Monday, May 26, 2008

Nigeria and the US: scary parallels

Nigeria is once more in the news for gas related riots. While the United States are obviously not yet at this level, there are e few disturbing parallels between the two countries:

  1. Cheap gas is a right or at least it is considered to be a right. In both cases, the government is typically asked to "do something about it," in Nigeria by trashing the neigborhood, in the US by making trash calls on radio.
  2. Both are major oil producers, yet are not able to satisfy domestic demand. And both governments have major debts as well, despite oil revenues.
  3. Refining capacity is 20 years behind and stuck. In Nigeria, this has two reasons: 1) government-owned refineries are so poorly managed the government itself realizes it should not build another one; 2) privately owned refineries would not be able to make a profit given the price controls subsequent to the previous point. Why no refineries have been built in the US is subject to wide speculation, from conspiracy theories to environmental concerns.


Independent Accountant said...

I have posted on commodities subsidies at my blog. The parallels are disturbing. Gas in 45 cents a gallon in Iran. Subsidies are a worldwide problem.

aem said...

Little refineries have shut down and big refineries have gotten bigger. There is no reason to build new when existing refineries can be expanded.