Wednesday, March 23, 2016

Cheap oil means bad business for pirates


Low oil prices have all sorts of ramifications throughout society. It means cheaper fuel, which means people have more money to spend (though some folks prefer to save it). It also means people drive more, which means more emissions, but also that more people die in accidents. It hurts hybrid car sales, but EV buyers can find some sweet deals. It hurts oil companies, who have scaled down production, which is mixed news for the environment, but also has its own effect on the economy. Interestingly enough, cheap oil also appears to be hurting pirates (not the digital kind, but the contemporary version of the "shiver me timbers" types).

According to the Huffington Post, low oil prices tip the risk/benefit scales in a way that simply make it not worthwhile for some pirates to attempt to seize tankers. In the Gulf of Guinea, a major shipping lane for oil tankers, attack from pirates dropped from 69 in 2014 to 49 in 2015. Nigeria, the heart of Africa's oil production, lost as much as 500,000 barrels a day when prices were over $100 per barrel, or about a quarter of its outgoing supply, according to West African maritime industry analyst Bolaji Akinola.
"Piracy is no longer such a profitable business as it was when prices hit $106 a barrel." - Florentina Adenike Ukonga
Florentina Adenike Ukonga, the Gulf of Guinea Commission's executive secretary agrees. "With oil at a low bottom price of below $30 per barrel, piracy is no longer such a profitable business as it was when prices hit $106 a barrel a few years ago," she says. "The price drop has contributed a great deal in reducing piracy and other maritime crimes in the Gulf of Guinea."

Of course, there are other reasons for the decline in piracy, including increased communication, collaboration and coordination of anti-piracy efforts by multiple navies. In addition, West African pirates have adapted their criminal enterprises in the face of cheap oil, focusing more on kidnapping and ransom than stealing petroleum, "the kind of piracy that we saw in the Somalia area, in the Gulf of Aden," says Akinola.

Stealing oil just isn't the lucrative business it once was. Still, until conditions improve for people living in the region, crime will continue. "In the long-run, there is a need to provide employment for youth, especially in the Niger Delta area of Nigeria," Akinola tells NPR. "I hope you are aware of the fact that piracy in the larger Gulf of Guinea area has been blamed on Nigerian pirates. So until you are able to meaningfully engage this category of people, they will continue to constitute danger to shipping."

No comments:

Post a Comment