Aug 11, 2017

Oil Prices Will Only Come Down

Oil Workers. Source:

In the first week of August 2017, two knitted events occurred. In Britain, a ban on petroleum-driven cars by the year 2040 was announced. That is just twenty years away. The other event, which reflects the desperation for the discovery of oil, happened in Nigeria, where oil exploration workers were abducted and killed by the terror group, Boko Haram. 

One begins to wonder whether or not the Nigerian authorities have not learnt enough from the betrayal that petroleum is prone to. Besides the reality that oil prices have always tumbled down and ridiculed the nation, it is glaring now that, with the efforts towards a cleaner environment, the appeal of oil will continue to diminish. 

Some years back, pundits predicted that Nigeria’s oil reserve will run out in the next half of a century. That means that we still have over forty years to continue enjoying oil money. But with Britain slamming its fist on the table to demonstrate its strong commitment to get rid of petroleum-driven automobiles in just 23 years, the implication is that the situation is now more dire, since, rather than more than four decades, we now have less number of years to continue enjoying oil money. It is the reason why it will seem bizarre that we are still desperate for oil to the point of losing lives. As a matter of fact, Britain is not the only nation. The others are India, France, Norway and ten other nations, according to CNN

Even if oil continues to enjoy the patronage for the next forty-something years, the price will only continue to go down, something that has been a nightmare for the country, with its addiction on oil revenues. 

Over the past 120 years, the electric car has gradually evolved to become relevant. Its major impediment had been the battery. As at 1894, there was no battery to sustain it for more than 30 kilometres.  Today, however, Lithium-ion-powered batteries can power the electric car for as long as 383 kilometres. A Tesla Model S electric car was recently driven for more than 1000 kilometres on a single battery charge. It means that one can drive such a vehicle from Jos to Port Harcourt without the battery running out, making it more efficient than hydrocarbon-driven vehicles. 

The only problem about the electric car now is the price. However, according to the Economist, it is reckoned that its price will be at parity with that of petroleum-driven cars in just a year, though at a loss to the manufacturers. But there is optimism that electric car sales will make up 14% of car sales globally by 2025 (eight years time). What that means to a country like Nigeria is that going forward, oil prices will only come down. 

At this point, the conversation within policy-making bodies in Nigeria should be dominated by the question of, “what are we going to do to avoid becoming a miserable victim of the progress towards the electric car?” 

The scary issue about Nigeria is our conservatism that ensures that we are always some twenty years behind every new change. If we are conscious of the looming economic doom, we would learn to get fast on issues from now and perhaps forever.

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