The oil curse illustrated

Bad news from Nigeria:

The Movement for the Emancipation of the Niger Delta said it attacked a Shell-operated oil-pipeline switching station and a navy vessel in southern Nigeria on Monday and blew up a military vessel. The group took nine foreign oil workers hostage over the weekend.

Still, we get more than 2 million barrels per day from Nigeria, since we need it. If we didn't, the Europeans, Chinese, Indians or Japanese would. This is a perfect example of why a poor nation should not rejoice if they find oil. If Nigeria instead derived export income from a shoe factory or a semiconductor plant, that foreign exchange would dry up in about two and a half seconds if rebels were running around taking workers hostage. Nigeria's government can't come to grips with rebels, corruption or much of anything else for that matter, but they will always stay afloat because they will always have money if oil sticks around $60 per barrel. Unlike foreign businesses, domestic small manufacture or agriculture, oil vests power in the government by way of royalties, with few other power centers apart from foreign oil companies that rely on the government for drilling leases. That combination creates both stronger and less effective central government, a truly awful combination with very little in the way of alternatives.