The recent presidential debate between Kamala Harris and Donald Trump threw up a major aspect of American foreign policy. It highlighted its position on its demand for foreign oil supplies. Though the United States is one of the major producers of oil with its huge reserves, the country has over the decades imported a large percentage of its crude oil needs. However, this took another turn with an interest in the USA relying more on local production and consumption. Fracking for oil became an added option.
The Obama administration ramped up the reversal of international imports of oil, with the expansion of fracking. This involves getting crude oil from rocks fissures. To the Americans this is a strategic means of keeping their reserves intact while limiting their reliance on foreign oil. The 1973 oil crisis is still fresh in the minds of the American political establishment, though the narrative put forward currently is the climate change debate, also referred to as a global crisis.
The United States while working on its fracking mission has also intensified the introduction of alternatives of power generation in the country. It has also not shied away from pursuing the alternative energy sources as part of its global diplomacy drive.
Seeing the shift in the oil economy, many major oil exporting countries have taken heed of the future of oil and resorting to diversifying their economies. While the kingdom of Saudi Arabia maintains its position as the world’s largest producer and exporter of oil, in recent years it has accomplished major strides with making the country a non mono economy. The thought of Saudi Arabia opening its doors to foreign tourists a decade ago was unimaginable, but this is a fact in 2024. The Saudi government is equally pushing a green economy with its renewable energy policy.
Also in the gulf region, the United Arab Emirates and Qatar have almost turned full circle into non oil economies while still maintaining their influence as oil/gas producers. These countries are taking a cue from signals coming from America and increasingly from Europe.
It is important to note that while there has been a change to the traditional climatic patterns, this may not necessarily be as dramatic as the narrative suggests. What is worth noting is that majority of the world’s oil reserves are in the non industrial world, which are not in the strategic and security interests of the United States and its major allies.
Other major oil producing countries are in a quandary regarding managing the emerging shift in the premium placed on oil by the big consumers. Nigeria is a unique example. Nigeria has over the last five decades exported crude oil and during this period raked in millions of dollars. On the other hand, Nigeria hasn’t invested enough nor brought its infrastructural capacity to meet its current needs. The political leadership in Nigeria seems to recognise the importance of weaning the country away from its dependence on fossil fuels for its foreign exchange, thus giving the country the years 2032-35 of achieving a non oil economy.
The shift in the oil economy is real and nations are forced into adjusting to the new realities. While countries are navigating the gradual transition to a new global energy system, some oil producing countries don’t have the luxury of a financial war chest or economic spine to sustain their economies during this transition.
Referring back to Nigeria, though it has sustained its democracy over the last two and half decades, the country has struggled to expand its economy while burdened by a large population. The current government in Abuja though has started what it considers urgently needed reforms. The reforms are painfully excruciating according to both citizens and the opposition. If the reforms are followed through sincerely, then Nigeria might be on course of a turnaround with another ten years of oil production and income to secure its future as a non oil economy.
What makes this impending new global energy order irreversible is the economic growth of both China and India and their position in the world. The requirement for cheap and sustainable energy to further their economic prosperity is non negotiable.
Olugbenga Adebanjo
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