THERE WILL BE BLOOD
The High Cost of Competing for African Oil
Raj Balu
Untapped Riches
It is the most promising continent in the world for new oil production. It is a place where oil is under-explored, though highly accessible. And the quality of the oil is generally of a very high grade, so refining it is cheap.
With dwindling oil reserves throughout the world, along with rising oil prices, Africa is drawing huge interest from major global oil companies for its untapped riches. It has even been estimated that Sub-Saharan Africa is currently earning $30 billion a year from oil exports.
The competition between the U.S. and other developed nations for African oil is extremely high and with that competition comes high costs, both monetary and otherwise.
Oil Rush
From Liberia and Ghana to Nigeria and Gabon, West African nations offer unparalleled opportunities for both major and independent oil companies. Geopolitical changes, reduced security risks and a new African foreign policy put in place by President Obama have helped to make the region an oil hotspot.
For many years, numerous West African nations were embroiled in civil wars. Previous searches for oil in many of those nations often resulted in scanty results. But with a new sense of relative calm in a number of nations and advanced exploration capabilities in place, oil companies that have moved into the region are having great results and have high expectations for the future. In countries like Liberia, The National Oil Company of Liberia has opened its doors to international companies who  want to explore for oil. The situation is similar in newly calm Cote d’Ivoire and Sierra Leone. It is an understatement to say that the future looks bright for oil companies in Africa -- they are truly in a position to prosper for years to come.
But just because oil companies are pouring money into local economies in Africa – a running total north of $70 billion by the end of this decade – doesn’t mean that most Africans are seeing the benefits of those dollars. In fact, this great resource known as oil has proven more often to be a curse than a blessing.
Cursed by Oil
From the early 1970’s to the mid 1990’s, African countries with running oil productions grew four times faster than those without. But that doesn’t necessarily mean that growth from oil is the best thing for those countries. In fact, it can be a curse.
Large sums of money pouring into a country from oil can lead to high currency inflation. When currency is inflated, it can render other exports uncompetitive. Workers often quit their jobs and take better paying oil jobs, hurting other sectors of the economy. While the near future looks good for oil companies, the oil reserves in these countries will eventually be pumped dry, leaving people jobless, especially because other sectors of the economy have been damaged. The allure of oil money also tends to corrupt some government officials. Rather than using the money to invest in their country’s future, they instead build small or large fortunes for themselves. Since many African governments do not depend on taxes, they are free to ignore the wants and needs of the people. And with so many people looking the other way when money changes hands, including Western governments, it becomes too easy for those  on the take to line their pockets. Like in many countries in the Middle East and Latin America, trying to have an oil-based economy and not having a strong democracy to support it is a dangerous combination.
In many African countries, there are oil activists who are trying to do something about the growing problem of the affects the oil industry has on local populations. But as activists in Nigeria have found out, going against Big Oil can be risky business.
Activist Executions
The idea of an underdog with limited resources and an almost unheard voice taking on a big corporation with unlimited resources and a bullhorn is not new to the world. Some of the most popular examples of success in such endeavors include Erin Brokovich taking on Pacific Gas & Electric and Jeffrey Wigand challenging Big Tobacco. But in Nigeria, a group of oil activists going after the oil industry paid the ultimate price.
Fourteen years ago, Ken Saro-Wiwa and eight other oil activists went on a campaign to bring awareness to ecological damage caused by oil extractions. They also believed that their people, the Ogani of Nigeria, were being exploited for their oil-rich land. The campaign was going exceedingly well and brought great international awareness to the issue. But in a disastrous turn of events, arrested and tried for what can only be described as “trumped up” charges, the activists were convicted and executed by hanging. For over a decade, lawyers for the Center for Constitutional Rights had been building a case against Royal Dutch Shell for being complicit in the unjust hangings. They also described the company as being involved in torture and crimes against humanity.
Though Shell has repeatedly denied any wrongdoing and maintained that they never encouraged or advocated any  violence, they now have settled a lawsuit that states they conspired with the former military government of Nigeria to silence the activists. The company will have to pay $15.5 million over the executions. Shell still denies any wrongdoing and says they settled only to aid in reconciliation.
Sharing the Wealth
The oil-rich nations of Africa are allowing international companies to set up shop within their borders and extract highly valuable oil. In the process, certain high level individuals in African governments are reaping great monetary benefits.
If the wealth gained from oil is horded by greedy power players and is not used to improve the future of these nations, there is no doubt that there will continue to be high costs for competition, including more bloodshed.
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