Socioeconomic Impact Of Oil Production On The People Of Amukpe Community

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Socioeconomic Impact Of Oil Production On The People Of Amukpe Community

Chapter One


1.1 Background to the Study

Nigeria is not only the most populous country in Africa, but the major producer of oil in the continent. The political economy of Nigeria is based on the extractive industry (Orogun, 2010). Major mineral resources found in Nigeria include petroleum, natural gas and solid minerals. Oil from Nigeria accounts for 2.6 per cent of global production (BP, 2010:8), and the country is ranked the world’s eleventh largest producer of crude oil (Energy Information Administration, 2010:2). As indicated in Figure 1, Nigerian onshore and offshore oil reserves are found in the Niger Delta region, the Bight of Benin, the Bight of Bonny and the Gulf of Guinea (Watts, 2008; UNDP, 2006). Nigeria currently produces about 2.5 million barrels per day of OPEC production. The discovery of substantial crude oil reserves in the deep and ultra‐deep water was to increase the reserve base from 37.2 to 40 billion barrels by the end of 2010. In addition to oil wealth, an estimated 5.3 trillion cubic metres (TCM) of gas, reserves make Nigeria the world’s seventh largest holder of natural gas reserve and the largest in Africa (USEIA, 2010). Apart from oil and gas, Nigeria is endowed with solid mineral wealth that is found across the country. Davenport (2010) reported that the expansion of solid minerals mining has the potential to contribute 15 per cent to Nigeria’s GDP by the year 2015. Currently, this * Correspondence sector, unlike oil, is non‐developed, non‐productive and currently contributes less than 0.5 per cent to Nigeria’s GDP, as against 35 per cent from oil and gas in 2009 (National Bureau of Statistics, 2009). However, Nigeria is promoting the exploitation of non‐oil minerals for additional revenue. Thus far, seven minerals are receiving priority attention for privatisation: gold, oil sands (bitumen), coal, iron ore, barite, lead/zinc and limestone.

However, pollution from domestic and industry sources, over-exploitation of Oil and Gas resources and poorly planned and managed communities and coastal developments and near-shore activities are resulting in a rapid degradation of vulnerable land, coastal and offshore habitats and shared living marine resources of the region putting the economies and health of the populace at risk [Ayres,2008]. The decline in water and air quality (chronic and catastrophic) from land and sea-based activities especially industrial i.e. flaring/power plants, agricultural, urban and domestic sewage run-off, eutrophication and gas flaring have been identified as a major Trans-boundary environmental problem by communities in the region. Mainstream economics of the neoclassical kind was not developed primarily to deal with environmental problems [Daly, 1992]. When facing a new category of problems, it therefore also seems reasonable to consider alternatives to the neoclassical paradigm. The limited reversibility or irreversibility of many environmental impacts is one reason to question conventional economic reasoning, which generally assumes that everything can be traded against everything else in monetary terms. Even if it were accepted that impacts can be traded against each other in one-dimensional, monetary terms, the price at which such trading should occur is always open to debate. The idea of correct prices for purposes of resource allocation suggested by conventional cost-benefit analysis becomes less convincing, if not absurd. Why those prices? What right does one have, as an economist, to define so-called correct prices or correct rules for valuing environmental impacts or other impacts in monetary (or other one-dimensional) terms?

1.2 Problem Statement

The discovery and extraction of natural resources have brought different consequences to countries that are endowed with such resources. While some of these nations have become economically strong and self-sustaining, others have been drawn into serious economic hardships and conflicts. Proponents of the resource have it that the citizens of these countries suffer from abject poverty, environmental damages, pollutions, diseases, illiteracy and score very low on the United Nations Human Development Index (UN,2006). Hence there is need to know the socio economic impact of oil production on the people of amukpe community.

1.3 Objectives of the Study

The major objective of the Study is the socioeconomic impact of oil production on the people of amukpe community.

1.4 Research Questions

  1. What does oil production entails?
  2. What are its effect on the environment?
  3. What are its socioeconomic effects on the population?

1.5 Significance of the Study

The research gives a clear insight into the socioeconomic impact of oil production on the people of amukpe community. It will also serve as a preliminary study into the effect of oil production on the environment of the community.

1.6 Scope of the Study

The research focus on the socioeconomic impact of oil production on the people of amukpe community.

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