Attack on Nigerian Oil May Be Imminent

The Movement for the Emancipation of the Niger Delta, a militant group that has made good on threats in the past, has vowed to launch a major attack on oil infrastructure, according to Lloyd's List.

In 2006, Nigeria was the world's eighth largest net exporter of oil, according to the Energy Information Administration.

Recent violence that had no impact on oil supply, but it helped crude oil prices climb toward $100. We call this political peak oil: When supplies are this tight, any violence, political fracas or extreme weather event can send prices up. A serious attack would no doubt affect world prices, though some experts quoted by Lloyd's List cautioned that the rebel group lacks the resources to wage a significant attack.

As the Energy Information Administration writes on its Web site, "Since December 2005, Nigeria has experienced increased pipeline vandalism, kidnappings, and militant takeover of oil facilities in the Niger Delta. As of April 2007, an estimated 587,000 barrels per day of crude production is shut-in." Lloyd's List had the figures differently, stating that Nigeria is losing about 20% of its 2 million barrel per day oil production capacity to kidnappings and violence.

The bottom line is that reliance on oil, no matter its source, will subject the U.S. economy to violent price swings. Even if no oil flows from Nigeria to the U.S., disruptions there affect the price everyone pays for oil. Increased fuel efficiency, alternative biofuels and new technologies are keys to disentangling our economy from oil and the violence that affects its price.

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