Nigerian unions have an ultimatum on the table: if the government does not reinstate fuel subsidies by Sunday, the country’s largest oil exporters will call a strike.
And while this would not stop all — or even most — oil exports from Nigeria, the move could increase world oil prices and devastate the Nigerian economy.
Reuters reports that, in the meantime, after five days on the streets, leaders have asked protesters to go home, and rest up for another round of demonstrations on Monday.
Protests and strikes in Nigeria are costing Africa’s most populous nation as much as a billion dollar a day, according to Bloomberg News. But in a country where 90 percent of the 160 million people live on less than $2 a day, locals say the price of inaction could be far greater.
After the subsidy was canceled on Jan. 1, the price of fuel doubled, causing a rise in the cost of food, transportation and education.
"All the oil wealth that this country has earned over the years hasn't touched the population," Adeyinka Shorungbe, a 36-year-old banker told The Wall Street Journal Thursday at a protest in Nigeria's largest city, Lagos. "Everyone knows what's at stake here."
President Goodluck Jonathan said he canceled the $8 billion subsidy to “ensure improvement in national infrastructure, power supply, transportation, irrigation and agriculture, education, healthcare, and other social services, [and] is in the best interest of our people,” according to Ghana Business News. Jonathan also said the subsidy fostered corruption and bad governance.
Analysts say the subsidy kept fuel prices unnaturally low, discouraging investment in refineries, according to Bloomberg News. Nigeria exports more than 2 billion gallons of crude oil a day, but with no processing facilities, has to import most of the oil it uses at home.
World oil prices have already risen at the fear of a partial work stoppage in Nigeria, the fifth-largest supplier of oil to the United States and a key supplier in Europe and Asia. Some analysts say the impact to the Nigerian economy — which gets 90 percent of its foreign currency from oil — would be devastating.
Kayode Akindele of the Lagos-based investment firm 46 Parallels told Reuters the government could use force to prevent the stoppage, despite the fact that it is already fighting Islamic militants in the north who pose the worst security threat in the country since the 1960s civil war.
"If there is any disruption to oil production it would be a serious escalation and the government would be likely to use legal or enforcement means to stop it," said Akindele.