what are the implication of fallen price of crude oil in Nigeria
I am currently bound to make a standpoint or perhaps an ordinary analysis such that of an ordinary person whose experience is not quite that of an expert. The idea that I would like to present unto my readers right now basically comes from an ordinary citizen’s viewpoint. The same line of thought may be well explained or described but nevertheless, cant escape the fact that it somehow tend to be quite bias in some ways. I will pursue what I think is just and will opt to tap my best abilities in trying to explain these things on a free and just manner. The viewpoint that I would like to focus onto is rather a critical and sensitive matter to tackle. It is all about the possible implications of the fallen price of crude oil in Nigeria. A common business analyst or an economist would simply dazzle us with their answers to this problem. But the same will nevertheless be powdered with their technical data such as statistics and some business-related or economics jargons and figures which would make the thing more complicated instead of being answered on a very understandable manner.
Inasmuch as we don’t want to drift ourselves with flowery words and stick more on its technicalities, we must ward-off any complex factors first that surrounds it and approach or attack the same on a more liberal, easy and comprehensible way. In this case, looking the issue on a bird’s eye view and on a simple member of the society perspective will somewhat spark us a light on the matter.
Oil. Crude oil in particular. What would easily come to mind when we think of these? The most probable answer is that it is one of the most treasured natural resources that one could have nowadays. A country being able to produce such is a sure global winner, so to speak. Economists would rather quip that one of the basis of one’s growing and developing economy is measured by the amount of its produce. It is for the main reason that everything or almost everything and everything relies on it. Crude oil aside from gold, copper or any other resources, is one of the major factors that affect the economy of not just a single country but even the whole world. It is therefore a blessing for a specific country or nation to have or to produce such a treasure.
On a practical and everyday living perspective, crude oil as wee see and know it, is used on many machineries and industries like the transport, maritime, commercial, manufacturing and on almost every aspect of a nation’s economic operation. It is likewise the main reason why it is so very important that a mere fluctuation on its price or production can ruin or save an entire nation or even the world in itself. But somehow, a downside of this great phenomenon is manifested by those nations that hardly produce the required amount and quantity of crude oil in order to run well and manage their various industries. Some developing nations are also faced with this reality that is why they rely on those nations or countries that offer or sell these products as the same are abundant on their side.
We all know that aside from the oil and other related products that come from the Middle East, the country Nigeria in West Africa is one, if not one of the largest crude oil producing nations in the world. Crude oil in Nigeria was tapped as early as the British discovery in the late 1950’s. A large amount of oil deposits were said to have been unearthed in the Niger Delta. The oil discovery in the country was accompanied and marred by political and military unrests that continued to last until its nations imperilment to give way to a more suitable and sustainable economic growth within its nation as well onto the other countries that rely mostly on their supply. Nigeria is considered to have one of the largest oil deposits, wells, drilling and other oil-related activities throughout the world. They currently supply a majority of the world’s oil needs among countries that rely badly on crude oil in their industries.
But what would happen if the price of oil in Nigeria started to go down? What would be the end results for Nigeria as amongst the major oil suppliers and the possibilities or implications as regards to its loyal customers? As early as last year saw a dramatic decrease in the price of crude oil in Nigeria. These were mainly on the cause of slow production, less activity in the processing and manufacturing aspect that is brought about by the political leadership inconsistencies and such other political factors which mainly aims to control the industry by monopolizing the same and probably gaining or profiting more from it than the usual. These somewhat greedy political and self-motivated agendas led to the rise of uninterested industries and less active souls to push and develop their given treasure. We then make our simple analysis and try to draw the best possible answers to our posted problem by doing a simple seller-buyer idea.
1. Our law of supply and demand stated in our economic books would state that it is obvious for the demands to move upwards and increase as the prices tend to lower down. In our scenario, since the Nigerian crude oil continues to drop down, an expected increase in the demands of countries that rely mainly to crude oil will definitely rise. A more complicated scenario of these is if these vital products could go to the extent of possibly going out of stock as the demands and orders have and will continue to rise. Such is a different case for Nigeria and other large crude oil producers. Their supply is overwhelming that they really need to lower down their prices. Demands on these abundant supplies will equalize and may have to suffer a lot with its lower price.
2. Just like in any given commodity that has gone from a high price and suddenly plummeted down to a series of low ones, crude oil producers might, in order to stay in the business, try to horde or keep a considerable number of supply in their backyards and wait for the ample time to sell their products which is when the price starts to recover from its slump. A Chinese businessman would have just an ordinary day in the office by just merely applying his oriental idea in handling his supply. Considering the supply stays the same or is more likely to be abundant because of its availability, selling these in bulk or in large quantities even at a lower price would yield a considerable amount of profits. Although the supply sector would be greatly affected by these strategy, it would be economically wise to let your supply suffer a bit rather than face the possibility not ever having to move forward and gain or profit for the great volume of supply that you have.
3. A great economic challenge now stands before the government, particularly the government of Nigeria. As the current events will tell, said nation is doing everything possible to address this situation by imploring economic strategies such as subsidies and proper budget allocations.
4. With these economic shifts, it would only show that the world right now needs less oil in developing and it surely will affect the price of other commodities that rely mostly on crude oil and such products. Having this scenario brings us to the point of prices of everything have also to down. And the lowering of prices on almost everything will definitely hamper a nation’s economy as more industries will suffer in order to sustain themselves. A common businessman would definitely think of survival in these trying times and would rather sacrifice a certain factor down the drain than ever having to close down the entire business. This is what exactly is happening right now as more world-renowned and used to be stable companies are starting to down-size fractions of its labor, manufacturing and supply operations. It is evident that this low price in crude oil triggers a domino-effect reality where everything in its path and the industries that rely heavily on oil also loses their respective focuses, starts to suffer in costs and eventually goes down.
5. The most economic blows received, the loser and the one that suffers most here in the end is no one else but us simple consumers. To a certain degree, this economic activities do look good and promising as one easily foresee it as an event that would definitely lower down the costs of goods. We must also realize that the supply, quality and quantity of a certain good also relies on the capability of its manufacturer to maintain and sustain its productivity in terms of those factors and all these cannot be possible if the price of a certain important industrial commodity such as oil is in its lowest ever.
We should be wary of the great possibility of a more trying times if these global economic crisis will start to recover. Much is expected when we finally get over with these realities. Producers alike will try to jack-up prices when they start to recover in order to sustain their industries. As they say, the show will not be over until it is over. Much is yet to come and on our case as mere ordinary consumers and industry workers, we must put in our minds on at least a thought that there are no such things as a “financial crisis” or “challenging times” for an aggressive an industrious person.