Crude oil is a naturally occurring viscous liquid often found tens or hundreds of kilometers under the surface of the ground. It is called a fossil fuel because it is said to be formed by the pressurized decomposition of organic matter which is buried in large quantities over long periods of time.
Crude oil is called black gold because it is extremely valuable; being the source from other fossil fuels such as paraffin, petrol, diesel, and jet fuel is distilled. Other valuable things that can be obtained from Crude oil are wax, engine oil, petroleum jelly, and plastic. It must be stated that no culture or country can influence the presence or otherwise of Crude Oil on their land. In some ways, it can be said to be a blessing to mankind, because the man did not work for it, but rather found it naturally hidden under the ground.
Nigeria has crude oil deposits in abundance- as a matter of fact, it is the sixth-largest exporter of crude oil in the world market. Nigeria’s oil reserves are about 22 billion barrels in untouched deposits, and Nigerian oil is of reputably high quality. But what impact has the discovery and steady extradition of this extremely valuable product had on the people of Nigeria? That is exactly what this article is about.
Crude oil has been a major boost to the Nigerian Economy. As a matter of fact, the majority of the Nigerian budget is based on the capacity of the Crude Oil-producing installations, and the price projections for Crude Oil for the coming year. Crude oil prices, politics, and demand are a major factor that goes into consideration during the planning of the budget in Nigeria.
Furthermore, crude oil accounts for over 80 percent of the Nigerian government’s financial capacity. If there has been any development in Nigeria in the last 40 years, it can be attributed to crude oil.
Benefits Of Crude Oil In Nigerian Economy
Provision of Revenue and Foreign Exchange
As mentioned above, Nigeria depends heavily on crude oil for money. That means that crude oil is the only significant contributor to the well being of the Nigerian State. Capitals infrastructural development projects, defense, healthcare, education, and the luxurious lifestyles of the elected officials of the Nigerian government all come from this singular source: crude oil.
The foreign exchange which is not just money or monetary value is an important economic buffer that every government needs to shore up its economy whenever its own currency is shrinking in value compared to other currencies. This may be caused by a fall in demand for the major exports of the country or any other unforeseen development.
The foreign exchange is then injected into the market in order to abate the demand for foreign currencies which could put further pressure on the country’s own currency, thereby increasing the pressure on the economy. Crude oil, being Nigeria’s major foreign export is also Nigeria’s major source of foreign exchange thereby giving it double monetary value to Nigeria.
There is actually no reliable data to give us the exact number of Nigerians that are employed in the Oil Industry, one estimate puts it at 2 percent of the country’s population. Considering the juicy pay-packets that are rampant in the oil industry, this can have a ripple effect on the economy as many other sectors are indirectly supported by the oil industry workers and their families through the spending power that they have as a result of earning steadily high amounts of money on a regular basis.
Enhancing the Technical Capacity of Nigerians
Recently, there has been a lot of reforms targeted at boosting the participation of Nigerians in the Nigerian oil sector. This is against a backdrop of years of non-participation on the part of Nigerians. For very many years the oil industry has been completely dominated by foreign firms who acted as if the oil industry was rocket science or involved a kind of magic. These days, however, many Nigerian firms have become involved in Pipe Laying, Pipeline maintenance, drilling works, excavation works, and so on.
They can only do this because they have gained the technical ability, and so they now have a certain level of expertise. To become more proficient, however, they must improve in the technical skills so as to be able to handle even more technically tasking jobs proficiently- jobs like overhauling of drilling stations and even maintenance of refineries.
In order to be inclusive and not leave out any section, we will break this part down into 2: Oil Servicing Sector, and General Sector. Let us first talk about the oil servicing sector. These are the firms that work with the oil companies that operate in Nigeria. we are talking about the drilling firms, the dredging companies, underwater welding experts, and so on. They follow the oil companies wherever they go, and work with them. These companies also employ workers who they pay quite well, and so enhance the country’s GDP, as these workers to contribute to the economy with their spending.
The General Sector in this context refers to those hospitals, hotels, catering services, and all whom they employ, and who follow the oil companies into the creeks and other difficult to access locations in order to provide important services to the oil companies and their workers. There are even helicopter services that service the oil companies by airlifting them and their workers and equipment from place to place. Some of these helicopter services even sign long term contracts with the oil companies, meaning that there is money going round thanks to crude oil.
As mentioned earlier, the oil companies often go into the hinterland. into the creeks and even offshore locations to build their bases and operating stations or docking stations. That is often followed by an influx of firms that are in the oil servicing sector. They will need roads, hospitals, electricity generation, and so on. This will no doubt be just as beneficial to the local populations of those regions as they too will benefit from the provision of these infrastructures.
Despite the highlighted benefits that have been treated in this article there are many problems that have arisen from the presence of Crude Oil in Nigeria. The 2 percent participation of the Nigerian Population is far too small for a country that is number six on the list of country’s that top the oil production charts. Oil Producing Communities are some of the least developed regions in the country, and this suspicious state of things has raised questions of deliberate and malicious marginalization of the oil-producing communities whose land are obviously been exploited to the betterment of other regions.
Furthermore, there have been overwhelming environmental and ecological issues in the oil-producing regions as oil spillages that occurred repeatedly have almost destroyed the environment, damaging the land such that large parts of it can no longer be cultivated, and polluting the waters such that fishing is no longer an activity worth the time. Furthermore, despotic governments have gone so far as to kill human rights and environmental activists who have stood up to fight for the rights of the Locals of the certain oil-producing communities, and now that give a political twist, to the problem. Some researchers have been moved to say that oil in Nigeria has been a curse and not a blessing.
That’s all about the Benefits Of Crude Oil In Nigeria Economy.
Tag: Impact and importance of oil on the Nigerian economy.