End of Oil

In the long run, the trends in the auto industry will be devastating for the crude oil reliant economies and infrastructure deficient countries like Nigeria. The sooner our country begins to make serious efforts, the better the chances of finding new opportunities for growth… If Nigeria does not stop paying lip service to diversification, restructuring and development, it will be left holding the barrel.


Crude oil began its ascendancy with the development and adoption of the internal combustion engine (ICE). A few years later, the ICE helped Henry Ford’s automotive revolution; it boosted the demand for liquid fuels and created an upsurge in crude oil’s contribution to global energy supply. Crude oil consumption doubled every decade from the 1920’s until it attained the top position in the global energy mix in 1970. In the Spring of 2013, I was driving through the Canadian Tundra and saw vast wind farms and solar installations. Oil was trading at $115 per barrel at the time, but with what I saw in Canada, the increasing production of biofuels, electric cars and shale oil, I knew the end of oil was approaching. A week later in this column, I predicted the crash of crude oil prices. When technological shifts produce novelties, buying the old stuff no longer makes sense. That was what happened when we left the clumsy cassette tapes for Compact Discs, rotary phones for smartphones. It is difficult to predict when these shifts will occur but they will. When it happens, the whole world changes. The electric and fuel cell cars will change the world of oil and the shift is closer than we are prepared for.

Last Sunday, I went to the ongoing North American Auto Show in Detroit. On dIsplay are hybrid cars, electric cars, fuel cell cars using hydrogen gas and autonomous cars also known as driverless cars. Hybrids are gaining ground. Eighty percent of the Mercedes Benz line up at the auto show are hybrids. The German auto maker has developed its own charging station that is futuristic and touch enabled. Without doubt, I make bold to predict the 2020s as the decade of the electric car. Mass market takeoff hasn’t happened for electric cars for two reasons; one, the presently high prices of batteries and the lack of long range charging for the cars. These are on the way to change. According to Bloomberg New Energy Finance (BNEF), battery prices fell 35 percent last year and are on a trajectory to make unsubsidised electric vehicles as affordable as their gasoline counterparts in the next six years.

By 2020, General Motors, Nissan and Tesla will start selling long-range electric cars in the $30,000 range. With billions of dollars in investments by auto manufacturers, electric cars will cost less and perform better than gasoline driven cars. How much oil demand will these cars depress? When will cars running on cleaner fuels, fuel cells and electric cars tip the scales and relegate oil for good? This is something Nigeria is not planning for but the day of reckoning is fast approaching. Plug-in cars are less than one percent of the global car market today and are not seen on the streets of most countries. While OPEC maintains that electric vehicles (EVs) will make up just one percent of cars in 2040, industry projections suggest they will be thirty five percent by 2040.

With a growing population and the current OPEC quota, oil at $70 is not enough to build infrastructure and sustain our lack of a productive base, import dependence and unreasonable appetite for dollars. Nigerians must brace up and develop a high threshold for pain because the drop in the price of oil will be nothing compared with the end of the demand for oil as we know it.


The evolving trend is a world in which people do not want oil anymore. Even though demand from China and India will continue to grow slightly, developed nations where a lot of demand is have started weaning themselves from oil and it is expected to grow exponentially over the next decade. It is expected that the diversification of fuels and increased fuel efficiency will keep prices below the peaks we saw over the last decade. This includes everything from liquefied natural gas to diesel to electric vehicles.

What is Nigeria with her ballooning population doing to face the end of oil? It is true that oil prices will recover, but it certainly won’t get to the triple-digit levels we saw before the 2015 crash. Prices will level off at $60 to $70 per barrel between now and 2020. With a growing population and the current OPEC quota, oil at $70 is not enough to build infrastructure and sustain our lack of a productive base, import dependence and unreasonable appetite for dollars. Nigerians must brace up and develop a high threshold for pain because the drop in the price of oil will be nothing compared with the end of the demand for oil as we know it. There is a hard road to travel ahead.

What is to be done? Nigeria will need dedicated leadership, serious attitudinal change and extraordinary investment in education to face the gloom of the coming years because we certainly don’t have money. Its all been looted! Even the kingdom of Saudi Arabia is priming itself to face the end of oil. Saudi Aramco, the kingdom’s prized oil asset and the world’s most valuable company will go public sometimes this year or in early 2018. Saudi Arabia plans to sell five percent of the company to build a $2 trillion sovereign wealth fund (SWF). This fund is intended to help transform its economy for a post-oil world. The remaining shares will then be moved into the SWF. Technically, transferring its shares to the SWF means investments will become the source of Saudi government’s revenue, not oil. The Saudi plan is to create an economy or state that doesn’t depend on oil within the next 20 years. How big is $2 trillion? Bloomberg notes that “it is almost twice as big as the world’s nine major oil companies combined and enough to buy the world’s four largest companies – Apple, Google’s parent company, Microsoft and Berkshire Hathaway.”

…Nigeria must borrow to fund investments in infrastructure, power, education and environment. These investments are necessary to improve and add value to agriculture and mining without which the government focus on these two sectors will yield nothing. Change in attitudes must begin with mass sensitisation.


To get out of the hole we are in, Nigeria must borrow to fund investments in infrastructure, power, education and environment. These investments are necessary to improve and add value to agriculture and mining without which the government focus on these two sectors will yield nothing. Change in attitudes must begin with mass sensitisation. It might be a hard sell in a country where the elite have pauperised the masses, it must be communicated that taxation is the foundation of an effective state. Taxation is a social contract and a bargain between the government and the people. For long, Nigeria’s tax base has been very poor, like in other resource-rich countries. The citizens must be educated that services like security, healthcare, education, roads will be given in exchange for the taxes they pay. When a people don’t pay taxes, services tend to be terrible and no one is held to account. When people put their money in the system by way of taxes, they tend to be interested in how their money is spent thus strengthening the bond between taxation and service delivery.

In the long run, the trends in the auto industry will be devastating for the crude oil reliant economies and infrastructure deficient countries like Nigeria. The sooner our country begins to make serious efforts, the better the chances of finding new opportunities for growth. From 2017, every year that follows will bring more electric and fuel cell cars to the road, and less demand for oil. If Nigeria does not stop paying lip service to diversification, restructuring and development, it will be left holding the barrel.

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Bámidélé Adémólá-Olátéjú a farmer, youth advocate and political analyst writes this weekly column, “Bamidele Upfront” for the PREMIUM TIMES. Follow me on Twitter @olufunmilayo