Yesterday, the New York Times reported on how removal of the subsidy may affect production. “Nigeria’s main oil union said Thursday that it would shut down oil production on Sunday if the government did not reverse its decision to remove popular fuel subsidies. Nationwide strikes prompted by the decision, which has doubled gas prices, continued Thursday, as tens of thousands of people protested for the fourth straight day. President Goodluck Jonathan met with labor unions on Thursday to try to resolve the dispute. The president of one of the largest unions, Abdulwaheed Omar of Nigeria Labor Congress, called the talks ‘fruitful’ and said they would meet again on Saturday.”
Nearly 80% of the Nigerian state budget depends on crude revenues. Would the federal government really permit the union to stop production, especially in a post-Arab Spring oil economy in which Nigerian exports are more strategically important than ever? For me, not likely. However, a friend in the oil industry here thinks that the union absolutely could stop work and that if that happened, the Occupy Nigeria movement would officially be a success less than 24 hours later. The Nigerian state can survive reinstatement of the fuel subsidy, shame-faced but more-or-less as intact as before, but the state cannot survive without oil production.