http://www.theoildrum.com/node/2348

Nigeria: Energy Infrastructure Firestorm

........When a fire becomes sufficiently intense, its heat creates a rising column of air so strong that surrounding air is drawn into the void, creating a draft that sustains and intensifies the fire. It becomes a self-sustaining, self-intensifying organism: a firestorm. The violence in Nigeria’s delta region has become a firestorm, and the consequences of this transformation will fundamentally impact that nation’s ability to export oil. Recent events in the delta region have transitioned the violence there from a negative-feedback loop where there was a disincentive to militants to shut in too high a portion of Nigeria’s oil exports to a positive-feedback loop where militants will compete to completely destroy Nigeria’s capacity to export oil............

............Ramifications
The escalating violence in Nigeria has two important ramifications:

First, the tip from stable violence to perpetual escalation of violence represents a sea change in the level of disruption to Nigeria’s oil exports. The controlled Ijaw violence under a unified MEND had a strong disincentive to either shut-in excessive portions of Nigeria’s oil exports or to inflict long-term damage on that export capability. The new entrepreneurial violence is comprised of multiple actors, each competing to extort money from a limited target list of oil installations, foreign workers, and foreign oil companies. Because the actors are now militant youths seeking short-term financial gain, rather than careful elders seeking long-term political concessions, there is a strong market incentive to fill the available market space—in other words, to escalate kidnappings and infrastructure attacks until all Nigerian production is shut in. Admittedly, these militants will face diminishing marginal returns as the level of Nigeria production approaches 100%. But for the disaffected youths of the Niger delta, living amidst broken tribal structures, ballooning populations, and the environmental devastation of the local oil industry, a very small marginal return on investment in violence is still the best economic prospect available.............

...........Second, this transition from ideologically motivated violence to financially motivated violence portends problems for energy infrastructure throughout the world. As peak oil exacerbates already tight global energy markets, record energy prices will allow energy firms everywhere to accept the kind of ransoms and payoffs that are fuelling the escalation of violence in Nigeria’s delta region. There is good reason to believe that today’s sectarian or ideologically driven violence in Iraq and elsewhere may transition to financially motivated attacks on energy infrastructure. This transition will be accompanied by the same critical change observed in Nigeria: there will no longer be the motivation to keep the majority of production on-line, or to prevent long-term damage to production capacity. Instead, as long as marginal returns on investments in energy infrastructure attacks remain positive, there will be a strong incentive to escalate these attacks no matter how completely a region’s export capacity is destroyed. If one accepts the proposition that peak oil will lead to global economic hardships, then this incentive will be further increased. The ability to pay “protection” for oil infrastructure is a direct function of the profitability of producing oil, and as such the peaking of world oil production—to the extent that it increases prices faster than production costs—will perpetually increase the incentive to attack energy infrastructure targets................

.............Finally, it is worth considering that energy infrastructure was designed to optimize economic performance, not security and defensibility. Economic considerations force an infrastructure design methodology consisting of largely centralized structures with multiple single points of failure, and networks vulnerable to cascading failures. As a result, even in oil producing states with functional security services, there is a high vulnerability to financially motivated infrastructure attacks. While a Nigerian scenario may seem unthinkable in the United States, consider our nation’s success in interdicting the drug trade. The market for energy is significantly larger than the market for drugs—and so is the incentive to militants to conduct financially motivated attacks on energy infrastructure. If this analysis is correct, the increasing incentives to attack energy infrastructure will become yet another factor accelerating the rate of decline of global energy production...............

Nigeria is a significant exporter of oil to the US. Set this development ( increasingly " shut in " or shut down Nigerian oil exports ) against Mexico's crashing oil production, Iraq's anemic production output due to continueing sabatoge and war, Iran's building problems with even keeping production up to a level to satisfy its own increases in consumption, Saudi Arabia showing signs that its main oil fields are entering a depletion phase, Russia consolidating its control of oil and gas reserves in its domain, most South American producers showing support for Hugo Chavez and his moves towards control of his countries energy reserves, and what futures oil contracts that are available being bought up in mass by China in recent years, it all adds up to diminshing oil supplies for the US, with the increasing prices that will go along with this. Bush, on his trip to South American this week is trying to convince anyone who will listen down there, that he is thier friend, and pal, but the South American people are not blind to the injustices perpetrated by Bush and Crew during his time in power. He may get an ethanol deal out of Brazil, but it will be of little consequence in relation to the realities of building un-availability of energy supplies for the US, elsewhere in the world.