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US ECONOMY SLIPS INTO RECESSION

Nigerian oil crunch proves to be the last straw
Dateline: 17 December 2010

2010 has really has been a bad year for the US and oil supplies.

First, the April terrorist attacks in Saudi Arabia scuttled major oil production facilities and the pipeline infrastructure, seriously inhibiting oil exports.

Then came the August storms in the Caribbean that destroyed more than half of the oil platforms in the region.

Now, the announcement that Shell has ceased operations in Nigeria, America’s fifth-largest oil supplier, has effectively triggered a recession in the United States economy.

The rebel war against oil exports from Nigeria has for years been motivated by the government’s apparent inability to provide any of the benefits of huge oil revenues to the population.

Nigeria, one of Africa’s richest countries has had one of the lowest standards of living for more than four decades.

What started out as minor skirmishes in the swamps of the Niger Delta, escalated to regular seizure of oil company staff and gruesome killings. The rebels now have overwhelming popular support and their military power has enabled them to disable all oil production facilities.

The events in Nigeria are being seen by Congress as a major national security risk and it is possible that Nigeria may become the next Iraq.

What the US decides in the next few weeks could well determine the future state of the world economy for the next twenty years.


ANALYSIS >> SYNTHESIS: How this scenario came to be

Shocking dependence

The last two major recessions in the US were triggered by a spike in oil prices; a crisis in Nigeria – America’s fifth-largest oil supplier – could well be the next great triggering event. “The economic and national security risks of our dependence on oil – and especially on foreign oil – have reached unprecedented levels,” warns former CIA director Robert Gates, now secretary of defense. “To protect ourselves, we must transcend the narrow interests that have historically stood in the way of a coherent oil security strategy.”

Is this just rhetoric to promote a political agenda, or is the US really that dependent on foreign oil?

2006: Nigerian oil hostages
In January 2006 several boatloads of heavily armed Ijaw militants overrun a Shell oil facility in the Niger delta and seize four Western oil workers.
The immediate effect of the attack is a 250,000-barrel-a-day drop in Nigerian oil production and a temporary bump in world oil prices.

China is actively seeking secure supplies of its own, and signs a long-term deal with Angola, which is fast becoming a major oil producer.

2007: Nigeria on the brink
Foreign commentators report that areas of the Niger delta are out of government control. The rebels call themselves the Movement for the Emancipation of the Niger Delta, or MEND. They insist what they’re trying to do is mend what they say is the unequal distribution from the profits Nigeria gets from its oil bonanza.
CNN’s Jeff Koinange reports: “These guys in their intimidating black outfits and matching black ski masks looked like any army’s worst nightmare. And that’s exactly what they’ve become: Nigeria’s worst nightmare. Nigeria is Africa’s largest oil producer. In 2005, it was the world’s sixth largest exporter of oil, but the conflict there has cut distribution by an estimated 500,000 barrels per day.

Very little of the profits makes it back to Nigeria, and even less makes it down to the mangrove swamps of the Niger Delta.

As a result, MEND in recent months has escalated its struggle, kidnapping expatriate oil workers at an alarming rate (more than 30 in the last month alone), indiscriminately killing Nigerian military forces, and carrying out attacks on oil installations in the region that cut the flow of oil dramatically.”

2008: Election in the US
The United States presidential election brings a Democrat back into the White House. Together with a Democratic majority in Congress, the administration looks set to reverse some of the hawkish moves of its predecessor.

China makes further inroads in Africa, tying up most of the Angolan contracts.

2009: Leaving Iraq to the Iraqis
True to her election promises, the new President of the United States begins a staged withdrawal from Iraq, which effectively ends America’s preferential access to oil from the region.

2010: Global climate disasters
In April, a concerted terrorist attack ruins the Saudi oil export capability at a stroke. It will be months before normal supplies are resumed. The United States rushes in with troops and technical support to try to mitigate the disaster, despite being under pressure at home.
In August the Gulf of Mexico is ravaged by the worst hurricanes in recorded history. Oil platforms in the area are destroyed and damaged, leading to a huge loss in production from US domestic sources.
In December an unseasonably early and unusually heavy blizzard covers the Northwest of the American continent in meters of snow. The president declares another Federal emergency and pledges support. Demand for heating oil, fuel for trucks and snowploughs and rescue vehicles sends the oil price sky-rocketing.
Nigerian rebels choose this exact moment to launch an all-out attack on western interests in the Delta region. Gruesome killings and hostage dramas remind Americans all too well of the indignities they suffered in Iraq at the hands of militants. The big oil companies pull out their personnel and support. Oil production from Nigeria comes to a virtual standstill.
The President faces her greatest challenge yet, as the American economy faces an abrupt reversal.

Links to related stories

Warning: Hazardous Thinking at Work

Despite appearances to the contrary, Futureworld cannot and does not predict the future. Our Mindbullets scenarios are fictitious and designed purely to explore possible futures, challenge and stimulate strategic thinking. Use these at your own risk. Any reference to actual people, entities or events is entirely allegorical. Copyright Futureworld International Limited. Reproduction or distribution permitted only with recognition of Copyright and the inclusion of this disclaimer. © Public domain image.

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