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Overview
Product Details
| ISBN-13: | 9781524607876 |
|---|---|
| Publisher: | AuthorHouse |
| Publication date: | 06/15/2016 |
| Pages: | 244 |
| Product dimensions: | 6.00(w) x 9.00(h) x 0.55(d) |
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Saving the Future
Agenda for Economic Development & Prosperity
By Alex Otti
AuthorHouse
Copyright © 2016 Alex OttiAll rights reserved.
ISBN: 978-1-5246-0787-6
CHAPTER 1
A World without Oil: Confronting the Realities of Emerging World Order
Overview
In April 2007, a television game titled, World without Oil (WWO), opened on Independent Television Service. It was an alternate reality game (ARG) created to call attention to spark dialogue about, plan for and engineer solutions to a possible near-future global oil shortage and post-peak oil. It was the creation of San Jose game writer and designer, Ken Eklund, and ARG veterans. World without Oil was presented on ITVS with funding from the Corporation for Public Broadcasting. The game's tag-line was, "Play it – before you live it." The game concluded on June 1, 2007.
The goal of the World without Oil game is to ask players to imagine a world reeling from a sudden oil shortage and describe how the crisis is unfolding where they live, and work as a team on simple and practical ways to adapt. By playing it out in a serious way, the game aims to apply collective intelligence and imagination to the problem in advance, and create a record that has value for educators, policymakers and the common people to help anticipate the future and prevent its worst outcomes. In sum, World without Oil invites people to, per its slogan, "Play it - before you live it". The game received rave reviews, several commendations and awards.
However, the game deals with a situation where oil is in short supply, for instance, through a sudden political action such as embargoes as we had in the past or some unforeseen circumstances. It was an acknowledgement of the importance of oil in the contemporary life of western economies and the growing power which oil producers now wield over them. The previous experience in 1973 was so unexpected and so traumatic to both the government and people of these societies that it remains a constant fear in their daily living.
But here we are looking at a situation where nobody especially in these same economies wants oil through a deliberate socio-economic and political policy. It is a reverse situation that the pains are on the producers rather than consumers as the game depicted. If the game served any purpose at all, it created an awareness of what can go wrong in the future that may have very deleterious implications for those affected. It was, therefore, more than a game because it expressed a creative imagination to live the future now: a preparation for tomorrow that will eventually come!
For us in this part of the world, it seems there is no tomorrow. And this explains the way we have exploited and expended our oil resources. Oil has conferred tremendous economic and political power, especially since 1973, on Nigeria and other members of the Organisation of Petroleum Exporting Countries (OPEC), a cartel of nine countries which controls about 60 percent of global oil export, and we now believe and think it will last forever. And for good reason, our present reserves of oil of about 38 billion barrels will last for 45 years while gas of 100 trillion standard cubic feet is estimated to last 150 years. What could be more reassuring as well as promising as this?
Unfortunately for us, the world is changing whether we like it or not, or are aware or not. Oil has been a double-edged sword – a curse and a blessing – to the world for about two centuries. The discovery of oil has brought about unimaginable technological development in the past century than all history put together. Oil has changed the way we live in the most unthinkable ways possible. Oil has taken man to the depth of the deepest oceans, to the greatest heights in space, and cut great distances to naught. But oil has also brought pains and misery, divided the world, devastated the ecology and endangers the earth and the future of mankind.
Oil, Nigeria's Economy and the Future!
To many people, the future of Nigeria and her economy is inextricably interwoven and inseparable with oil. After living on oil resources for the past 40 years, it has become practically inconceivable to imagine and think of the Nigerian economy without the major contribution of oil. Like the ostrich – or more historically, Nero, who fiddled while Rome burned – we have buried our heads in the sand oblivious of changes around us and the concerted efforts being made by the outside world to transit from oil. This explains the implacable and rigid positions our people hold on resource control and dependence on oil resources.
Our comfort in oil has immuned the nation and her leadership from recognising the threats posed by our continued and indeed increasing dependence on oil after 50 years, and taking the right and necessary steps to not only reduce such reliance but also confront the challenges of a world without oil. Tragically, the coming change is not about us and what we think. Instead, it is about the inexorable forces of nature and human development beyond the contemplation of any man or nation.
To perceptive and well informed eyes, the future without oil is already upon us and unless steps are taken to prepare and confront its emergence, its effects on our development will be more grievous than the damage done by oil. A world without oil is real and it is no longer whether it would be but when. It is no longer generations away; it is now in this generation.
For most of the world – both oil producers and consumers – the change from oil is being anticipated and preparations are being made for its arrival. Such awareness has removed any element of shock and surprise that usually accompany socio-economic and political change. Every social change creates role substitutions and consequently winners and losers. Transition from non-renewable to renewable energy will definitely change not only the way we do things but also the roles being played by the different actors.
In the particular case of oil, the emergence of non-oil energy will lead to the rise of new machines and technologies to replace oil-based machines as well as transfer the economic power from oil producers to the producers of the new energy source. For the oil producers, the consequence of changing from oil will have double negative impact: first, there will be the necessity of changing from old oil-based mechanisations, which would require heavy financial investment, and second, the loss of economic, as well as political, power, as producers of oil to the producers of non-oil energy. Both effects demand and impose financial burdens.
While the former impact is general in nature because it affects both producers and consumers alike, the second is exclusive to the producers who will suffer both economic and political power losses. Even at that, replacing oil-based machines and technologies is going to impose heavy financial burden on those who do not prepare adequately for it because every new energy source is progressively more expensive than the previous one it replaced. For instance, transition from wood and coal to oil involved expensive mechanical changes, even though the new energy is also less expensive. In the same vein, transition from oil to renewable energy will demand a lot of investment although the cost of the energy itself would be cheaper because of its renewable nature.
Most oil producers, especially those in OPEC, which are developing countries, are already conscious of this eventuality and committing everything necessary to mitigate the adverse impact of this technological and economic inevitability. They have not only diversified their economies into agro-industrial, human capacity and cleaner energy, such as gas, but are also investing in the economies of the prospective producers of the new energy to tap into the potential benefits to be accrued from it. For instance, the Arab world, which is the major oil producer, invests an annual average of $1 trillion in western economies. In fact, in 2013, UAE invested an incredible $800 billion in Europe alone. Indonesia, which is a middle level producer like Nigeria, is the third largest producer of rice and largest exporter of gas. Brazil, a non-OPEC nation (others being Russia, Brazil, Mexico and North Sea countries of Britain and Norway) and leader in the search for non-fossil energy, is already an industrialised economy. Iran, the second largest producer in OPEC, is almost a nuclear power which will reduce her oil energy dependency. The world largest producer of oil, US, does not export oil.
Why the Transition from Oil
There are several factors pushing for a quick change from oil. In previous transitions, economic factors had played major roles in the change from one energy source to another. But unlike the old era, other interests such as geo-politics and social factors have also come into play, making the present change most compelling and irresistible.
Historian Norman F. Cantor describes how in the late medieval period, coal was the new alternative fuel to save the society from overuse of the dominant fuel, wood:
Europeans had lived in the midst of vast forests throughout the earlier medieval centuries. After 1250 AD they became so skilled at deforestation that by 1500 AD they were running short of wood for heating and cooking ... By 1500 Europe was on the edge of a fuel and nutritional disaster, [from] which it was saved in the sixteenth century only by the burning of soft coal and the cultivation of potatoes and maize.
Petroleum emerged as an alternative to whale oil which had provided energy source hitherto. Whale oil was the dominant form of lubrication and fuel for lamps in the early 19th century. But the depletion of whale stocks by the mid-19th century caused whale oil prices to sky-rocket, setting the stage for the adoption of petroleum which was first commercialised in Pennsylvania in 1858.
High Cost of Energy
The high cost of the energy source compelled the search for an alternative. Human economic decision is a product of utility or value and cost. Every utility is measured in terms of its cost. When the value of a product is higher than the cost, there is great demand for the product. However, and conversely, when the cost surpasses the expected value, there is dissatisfaction and subsequently, a search for, and change to, a substitute. And cost considerations have always determined the appropriate source of energy.
High cost of a product is always a function of supply. Any product that is in demand usually has a challenge with supply and whenever supply is short of demand, price would be high. Those who depend on such product whose cost is sky-rocketing would not be content living with their fate. They characteristically seek change of the status quo by searching for an alternative. While producers are happy with high cost, consumers feel differently. Oil supply has been artificially and/ or monopolistically determined to regulate price.
Since the formation of OPEC, oil has become increasingly expensive as the price has been rising. Before its inception, oil price was less than a dollar. But afterward, it jumped to a negotiated $3 per barrel. Then there was the Middle East crisis of 1972 and the oil embargo on the West and first unilateral imposition of price by OPEC. Oil price went from $3 to as high as $18 per barrel. This brought stupendous wealth to OPEC at the expense of consumer nations. During the Iran-Iraq war in 1981, oil price rose to over $40 per barrel; it crashed during the glut of the 1980s but rose up again to over $40 during the Gulf War in 1990. In the past 15 years, oil price has hovered between $100 and $130, aided by global political crises, to the benefit of producers and discomfort of consumers. At a price above $55 per barrel, oil has lost its competitive edge to alternative energy.
Supply Challenge
Since the formation of OPEC, supply of oil has provided a particular challenge; for the first time, supply of such international product came under strict supply control. Before this time, the developed economies, through the Seven Sisters, namely, Standard Oil New York (Exxon Mobil), Standard Oil California and Standard Oil New Jersey (ESSO) (which three were formed following the forced break-up, by anti-trust law, of Standard Oil founded by billionaire J.D. Rockefeller), Texaco, Royal Dutch Shell, Gulf and British Petroleum had controlled both the exploration and pricing of the product.
But economic nationalism in the Middle East and the rise of radical leaders in some of the oil producing nations, such as Ahmed Sukarno of Indonesia, Muammar Ghadafi of Libya and Saddam Hussein of Iraq, necessitated the need for a change of the old order where the Seven Sisters determined the supply and price of the product. This was a clear warning to the oil dependent world that they would have to pay a high price to satisfy their oil thirst.
However, it was the oil embargo on the West following the Middle East crisis in 1973 that sounded the clarion call for the inevitability of an alternative to oil. By that action, OPEC imposed considerable hardship and cost on the western economies, virtually grounding them. It exposed the dangerous state of an oil dependent global economy and threw up a new power bloc that was not part of the traditional stakeholders into international politics. Oil supply was no longer a function of the economic law of supply and demand but a political decision of the producers based on the international relations and equitable, rather than market, price.
Since the emergence of the Islamic Republic of Iran in 1979, the free flow of supply even in normal times, particularly to the US and the Far East, has been dependent on access to the politically sensitive Strait of Hamuz under the suzerainty of Iran. The Strait is a major thoroughfare from the Middle East, which is the main oil hub in global oil economy. A product loses not only its value but also becomes dangerous to rely on if its supply cannot be sufficiently guaranteed at all times. Without the non-OPEC producers, global economy would have been terribly jeopardised by the unpredictability of OPEC supply.
Besides the physical and political challenges of oil supply to the consumer nations, there is the increasing technological issue of getting it. Oil was first discovered and produced onshore (on the land) but production pressures and diminishing yields, and environmental degradation forced oil companies into the deep seas. Deep sea exploration requires very high technology and sophisticated logistics which raise the cost of production and, by extension, the price, and reduce profit margin. It is also more difficult to manage and control and indeed more dangerous and more risky as witnessed in the oil spill off the Gulf of Mexico in 2011 lasting three months with over 100,000 barrels of crude oil daily spilled into the ecosystem.
A Political Power Bloc
The emergence of OPEC on the international political terrain created a power bloc that was alien in world politics. Before its formation, global political power used to be exercised by, and expressed through, military leadership and economic dominance. Before the last century, several European powers, such as Spain, France and Holland, had played dominant political power roles in international relations on account of their military prowess, which conferred economic advantage on them. Britain was the last of such powers that controlled many colonies including the Americas, which she eventually lost in 1783.
Since the end of World War II, this fact has been demonstrated by the existence of the United Nations Security Council which has five permanent members who are the most powerful nations in terms of both military and economic strengths. These are the US, Russia, China, UK and France. By all standards, these are world powers which won the world war and became by right the global custodians of political power and decision making. These powers determined global peace, security and social order. The exercise of this power imposed on them enormous responsibility in terms of contributions in both human and material resources in the exercise of this mandate. There are some common characteristics among these world powers, namely, they
a. are advanced industrial economies;
b. are militarily strong and indeed, nuclear powers;
c. are economically wealthy;
d. had once been global leaders in their own individual rights;
e. are also politically mature, and
f. also won the last world war.
Generally, international politics is usually a function of history and tradition, military power and economic strength. They all have these and they decide what happens in the system.
But the rise of OPEC changed this political equation and global power balance. Here were poor, backward and recently independent countries imposing themselves on global power loop and deciding the direction of political direction by virtue of their control of the energy resource of the world. It gave them power without responsibility and detracted from the conventional application of diplomacy (based on negotiations and consultations, compromises and collectivism in the use of force) as the norm in international relations. With OPEC, unilateralism and threat of force became the first resort.
Oil Embargo
The effects of the oil embargo were immediate. OPEC forced the oil companies to increase payments drastically. The price of oil quadrupled by 1974 to nearly $12 per barrel. This increase in the price of oil had a dramatic effect on oil exporting nations, for the countries of the Middle East who had long been dominated by the industrial powers were seen to have acquired control of a vital commodity. The traditional flow of capital reversed as the oil exporting nations accumulated vast wealth. Some of the income was dispensed in the form of aid to other underdeveloped nations whose economies had been caught between higher prices of oil and lower prices for their own export commodities and raw materials amid shrinking western demand for their goods. Much was absorbed in massive arms purchases that exacerbated political tensions, particularly in the Middle East.
(Continues...)
Excerpted from Saving the Future by Alex Otti. Copyright © 2016 Alex Otti. Excerpted by permission of AuthorHouse.
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Table of Contents
Contents
Dedication, vii,Preface, ix,
Foreword, xi,
Chapter 1 A World without Oil: Confronting the Realities of Emerging World Order, 1,
Chapter 2 Big Business and Nigeria's Economic Development, 28,
Chapter 3 Education and the Growth Imperative: A Time to Act, 57,
Chapter 4 Feeding the Future: Agriculture in the New World Order, 83,
Chapter 5 ICT and the Challenge of Sustainable Development, 107,
Chapter 6 Improving the Nation's Education System, 122,
Chapter 7 Nigeria, Your Glass is Half Empty, 135,
Chapter 8 How Nigeria wasted Her Oily Opportunity to Greatness, 146,
Chapter 9 Saving the Future: The Challenge of a New Nigeria, 194,
Bibliography, 221,
Index, 225,