NATURAL RESOURCES AND THEIR EXPLOITATION - ECONOMIC RESOURCES & ACTIVITY
Natural resources are economic resources; natural resources exploitation is an economic activity
Definition of Natural Resources
Natural resources are free gifts of nature that become goods when exploited and are used in the production of other goods and services.
iv. Logging – used to describe felling of trees for woods for furniture making, roofing of building, and other construction.
v. Hunting – used to describe extraction of wild animals from their natural habitat.
vi. Fishing – used to describe extraction of fishes from their natural habitat.
Note: Most exploited natural resources become raw materials for industries.
Benefits or Contributions of Natural Resources to the Economy
1. Source of employment: Those engaged in the extraction of natural resources from nature for economic benefit are said to be employed.
2. Foreign exchange earner. For example, Nigeria earns the US Dollars, a foreign currency by exporting crude oil.
3. Raw materials for industries. For example, petroleum products are used in petrochemical industries to manufacture products such as plastic, candle, etc.
4. Source of revenue to government. For example, Nigeria govt earns much of its revenue from crude oil.
5. Income generation to businesses and individuals. For example, Nigerian businesses and individuals in the petroleum industry earn their income from there.
6. Source of energy to power machines and equipment. Petroleum products provide fuel for our machines and equipment.
7. Money generated from natural resources is used to build infrastructures.
Benefits of Forest Resources
Specifically, the benefits of forest resources as natural resources are:
i. Provision of raw materials for arts and crafts industries and other industries.
ii. Provision of material for furniture and building construction.
iii. Generation of income through tourism and through provision of wood for building and furniture construction.
iv. Foreign exchange earnings through provision of timbers for exports.
v. Provision of employment for hunters, timber men, timber dealers and forest resources conservation officers.
vi. Provision of herbs for medicine for health care delivery.
vii. Provision of firewood as fuel for cooking.
viii. Provision of food. Some trees, such as bush mango, produce fruits for consumption.
Petroleum and the Nigerian Economy
Like other developing countries, Nigeria’s exports come from primary products, that is, commodities.
Oil and gas (petroleum) accounts for 86% of Nigeria’s export revenue. This implies that the foreign currencies Nigeria requires to pay for its imports of other primary products and secondary products – consumer and capital finished goods – come largely from petroleum exports. Even government budgets depend on volume of production and the price of crude oil in the international oil market. This shows how much Nigeria depends on this commodity.
An economy that depends largely on one commodity for its economic survival is said to be a monoculture economy.
{The prefix “mono” stands for “one”}.
In Nigeria, crude oil was first discovered at Oloibiri in 1956, in the present day Bayelsa State.
Petroleum Upstream, Midstream and Downstream Activities
4. Diesel: This is known as automated gas oil (AGO). It is used as fuel for heavy duty engines in heavy duty vehicles and in generating plants.
5. Naphtha: Used in making petrochemical.
6. Bitumen: It is used in the construction of roads.
Note: Bitumen + gravel + sand = asphalt, which is used for surfacing roads, in road construction.
7. Other petroleum by-products: They are used in the manufacture of detergents, lubricants, plastics, fertilizers, candles, some cosmetics like petroleum jelly, etc.
Advantages (Positive Effects) of Petroleum to Nigeria’s Economy
i. Provision of jobs or employment for the people in the oil and gas industry.
ii. Petroleum is the major foreign exchange earner for Nigeria.
iii. Mineral resources provide raw materials for some industries. An example is petro-chemical industries.
iv. Exploitation of crude oil contributes to Nigeria’s gross domestic product.
v. It serves as a source of revenue to government. Apart from export revenue to the government, local companies in the oil and gas sector pay royalty and a tax called petroleum profit tax to the government.
vii. Increase in wealth: Some Nigerians that have become wealthy made their wealth from petroleum. An example is those who own oil wells.
viii. Petroleum drilling activities attract development of infrastructure to some areas.
ix. There is transfer of technical know-how through imports of foreign experts and equipment for petroleum production.
Disadvantages (Negative Effects) of Petroleum to Nigeria’s Economy
i. Environmental and air pollution arising from oil spillage, gas flaring, etc.
ii. Over reliance on petroleum has caused the neglect of other sectors of the economy, such as agriculture, manufacturing, etc.
iii. Rural-urban migration, which resulted in congestion in the urban area, came with the discovery of petroleum.
Pollution from Petroleum
-Two basic pollutions in petroleum operation are oil spillage and gas flaring.
1. Oil spillage: Oil spillage is when crude oil pours on the ground or in a body of water.
Natural resources are free gifts of nature that become goods when exploited and are used in the production of other goods and services.
OR
Natural resources are goods extracted from the free gifts of nature.
As free gifts of nature, it means it costs humans nothing to have natural resources where they are.
- Natural resources include:
1. Soil: The upper layer of the earth that plants grow.
2. Forest and Savanna Resources: These refer to trees and grassland, the wildlife and other resources in them. Another term for this is flora and fauna. Flora refers to all plant life; and fauna refers to all animal life.
3. Water Resources: These refer to water bodies and the aquatic life in them as well as underground water.
4. Mineral Resources: These are divided into solid minerals and liquid minerals. Solid minerals include rocks, metals such as gold, silver, copper, aluminium, etc. Liquid minerals include crude oil, etc.
Exploration and Exploitation of Natural Resources
“Exploration” means to look for deposits of natural resources. And “Exploitation” means to extract the natural resources from nature – from where it exists.
As free gifts of nature, it means it costs humans nothing to have natural resources where they are.
- Natural resources include:
1. Soil: The upper layer of the earth that plants grow.
2. Forest and Savanna Resources: These refer to trees and grassland, the wildlife and other resources in them. Another term for this is flora and fauna. Flora refers to all plant life; and fauna refers to all animal life.
3. Water Resources: These refer to water bodies and the aquatic life in them as well as underground water.
4. Mineral Resources: These are divided into solid minerals and liquid minerals. Solid minerals include rocks, metals such as gold, silver, copper, aluminium, etc. Liquid minerals include crude oil, etc.
Exploration and Exploitation of Natural Resources
“Exploration” means to look for deposits of natural resources. And “Exploitation” means to extract the natural resources from nature – from where it exists.
Depending on the nature of a natural resource, the following terms are used to describe its exploitation i.e. its extraction from nature:
i. Mining – used to describe exploitation of solid minerals. Examples are gold, copper, diamond mining, etc.
ii. Drilling – used to describe exploitation of liquid minerals. Examples are crude oil drilling, borehole drilling, etc.
iii. Quarrying – used to mean splitting rocks into stones and gravels for bridges, roads and buildings construction.
i. Mining – used to describe exploitation of solid minerals. Examples are gold, copper, diamond mining, etc.
ii. Drilling – used to describe exploitation of liquid minerals. Examples are crude oil drilling, borehole drilling, etc.
iii. Quarrying – used to mean splitting rocks into stones and gravels for bridges, roads and buildings construction.
iv. Logging – used to describe felling of trees for woods for furniture making, roofing of building, and other construction.
v. Hunting – used to describe extraction of wild animals from their natural habitat.
vi. Fishing – used to describe extraction of fishes from their natural habitat.
Note: Most exploited natural resources become raw materials for industries.
Benefits or Contributions of Natural Resources to the Economy
1. Source of employment: Those engaged in the extraction of natural resources from nature for economic benefit are said to be employed.
2. Foreign exchange earner. For example, Nigeria earns the US Dollars, a foreign currency by exporting crude oil.
3. Raw materials for industries. For example, petroleum products are used in petrochemical industries to manufacture products such as plastic, candle, etc.
4. Source of revenue to government. For example, Nigeria govt earns much of its revenue from crude oil.
5. Income generation to businesses and individuals. For example, Nigerian businesses and individuals in the petroleum industry earn their income from there.
6. Source of energy to power machines and equipment. Petroleum products provide fuel for our machines and equipment.
7. Money generated from natural resources is used to build infrastructures.
Benefits of Forest Resources
Specifically, the benefits of forest resources as natural resources are:
i. Provision of raw materials for arts and crafts industries and other industries.
ii. Provision of material for furniture and building construction.
iii. Generation of income through tourism and through provision of wood for building and furniture construction.
iv. Foreign exchange earnings through provision of timbers for exports.
v. Provision of employment for hunters, timber men, timber dealers and forest resources conservation officers.
vi. Provision of herbs for medicine for health care delivery.
vii. Provision of firewood as fuel for cooking.
viii. Provision of food. Some trees, such as bush mango, produce fruits for consumption.
Petroleum and the Nigerian Economy
Like other developing countries, Nigeria’s exports come from primary products, that is, commodities.
Oil and gas (petroleum) accounts for 86% of Nigeria’s export revenue. This implies that the foreign currencies Nigeria requires to pay for its imports of other primary products and secondary products – consumer and capital finished goods – come largely from petroleum exports. Even government budgets depend on volume of production and the price of crude oil in the international oil market. This shows how much Nigeria depends on this commodity.
An economy that depends largely on one commodity for its economic survival is said to be a monoculture economy.
{The prefix “mono” stands for “one”}.
In Nigeria, crude oil was first discovered at Oloibiri in 1956, in the present day Bayelsa State.
Petroleum Upstream, Midstream and Downstream Activities
- Upstream activities are exploration & drilling of crude oil. This is also known as exploration & production of petroleum.
- Midstream activities are transportation of the crude oil to the refinery and the refining of the crude oil.
- downstream activities are marketing & distribution of petroleum products such as petrol, kerosene, diesel, etc.
Note: If the classification is limited to two – upstream & downstream activities – then the transportation of crude oil and the refining of the crude oil would fall under downstream activities. Upstream activities end with extraction.
Petroleum Products and their Uses
Petroleum products and their use are:
1. Petroleum gas or Liquefied Petroleum Gas (LPG): It is used as fuel for cooking; so it is also known as cooking gas.
2. Petrol: This is also known as premium motor spirit (PMS) or gasoline. It is fuel for motor vehicles and generators.
3. Kerosene: This is also known as paraffin oil. It is used as fuel for cooking with cooking stove and
lighting in lamp tin. For this purpose, its name is household kerosene (HHK).
Kerosene is also used as fuel by aircraft. For this purpose, its name is: aviation fuel.
- Midstream activities are transportation of the crude oil to the refinery and the refining of the crude oil.
- downstream activities are marketing & distribution of petroleum products such as petrol, kerosene, diesel, etc.
Note: If the classification is limited to two – upstream & downstream activities – then the transportation of crude oil and the refining of the crude oil would fall under downstream activities. Upstream activities end with extraction.
Petroleum Products and their Uses
Petroleum products and their use are:
1. Petroleum gas or Liquefied Petroleum Gas (LPG): It is used as fuel for cooking; so it is also known as cooking gas.
2. Petrol: This is also known as premium motor spirit (PMS) or gasoline. It is fuel for motor vehicles and generators.
3. Kerosene: This is also known as paraffin oil. It is used as fuel for cooking with cooking stove and
lighting in lamp tin. For this purpose, its name is household kerosene (HHK).
Kerosene is also used as fuel by aircraft. For this purpose, its name is: aviation fuel.
4. Diesel: This is known as automated gas oil (AGO). It is used as fuel for heavy duty engines in heavy duty vehicles and in generating plants.
5. Naphtha: Used in making petrochemical.
6. Bitumen: It is used in the construction of roads.
Note: Bitumen + gravel + sand = asphalt, which is used for surfacing roads, in road construction.
7. Other petroleum by-products: They are used in the manufacture of detergents, lubricants, plastics, fertilizers, candles, some cosmetics like petroleum jelly, etc.
Advantages (Positive Effects) of Petroleum to Nigeria’s Economy
i. Provision of jobs or employment for the people in the oil and gas industry.
ii. Petroleum is the major foreign exchange earner for Nigeria.
iii. Mineral resources provide raw materials for some industries. An example is petro-chemical industries.
iv. Exploitation of crude oil contributes to Nigeria’s gross domestic product.
v. It serves as a source of revenue to government. Apart from export revenue to the government, local companies in the oil and gas sector pay royalty and a tax called petroleum profit tax to the government.
vii. Increase in wealth: Some Nigerians that have become wealthy made their wealth from petroleum. An example is those who own oil wells.
viii. Petroleum drilling activities attract development of infrastructure to some areas.
ix. There is transfer of technical know-how through imports of foreign experts and equipment for petroleum production.
Disadvantages (Negative Effects) of Petroleum to Nigeria’s Economy
i. Environmental and air pollution arising from oil spillage, gas flaring, etc.
ii. Over reliance on petroleum has caused the neglect of other sectors of the economy, such as agriculture, manufacturing, etc.
iii. Rural-urban migration, which resulted in congestion in the urban area, came with the discovery of petroleum.
Pollution from Petroleum
-Two basic pollutions in petroleum operation are oil spillage and gas flaring.
1. Oil spillage: Oil spillage is when crude oil pours on the ground or in a body of water.
Oil spillage causes environmental pollution, killing plants, animals and fishes in their habitat.
Oil spillage occurs either during drilling or transportation of the crude oil through pipeline to the refinery.
2. Gas flaring: Gas flaring is the release of petroleum gas into the atmosphere. Gas flaring causes air pollution, leading to global warming.
It is during drilling and refining that gas flaring may occur.
Note: The chemical term for petroleum is “hydrocarbon”.
Thank you
For more information, send e-mail to: senaipia@gmail.com, or call: +2347052802574
Oil spillage occurs either during drilling or transportation of the crude oil through pipeline to the refinery.
2. Gas flaring: Gas flaring is the release of petroleum gas into the atmosphere. Gas flaring causes air pollution, leading to global warming.
It is during drilling and refining that gas flaring may occur.
Note: The chemical term for petroleum is “hydrocarbon”.
Thank you
For more information, send e-mail to: senaipia@gmail.com, or call: +2347052802574
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