Fuel Price Discourse: Oil: Prize Or Curse? an International Quagmire

Vanguard (Lagos)
ANALYSIS
July 15, 2004
Posted to the web July 15, 2004

Reproduced from:
http://allafrica.com/stories/200407150257.html

For Fair Use only

Chidi Achebe & Paul Epstein

A nightmare of an unending stream of mediocre leaders turned this once burgeoning nation into a 'basket case.' The presence of eager and equally scheming multinational oil company executives, and easy access to petro-dollars, helped fan skyrocketing corruption, particularly in the public sector. This created a suitable milieu for a culture of "kickbacks," government sanctioned bunkering of oil, and the emergence of a corrupt and politically inept leadership desperate to cash in on the bonanza.

Devoid of the moral, ethical, intellectual, or ideological discipline and preparation for leadership, some of these individuals stashed away millions and in a few exceptionally offensive cases, placed billions of dollars in foreign bank accounts. All this as the country burned. "Nero would approve!"

Social historians remind us that corruption in Nigeria wasn't always as bad as it is today. Before the advent of the "oil era," Nigeria's economy was principally driven by agriculture. She was one of the three largest exporters of cocoa, and one of the world's leading palm oil, palm kernel as well as groundnut producers. Legend has it that the Malaysians came to Nigeria to learn how to produce palm oil during this period. Malaysia is now the largest producer and exporter of palm oil in the world. Palm oil provides about 10 per cent of the Malaysian Gross Domestic Product (GDP). Today, sadly, Nigeria imports most of her food, and ironically, also purchases palm oil from Malaysia!

By the 1960s, a series of 'petty government scandals involving certain federal ministers' piqued the Nigerian national consciousness. The "oil boom years" of the 1970s and early 1980s saw the evolution of bribery and corruption into a social pathology. However, by the 9th decade of the 20th century, corruption had been clearly elevated to "cult sport status." Today, that legacy has turned corruption into a national pastime, paralysing any possibility of meaningful development. James Wolfensohn, President of The World Bank makes a crystal clear prognosis: "Corruption is a cancer in the country (Nigeria). You can pretend to live with cancer, but it kills you."

'The Open sore of a continent' -- Wole Soyinka

It is difficult to determine just how badly a country is performing without comparing poverty indices across nations in the world. Here are some indisputable facts: 70 per cent of Nigeria's almost 130 million inhabitants live in abject poverty, defined by the World Bank as "subsistence on less than $1 a day." According to the UN, only 50 per cent or a half of all Nigerians have access to safe water. Today in Nigeria, life expectancy is between 49 and 52 years and infant mortality is over 77 per 1000 births -- one of the highest in the world and a figure comparable to that of war-torn Afghanistan!

In the 1970s, Nigeria's GNP per capita income approached $500, a figure that peaked at nearly $2,000 at the height of the 'oil boom' between 1978 and 1982. Today, Nigeria's GNP per capita income is $260. Once described as a middle income nation by the Paris Club, three decades of government corruption, and apathetic followers, has seen Nigeria reclassified as one of the 20 poorest nations in the world. The expert analysis of Victor E. Dike reveals even more: "Nigeria's current GNP per capita of about $260 is below that of less affluent countries such as Bangladesh with a per capita income of $370.

Nigeria's low per capita income compares with those of smaller African countries with less endowment in natural resources, such as Tanzania with a per capita income of $260 and Mozambique of about $220. African countries that enjoy impressive standard of living are South Africa with a per capita income of $3,170, and Botswana with a per capita income of $3,240. Nigeria's poor per capita income becomes more frightening when compared with those of some Western nations. For instance, the GNP per capita income of the United States was about $27,086 in 1996 (USAID 2002); and recently that of Britain was put at $23,590 (The Commonwealth Yearbook, 2002). This is not to mention the impressive economic performances of the four Asian Tigers of Singapore, South Korea, Taiwan and Hong Kong!"

Many an analyst has spent sleepless nights pondering over the reasons for Nigeria's predicament. In the preceding section on poor leadership and corruption, we started to crack this conundrum. However, it may also be useful to examine the role of the oil industry in the under-development of Nigeria.

Political uprisings and resistance

Two reasons underpin most of the civil unrest in the Niger River Delta area. The first is the unfair distribution of the country's annual oil revenues among the Nigerian population, a practice that favours non-oil-producing regions of the country. The second has to do with seething resentment towards the Oil Multinationals for their role in the devastation of the environment. Although all multinationals have been targetted in the disputes, Shell has been the main focus. The new democratic dispensation has not brought an end to political uprisings in the area.

Civil unrest has resulted in over 5,000 deaths since the transition to democracy, and has resulted in the closures of terminals and flow stations. Karl Meier tells more: "Violence in the Niger River Delta, home to a majority of Nigeria's oil reserves, kills about 1,000 people a year, on par with conflicts in Chechnya and Colombia, according to a Shell-funded reportâ-oe. The 93-page survey also said Shell itself "feeds" the violence and may have to leave the area by 2009."

The recent removal of oil subsidies by the Federal Government has resulted in a hike in oil prices, labour union demonstrations, the resurgence and significance of the black market, and long lines at petrol stations. President Obasanjo continues to insist that the hike in fuel prices is the right measure to stimulate the oil sector and the economy.

Lay and expert observers alike continue to contend that the amount of money that is lost via corruption would be sufficient to maintain oil subsidies, and keep the price of petroleum products affordable to the average Nigerian. President Obasanjo has committed his government to resolving the problems and cleaning up the industry and the government in terms of corruption. Environmentalists, local and labour leaders are not holding their breadth.

Environmental devastation of the Niger Delta

"Appalled by the denigrating poverty of my people, who live on a richly endowed land; distressed by their political marginalisation and economic strangulation; angered by the devastation of their land, their ultimate heritage; anxious to preserve their right to life and a decent living, and determined to usher into this country as a whole, a fair and just democratic system which protects everyone and every ethnic group and gives us all a valid claim to human civilisation, I have devoted my intellectual and material resources, my very life, to a cause in which I have total belief and from which I cannot be blackmailed or intimidated." -- Ken Saro-Wiwa Closing statement to Nigerian military court.

clutches of multinational corporations such as Shell which have destroyed their homelands through environmental pollution.

The Niger River Delta is an environmental disaster zone. Between 1986 and1996, 2.5 million barrels-equal to 10 Exxon Valdez disasters- has been spilled in this region. The burning of 8 million cubic feet of natural gas everyday compounds the environmental catastrophe.iii According to Green Peace:

"Since the beginning of Shell's operations in the Niger Delta, the company has wreaked havoc on neighboring communities and their environment. Many of its operations and materials are outdated, in poor condition, and would be illegal in other parts of the world"iiii

The Sierra Club goes even further:

"The Oil Industry has had devastating effects. Our report found 'badly maintained and leaking pipe lines, polluted water, fountains of emulsified oil pouring into villagers' fields, blow outs, air pollution.' Farms and fisheries are spoiled, and the mangrove swamps, which provide people with building and other materials and are a vital part of the ecosystem, are disappearing. At the same time the people get little benefit from the immense wealth being generated."iiiii

Pollution caused by the oil and natural gas industry has been mind-boggling and extensive. It has led to ground water pollution, which in turn has caused outbreaks of diarrhea epidemics. Birth deformities are on the rise as are certain soft tissue cancers. Environmental pollution has led to the displacement of farmers and their families into surrounding urban centers already ill equipped to deal with the economic, social and health requirements of their burgeoning populations. Most of the new migrants in these urban centers become trapped in cycles of poverty and penury.

LAND AND SOIL DEGRADATION

One of the major causes of the 'rural flight' is the pollution of the soil and land and the concomitant, progressive reduction in crop yields in the Niger River Delta. The oil industry has caused soil and land degradation through multiple mechanisms. Soil pollution has led to a decline of soil fertility through the dumping and build up of toxic substances.

There has been a deterioration of soil physical properties as a result of reduced organic matter (the structure, aeration and water holding capacity of soil is affected), and reduction of soil organisms. There has also been an associated decline in soil biological activity. Other devastating effects of polluting activities include water logging, increase in salt or starch soil content, sedimentation or "soil burial", loss of vegetation cover through deforestation, and soil erosion.vvvv

Nigeria lost approximately 469 square miles annually to deforestation between 1990 and 1995 according to the World Bank figures. This value, however, includes only those areas lost due to shifting cultivation, permanent agriculture, ranching, settlements, and infrastructure development, and does not include the areas of land loss due to fuel wood gathering.vvv Be as it may, 96% of Nigeria's pristine forests have been cut down!

BIO-DIVERSITY LOSS

One of the immediate consequences of this form of human intrusion is significant loss of biodiversity. Under this strain, species may be pushed to extinction. The ecological benefits forests provide to the environment, such as watershed protection, nutrient recycling and climate regulation are lost with deforestation of this magnitude.iiii

Other consequences include decreased species diversity, due to reduced habitable surface area, which corresponds to a reduced "species carrying capacity". Genetic diversity diminishes as the size of habitats shrink. This phenomenon also drastically affects the populations of species living in these environments. Smaller habitats can only accommodate smaller populations; this results in an impoverished gene pool. Flexibility and evolutionary adaptability to changing situations is severely hampered as the genetic resources of a species diminish. This has significant negative impacts on species survival.iiiii

AIR POLLUTION

As a result of the gas flaring activities of Shell and other multinational oil companies, Nigeria has worn the unflattering badge as the world's leader in natural gas flaring. This activity has produced 'acid rain' and amplified the number of respiratory ailments and lung pathologies in the region.

According to the World Bank, 87% of all associated gas is flared by Shell and her cohorts as compared to 21% in Libya and 0.6% in the United States. World Bank records highlight the fact that the Niger Delta atmosphere receives 80 billion cubic feet of gas from the oil industry's flaring activities. This gives Shell Petroleum Development Company (SPDC), the dubious distinction of being one of the world's chief contributors to global warming.iiiiii Happily, the Liquefied Natural Gas projects, now beyond phase-2, may reduce Nigeria's contribution to the world's climatic instability.

WATER AND MARINE POLLUTION

There is an absence of pipe borne water in the Niger Delta area. Most of its freshwater is obtained from wells dug with antiquated technology by the villagers themselves or obtained as "fetching water" from streams or creeks. This makes the inhabitants of this region particularly vulnerable to environmental pollution.xxxx

Ground, fresh and marine water in many ways is the final meeting point of other forms of pollution - particularly air, land, and soil pollution. Land pollution either from oil spills or from leaching or erosion from soil or acid rain, often finds its way into creeks, streams and rivers, which ultimately contaminate marine bodies and seep into ground water.

The oil industry's extraction of petroleum from the coastal area and the continental shelf of the Gulf of Guinea, compounded by activities devoted to the exportation of the oil products, have had an increasing, detrimental effect on marine ecosystems. Scores of ships that move in and out of the Gulf of Guinea have produced millions of metric tons of oil sludge that end up on the seabed contaminating marine habitats. The sludge is discharged from the marine tankers when they release their ballasts, since the vast majority of them are not equipped with oil and water tank separators, referred to as segregated ballasts tanks (SBT).

Very little documented information is available about the quantity of oil that is spilled by the oil industry's offshore jetties. Indirect evidence from oil washed onto coastal shorelines and beaches in the area suggest that the pollution is significant. Their coastal location makes mangroves vulnerable to marine oil spills and on-going pollution from offshore rigs. The oil spills in mangrove habitats permeate exposed tree trunks, accelerating the rate of decay of these precious plants and leads to shore line erosion. Devastated also are the fauna and flora, organisms big and small that depend on mangroves for survival. The destructive spiral continues down the food chain as fish populations diminish as do fisherman harvests.

"WE ARE DYING" : OIL POLLUTION, SICKNESS AND DEATH

The impact of the Oil Industry's presence on the health of the inhabitants in the Niger Delta is multi-dimensional. The salient areas are discussed below.

The combustion of fossil fuels produces a toxic mixture of gasses and coated carbon particles. Carbon monoxide, carbon dioxide, sulfur oxides, nitrogen dioxide and various polynuclear aromatic hydrocarbons (PAHs) are produced during this process. 'The particulate matter in the smoke column is what is most injurious to human health. The small particles, 10 microns or less in diameter are most lethal. These particles are the ones that are small enough to lodge in human lungs'. Long term exposure to these substances impairs human health the most severely.iiii However, short-term exposure to high concentrations can aggravate symptoms in sensitive individuals with heart or lung ailments such as Asthma, COPD or Coronary Artery Disease. Lung cancers can also result from long term exposure to air borne pollution. This problem is being encountered throughout the Delta region.iiiii

Oil spills and spills are capable of generating serious air pollution whether or not the oil undergoes combustion. The toxic fraction of light crude oil (found in The Niger Delta Region), evaporates most easily carrying with it a deadly cocktail of PAHs, including benzene (a known human carcinogen) and toxic fumes, such as toluene, xylene, butane, and propane. Air quality after such spills is compromised for an extended period of time - enough to seriously impair human health.iiiiii Acid rain further complicates the problem, altering surrounding streams, creeks and polluting ground water.

The incidence of skin diseases from bathing in polluted water has dramatically increased. Ground water pollution causes repeated outbreaks of diarrhea.

Malnutrition with the evidence of Kwashiorkor has returned to this part of Nigeria (it was last evident during the Civil War). The combined impact of water and land pollution is responsible for crop failures and diminishing fish populations.

LEAD POISONING

Unlike most of the West, petroleum refined for automobiles is still laden with lead. The team of Nigerian scientists Obioh, Oluwolu and Akeredolu et al, in their thorough study of Lead Poisoning in Children in Nigeria, provides remarkable evidence of the far reaching effect, albeit indirect, of the Oil industry on the health of Nigerian children. In their randomized sample of children between the ages of 1-6, they found the average blood lead level to be 106 micrograms/liter, and 2% of the children had a blood level greater than 300 micrograms/liter. The five-year-old Nigerian children in their studies were found to have the most elevated serum lead levels. For comparison, the acceptable upper limit of normal for the United States is debatable, but ranges from 10-15 micrograms/dl.

Other authors of similar studies came to parallel conclusions, and ascribe this finding to long term exposure to environmental pollution during playtime outside. They report the total amount of atmospheric lead emissions to be about 3000 metric tons a year. The main culprits for this problem were found to be the use of leaded gasoline in cars and combustion from the oil industry.vvvv

There is suggestive information about the role of lead in hypertension. However, links to kidney disease and neurological damage -blindness, brain damage, seizure disorders - have been firmly established. Convenience sample surveys of individuals living in this part of Nigeria, suggest that these disorders could be a major problem amongst Delta inhabitants, though careful studies are needed to confirm this.iiiii

ARSENIC

Arsenic, widely distributed throughout the earth's crust, is introduced into groundwater from erosion and dissolution of arsenic-containing mineral ores. In addition, the combustion of fossil fuels is a significant source of arsenic in the environment.iiiiii Arsenic has been found in the wells dug for drinking water in the River Niger Delta and long term exposure has been linked to a variety of illnesses including hypertension, diabetes, cardiovascular disease, and infertility, cancers of the skin, lungs, urinary bladder and kidney.

CYANIDE

Toxins such as phenol cyanide and sulfide-suspended solids are also found in large concentrations in the River Niger Delta. Cyanide is a particular problem, because cassava - a primary food source in this region - contains cyanide at its early stages of its growth (to ward off insects). People have evolved in association with this staple crop and have thus survived in the presence of substantial high serum levels of cyanide. But Shell's oil pollution, particularly through leaks and spills, has led to the bioconcentration of this toxin in animals, fish and plants ingested by humans.

These added overwhelms the innate evolutionary serum cyanide counteracting mechanisms, leading to elevated serum levels, rendering the regions residents more vulnerable to cyanide-related disease. Cyanide's effects on the neurological system (disabling neuropathies), the thyroid gland and the respiratory system are well documented.iiiiiii

Florence Obani-Nwibari et al. impart this information about the health of Ogoni (a major ethnic group in the River Niger Delta) women and children:

"The physical health of the people, particularly the women, has deteriorated. Exposure to gas flares and contaminated water has caused health problems. Ogoni people eat fish from poisoned streams. Most do not have the resources to pay for health care and medicine. Even for those who do, there is not a single fully equipped government hospital in Ogoni land. Women frequently die at childbirth or give birth to premature babies. The lack of diagnostic medical laboratories in Ogoni prohibits us from knowing the extent of the health problems caused by oil pollutionâ-oe."1

SOME SOLUTIONS AND STRATEGIES

A)SAVE THE ENVIRONMENT:CLEAN UP THE NIGER RIVER DELTA

For thousands of years, human settlements in the Niger Delta, endowed with discipline and respect for its surroundings, existed in symbiosis with one of the largest, efficient and productive equatorial ecological systems in West Africa. It is now evident to many observers that driven by greed and profit, four decades of multinational oil exploitation in this region has resulted in one of the worst environmental offenses in history.

Shell and other multinational oil corporations would be wise to heed their own funded reports that encourage them to clean up the Niger Delta; or should be forced through all possible legal channels to do so. Programs to provide social and health care services must be complemented by cleaning up the vast Delta Region of Nigeria. Only extensive ecological reconstruction of this once extremely productive area can possibly redress and reverse the destruction of the environment and the dispossession, destitution and denigration of local populations.

With the enormous profits gained from the region over the past four decades, oil industries can easily afford to do this. As a major producer of oil for combustion and flared gas that directly emits greenhouse gases, it is in the interest of the world community to clean the Niger Delta and dramatically the extractive practices. Reducing demand for oil through greater efficiency is the part other nations can play.

B) STAMP OUT CORRUPTION

"Nigerians are corrupt because the system they live under today makes corruption easy and profitable. They will cease to be corrupt when corruption is made difficult and inconvenient"

- Chinua Achebe 2

It is clear that strong leadership is central to the solution of corruption and other social pathologies in Nigeria. Skyrocketing subornment has been kept alive by a history of easy and unrestricted access to large amounts of petrodollars by government officials, without accountability. Individuals who have clearly looted the national treasury have borne no cost, setting the stage for a legacy of 'kleptocracy.'

There has been a great deal of 'nice sounding government rhetoric' about fighting corruption. Access to the nation's wealth, i.e. petrodollars that fuel the corruption, must first be controlled and restricted. The current democratic dispensation provides a novel chance for Nigeria to cultivate a culture of accountability, openness and transparency in government, as well as in the oil sector.

Developing a system of checks and balances that makes "corruption inconvenient" - enforcing jail terms for the guilty; mandating unannounced auditing by non-government firms with impeccable reputations; making government earnings public; publishing oil corporation account portfolios - costs, expenditures, salaries, budgets, etc. - can have a profound effect in redirecting Nigeria's downward course and weakening state.

The ripple effects of such a transformation would be felt in a myriad of areas. Most profoundly, it would set the stage, at last, for a generation of leaders who adopt public service to "serve the nation, and not to get rich".

C) READING THE WRITING ON THE WALL: ECONOMIC DIVERSIFICATION

Nigeria depends on oil for 90-95% of export revenues, and over 90% of foreign exchange earnings. A similar story can be told of several other African oil producers. As a finite source of energy, fiscal dependence on the sale of fossil fuels is beset with future financial instability and does not provide the basis for sound economic planning. At some point, the Hubbert curve for world oil will enter the down slope. Extraction will become more expensive and, eventually, this fossil fuel - essential for transport throughout the globe -- will disappear.3 It behooves the Nigerian government and all oil producers to begin seek other sources of energy and diversify the sources of revenue.

In his book Poverty and Famines: An Essay on Entitlement and Deprivation, published in 1981, Professor Amartya Kumar Sen argued against the view that a shortage of food was the most important explanation for famines, but suggested the interplay of social and economic factors to elucidate this phenomenon. The Nobel laureate's work has made it clear that several African Oil exporters including Nigeria are a collapsed oil market away from famine. Sustained investment in the manufacturing sector as well as the Agricultural sector while the petrodollars are available would be advisable!

Nigeria, like India, has an elaborate tertiary educational system. Unlike India, however, university graduates of the citadels of higher learning in Nigeria face dismal job prospects. The universities of Ibadan, Nsukka, ABU, Bayero, Lagos, Nnamdi Azikiwe, OAU etc. could become sources of intellectual expertise for a homegrown High technology industry that could generate billions of dollars in revenue.

New industries could include those for:

1. Energy-efficient technologies and vehicles;

2. 'Smart ' technologies to optimize the function of electric power grids

3. 'Green' buildings and allied technologies (insulating, solar-power producing windows)

4. Improved public transport.

5. Means of distributed generation - wind, solar, tidal, wave, geothermal, fuel cells.

Distributed generation measures provide protection against physical, storm and heat wave-related disruption of grids and promote pathways of mitigation (prevention of climate disruption).

These industries, along with those for ecological reconstruction, can create new enterprises and jobs.

D)TRANSITION TO ALTERNATIVE ENERGY SOURCES

We need a new energy policy -- and urgently. Japan and the EU have led the way in making this much needed gradual transition to cleaner energy sources. In the US and other countries where such a transition is eminently possible, a great deal of catching up is needed in order that they do not lose comparative advantage in what will surely be burgeoning world markets. In the past century, huge subsidies assisted oil exploration and facilitated the supporting infrastructure - vast networks of highways and airports. Those 'monies' will be sorely needed to make this shift in world civilization away from the combustion age.

The developing world too, must begin to move away from the use of fossil fuels and its suffocating environmental and economic strangle hold. For all nations, proper, coordinated planning and adequate economic incentives will be needed to jump-start and sustain the new enterprises and markets.

Switching to clean energy sources will require creativity and a lot more collaboration than the world has seen to date. But the potential costs of inaction are enormous, and the proper incentives can create a new clean engine for the global economy and propel us into a much healthier future.

Dr. Chidi Achebe is the Medical Director of Whittier Street Health Center in Boston

Contact: CAchebe@hsph.harvard.edu

Dr. Paul R. Epstein is Associate Director of the Center for Health and the Global Environment (CHGE) at Harvard Medical School.

Reproduced from:
http://allafrica.com/stories/200407150257.html
For Fair Use only