Somalis- We poor no more, Oil in the billions

[TheLastWaryaa]

I am in Dubai and I went to an Eid dinner last night which had many Somali officials. I happen to pump into a senior geologist for Coastline Explorations, the company that got the contract to explore offshore.

I couldn't believe my luck, I asked him if there was oil in Somalia, and his answer "Oh Yes, certainly, plenty, all the seismic evidence I have seen suggests billions"..he wouldn't go into more detail.

He just added that by the end of the year, they will have a clear idea of how much oil/gas there is. I am guessing their starting their exploration soon.

 

[Hmohamed54]

Why do you think America/west and arab nationa is so involved in your country. You think your problems are by accident. This happened to many countries we’re just next unfortunately.

 

[cars]

It is a common misconception amongst Somalis that finding oil will improve the quality of life of those living in Somalia. While it is true that oil extraction will increase the GDP of such country, a country relying on oil as its main source of income will potentially result in a wide income gap between the rich elites who control the oil industry in the country and everyone else without significant wealth redistribution.

Oil extraction causes income inequality because the oil industry does not need a sophisticated labor force. Oil can be extracted with machines, and only few specialists (i.e. engineers, supervisors, machine operators, etc) would be needed to assist in extracting the oil. Even prior to such technology, oil mining would be done by poor laborers. This means that a country that relies on oil as its main GDP source does not require a well educated civilian population. Why is this a problem? Because most of the money earned by oil extraction will end up entering the hands of few people.

The only way that oil mining would actually benefit people as a whole would be if the income produced by oil extraction is heavily taxed and redistributed to all citizens in the entire country. However, there is no incentive for politicians to do this. Since only few citizens need to be educated and have a high quality of life in a country where oil extraction is the main source of income for such country, an oil rich nation is likely to become an authoritarian country, since such dictator would only need to please the few oil elites in the country and prevent the rest of the population from rebelling. Just look at the countries which currently have large amounts of oil. Saudi Arabia, Venezuela, Russia, all of which generate a large percent of their country's wealth from oil, are all authoritarian countries. If you want to learn more, CGPGrey actually has a good video on this topic of how rulers hold power and discusses why countries that mine resources tend to be dictatorships at around 12:40 in the video
Let's take Saudi Arabia as a case study for what could happen in Somalia. Despite Saudi Arabia being the largest oil producer in the world, they rank relatively low in income inequality. Al Jazeera estimates that up to 20% of Saudi Arabians may be in poverty, and in 2013, Time Magazine captured photographs of the issue of poverty in Saudi Arabia. This scientific study found that selling oil was found to "increase wealth inequality" and studied how income redistribution was able to curb such effects.

Ultimately, oil is not some quick fix to Somalia's problems. While oil would make Somalia a relatively wealthy nation, it has the potential to cause drastic wealth inequality and turn Somalia into a oligarchical country with authoritarian rule.

 

[ZBR]

You know Syria Iraq Yemen Sudan South Sudan and Libya have oil to this day

 

[webslooth]

Nothing is going to happen some of you people need to let go of this cringe fantasy that Somalia will be a great country again.

 

[Pastoralist]

Billions? We have trillions. Coastline exploration isn’t even a large petrol company, but they’re taking the bulk of the profit. We would be at the bottom providing raw oil while they refine, distribute, and extract it.

the previous government rejected them for this very reason.