Nigeria Downstream oil industry activities
The model shows how petroleum product is refined/imported and distributed under the control of the NNPC
THE PRICE TRAP AND PEAK OIL
Peak oil will occur when it is too expensive to bring oil to the surface and not when reserves reach their limit. Companies must make a profit to be able to extract oil and stay in the oil business. However, that endeavour is becoming more and more difficult because of diminishing returns. They have to dig ever deeper to get to the oil at ever increasing costs, and the oil they find deep down is of a lesser quality. We have now reached a point where the price needed by oil companies to make a profit and stay in business is far higher than the price the market can bear. That price is probably about $ 100 per barrel - and rising every year! A market price o $ 100 will almost certainly cause a sharp recession and cause the price of oil to fall back beyond the point of profitability. For example, the combined profit of ExxonMobile, Chevron and Conocophillips fell from 80.4 billion in 2011 to only 3.7 billon in 2016 - see URL below. What the market can bear depends on the spending power of the mass of non-elite workers. The CLD shows the negative feedback loops that prevent oil prices to rise above the level of affordability. If non-elite workers cannot afford the goods and services offered, then there will be no demand for them and by extension for oil. In this situation the market price will not the cover the cost that oil companies need to extract oil. Oil supplies will decline and so will economic activity!