Boko Haram’s Logo, Wikimedia Commons
By Jacob Goldstein, Columnist
The global community generally regards falling crude oil prices as a positive development. Cheap oil means less expensive gas and lower heating bills. Yet it also indicates future struggles for countries reliant on oil production to raise revenue. Analysts often focus on how low oil prices will hurt the economies of major producers like Saudi Arabia, Iran, and Russia. Nigeria, however, receives less attention, even though it is an OPEC member that relies on oil for 70 percent of government revenues and is fighting a major Islamist insurgency. Falling global oil prices could have important implications for Nigeria’s fight against Boko Haram and by extension, the stability of all of West Africa. Nigeria will likely try to stop the rampant oil theft that occurs in the country to make up for its budgetary shortfalls. This will draw limited resources away from efforts against Boko Haram, as well as disrupt entrenched political and criminal interests in Nigeria.
As of the first week of December 2014, crude oil is trading for less than US $70 a barrel. The Nigerian government’s 2015 budget assumes that oil prices will be at least $78 per barrel, according to Ngozi Okonjo-Iweala, the country’s coordinating minister for economy and finance. Meanwhile, external analysts have pegged Nigeria’s breakeven price for oil closer to $122. If the global price of crude oil continues to fall, Nigeria needs to either cut spending or tap into its monetary reserves. The government’s main savings account for oil is the Excess Crude Account. Although this account is valued at nearly $4 billion, it is $2 billion short of International Monetary Fund recommendations. According to a former Nigerian finance minister this can only tide the country over for “two to three months.”
It is unclear whether falling oil prices are temporary or part of a long-term trend. Instability in the Middle East, slow economic growth in China, and a generally sluggish world economy are short-term factors that have contributed to lower oil prices. The rise of natural gas, growing US shale oil production, and a shift towards renewable energy in developed countries are conditions that may persist. The new normal may be $80 (or less) per barrel of oil. Nigeria has no way of knowing whether cheap oil is a fleeting event that it will be able to withstand or if it will have to use funds from the ECA.
Abjua will like attempt to crack down on oil theft if oil prices fail to rise. Decreasing the amount of oil stolen will increase oil productivity. Ms. Okonjo-Iweala alluded to this as a likely strategy and said the strategy “would enable us to pick up quantity to help us cushion on the price side.” Going after oil thieves is low hanging-fruit for the Nigerian government; it is a far easier way to raise revenue than increasing production. Stolen oil is a major problem for the Nigerian economy. Chatham House estimates that in 2013, an average of 100,000 barrels of oil per day were stolen. This represents about five percent of Nigeria’s total oil production, or $3.65 billion per year.  Both small group who can refine and sell oil locally and more sophisticated organizations in the Niger Delta siphon off oil. It is also common for thieves to steal oil at export facilities directly from oil transport trucks and tankers.
Should Nigeria decide to crack down on oil theft, this effort will impact the country’s security situation in two ways. First, protecting oil pipelines will require Nigeria to use its security forces to guard the pipelines, as well as go after the groups that are pilfering the oil. This will draw resources away from the fight against Boko Haram, which has been more active of late. In mid-November, the group battled the Nigerian military in the northeastern state of Adamwana and carried out the brutal executions of 48 unarmed fish sellers near the border with Chad. 
Secondly, oil theft often occurs with the tacit approval of rent-seeking politicians. Stopping this corruption may force criminal groups to turn to other, more violent strategies to acquire funds. As undesirable as oil theft may be to the Nigerian government’s budget, according to Chatham House “public corruption in Nigeria has acted as a kind of glue that holds together the country’s 36 states, 774 local governments and more than 250 ethnic groups.” The threat of Boko Haram has already pushed Nigerian society to its breaking point. The group killed more than 2,000 Nigerian citizens in the first half of 2014. Muammad Sanusi, the Emir of Kano and former governor of Nigeria’s central bank, is calling on citizens to arm themselves to defend against Islamist militants because the government is perceived as being unable to do so. Cracking down on oil theft could create general instability thereby shaking up entrenched political and criminal interests and potentially complicating Nigeria’s fight against Boko Haram.
As it stands, Nigeria is struggling to beat back an Islamist insurgency that poses a significant threat to the country. The possibility of having to combat oil theft at the same time will only make a combustible situation more dangerous.
Jacob is an M.A. candidate in the Security Studies Program at Georgetown University concentrating in international security. His areas of interest include energy security, radical Islamism, and regionally, sub-Saharan Africa. His interest in sub-Saharan Africa was spurred by his experience working with a savings and credit cooperative in Uganda. He is a graduate of the University of North Carolina at Chapel Hill with degrees in public policy and political science.
 Chris Stein, “Price Drop Vexes Nigeria, Africa’s Top Producer of Crude,” Voice of America, November 19, 2014 http://www.hrw.org/news/2014/07/15/nigeria-boko-haram-kills-2053-civilians-6-months.
 Christina Katsouris and Aaron Sayne, “Nigeria’s Criminal Crude: International Options to Combat the Export of Stolen Oil,” Chatham House, September 2013, http://www.chathamhouse.org/sites/files/chathamhouse/public/Research/Africa/0913pr_nigeriaoil.pdf, p. x.
 New York Times, “Oil’s Devastating Legacy in Nigeria,”August 14, 2014, http://www.nytimes.com/2014/08/15/opinion/oils-devastating-legacy-in-nigeria.html?_r=2.
 Christina Katsouris and Aaron Sayne, “Nigeria’s Criminal Crude: International Options to Combat the Export of Stolen Oil,” Chatham House, September 2013, http://www.chathamhouse.org/sites/files/chathamhouse/public/Research/Africa/0913pr_nigeriaoil.pdf, p. 2-3.
 Christina Katsouris and Aaron Sayne, “Nigeria’s Criminal Crude: International Options to Combat the Export of Stolen Oil,” Chatham House, September 2013, http://www.chathamhouse.org/sites/files/chathamhouse/public/Research/Africa/0913pr_nigeriaoil.pdf, p. 4.
 Iro Dan Fulani, “Boko Haram: Nigerian military retakes Gombi, Hong, in Adamawa,” Premium Times, November 19, 2014, http://www.premiumtimesng.com/news/headlines/171535-boko-haram-nigerian-military-retakes-gombi-hong-adamawa.html.
 Christina Katsouris and Aaron Sayne, “Nigeria’s Criminal Crude: International Options to Combat the Export of Stolen Oil,” Chatham House, September 2013, http://www.chathamhouse.org/sites/files/chathamhouse/public/Research/Africa/0913pr_nigeriaoil.pdf, p. 40.
 Human Rights Watch, “Nigeria: Boko Haram Kills 2,053 Civilians in 6 Months,” July 15, 2014, http://www.hrw.org/news/2014/07/15/nigeria-boko-haram-kills-2053-civilians-6-months.