Playing the fuel: reforming Nigeria’s subsidies

Nigeria's Fuel Subsidy Shift and Economic Implications

• Subsidy Removal Context: Nigeria's state-owned oil firm confirmed that the new Dangote refinery's petrol will sell near market rates (approx. 1,000 naira/liter), ending decades of artificial pricing (~600 naira/liter) that cost the government roughly four times its health budget.
  • Immediate Price Hikes: Pump prices already surged from 568 nara (under $0.50) to 855 nara, sparking panic and shortages despite the new refinery's capacity.
• Systemic Dysfunction:
  • Historical Scarcity: For 30 years, Nigeria lacked refining capacity despite abundant oil reserves, relying on imports while selling fuel below cost.
  • Corruption & Smuggling: Subsidies incentivized insiders to steal and smuggle fuel to neighboring countries where market prices are higher.
  • Opportunity Cost: Wasteful spending on subsidies prevents investment in human capital; public spending is only $6/year per child on education and $4 on health.
• Economic Consequences:
  • Cost of Living: Transport costs for food and goods have risen, driving inflation and triggering previous protests.
  • Adaptation Strategies: Affluent citizens are sending drivers to queue; others are switching to solar panels or natural gas hybrids to reduce petrol dependency.
  • Long-term Potential: If subsidy funds are redirected to education and health, Nigeria could triple adult productivity, though immediate hardship is unavoidable.

Texas Grid Stability and Bitcoin Mining Friction

• Changing Political Stance:
  • Initial Support: Texas promoted Bitcoin mining (driven by cheap power and land) to incentivize power plant construction following the 2021 winter storm (which killed ~300).
  • Current Tension: Grid operator ERCOT predicts energy demand could double by 2030, with data centers and crypto mining accounting for 50% of the surge.
  • Legislative Push: A bill restricting miners from "demand response" schemes passed the Senate in 2023 but stalled in the House; further restrictions are expected in the upcoming session.
• Market Anomalies:
  • Arbitrage Profits: Miners are profiting more from curtailing operations during price spikes than actual mining; Riot earned $30 million from curtailment fees vs. $8.6 million from mining in August 2023.
  • Grid Risk: Miners sell power back to the market at high prices during scarcity, leading to accusations of "energy arbitrage" and holding the state hostage.
• Political Future:
  • Electoral Influence: Governors Abbott and Patrick (potential Trump allies) face a conflict between restricting mining to protect the grid and aligning with the crypto-friendly stance of Donald Trump ahead of the November election.

Indonesia's Global Horror Film Export

• Industry Boom: Horror films dominate the Indonesian market, constituting 50% of domestic production in 2023 (50 films); 2022's KKN Didesapinari became the highest-grossing film in country history.
• Cultural Foundations:
  • Folklore Utilization: Directors leverage deep-rooted myths (e.g., Wewe Gombel) used historically by parents to enforce child behavior.
  • Historical Trajectory: The genre survived the 1990s recession and evolved from 1970s state-sanctioned ideological films into modern works inspired by Japanese and Thai horror.
• Global Expansion:
  • Streaming Success: Joko Anwar's Netflix series Nightmares and Daydreams became the first Indonesian show to reach the US top 10.
  • Regional Appeal: Films are gaining traction in Malaysia and Singapore due to shared cultural traits.
• Future Outlook:
  • Industry Strategy: Directors aim to balance global accessibility with local identity, following the trajectory of South Korean cinema.
  • Hollywood Interest: Growing global demand has led to offers from Netflix and Hollywood for localized collaborations.