAR AND LESS DOLLAR DUE TO LOWER CRUDE OIL REVENUE

LONG TERM SOLUTION; IMPORT SUBSTITUTION AND PRODUCTION OF ALL AND MOST IMPORTS IN NIGERIA.....AND POWER

You are right;reason why dollar rate has gone up

I pray that oil will crash and there will be less agitation for power and we will focus on other sectors like agriculture and steel

Everyone has rightly noted potential implications.

(1) Less revenue to Nigerian Government, which means less funds to disburse to states/ LGAs, thereby affecting capital projects since most of the revenue allocation go into recurrent expenditure, Government won't lay off people to avoid more social instability, however, projects will stall.

(2) Since Government still relies heavily on crude oil sales, it may begin to look for alternative quick fixes which means increasing tax revenues, reducing subsidies paid and may therefore be talking about taking out fuel subsidy completely (this has always been part of the current administration's agenda, but not likely to implement it until after elections, if re_elected)

(3) Other implications include pressure on naira, pressure on foreign reserves, excess crude account/sovereign wealth fund, with depleting reserves, which is used to defend naira.

(4) Importers will have to pay more for less goods, therefore they'd transfer the extra cost on consumers in Nigeria, leading to cost_push inflation.

Note: price of crude oil is not only determined by market forces, it is a strategic product whose pricing mechanism could be used to deal with some nations by powerful western forces. Russia is also feeling the effect of drop in price, and it may not be unconnected with their role in global politics since annexing Crimea and the plane crash involving hundreds of dutch.

Coupled with that, Saudi Arabia needs their oil in the market to compete with U.S shale oil, if they reduce supply to increase price, there is a substitute now to some extent.

OPEC meets next week to deliberate on this price issue, but before then, price may continue to slide.

Nigeria must take the issue of diversification very seriously and put it at the front burner.

Regards.

Ugwuanthonyike@gmail.com