IMPACT OF PETROLEUM PRODUCT PRICE ON HUMAN WELFARE IN NIGERIA
Keywords:
Premium Motor Spirit (PMS), Automotive Gas Oil (AGO), Dual Purpose Kerosene (DPK), Inflation Rate (INF), Interest Rate (INT) and Human Development Index (HDI).
Abstract
The single most important issue confronting a growing number of world economies today is the price of oil and its attendant consequences on economic output. Therefore the study investigated the impact of petroleum pump price on human welfare in Nigeria over the period 1990 to 2015. The study employed expost facto research design. Secondary time series data were used for the study and these were sourced from World Development Indicator (WDI, 2015) and Central Bank of Nigeria statistical bulletin, (CBN, 2015). The data collected were analyzed using autoregressive distributed lag. The inferences were drown at 1% and 5% significance level. The result showed that premium motor spirit price and dual purpose kerosene price exert a long-run negative and significant impact on human welfare in Nigeria (β = -0.15299, t = -5.31141 and β = -0.471399, t = -1.8838 respectively) while premium motor spirit price, dual purpose kerosene price and inflation rate exert a short-run negative and significant impact on human welfare in Nigeria (β = -0.71735, t= -4.3766; β = -0.62562, t = -2.9188 and β = -0.050310, t = -2.1829 respectively). The study concluded that as premium motor spirit price and dual purpose kerosene price and inflation rate increases, human welfare will fall and vice versa. Therefore for human welfare to increase, there must be a fall in premium motor spirit price and dual purpose kerosene price and inflation rate in Nigeria. The study recommended that Government and it agencies should ensure that petroleum pump prices should be regulated because they have a long way on the market. An increase in the price of petroleum products will lead to market failure because most products use either of these products. Since inflation rate worsen the welfare of people, the policy maker should find a way of control inflation in the system so that the welfare of the people will improve (better-off).
References
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Alhassan, A. & Kilishi, A. A. (2016). Analysing Oil Price-Macroeconomic Volatility in Nigeria. CBN Journal of Applied Statistics, 7, 1 – 22. [in English].
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Alom, F. (2015). An Investigation into the Crude Oil Price Pass-Through to the Macroeconomic Activities of Malaysia. Energy Procedia, 79, 42 – 548. [in English].
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Difiglio, C. (2014). Oil, economic growth and strategic petroleum stocks. Energy Strategy Reviews, 5, 48 – 58. [in English].
Dogah, K. E. (2015). The Impact of Oil Price Shocks on the Macroeconomy of Ghana. Journal of Poverty, Investment and Development, 9, 37 – 54. [in English].
Ebele, E. (2015). Oil Price Volatility and Economic Growth in Nigeria: An Empirical Investigation. European Journal of Humanities and Social Sciences, 34, 1900 – 1918. [in English].
Elster, E. (1989). Issues from the Second World Energy Crisis and Its Fall out on the Global Economy. Economic Peer Review Group publications, 5, 91 -97. [in English].
Ferderer, J. (1996). Oil price volatility and the macro economy. Journal of Macroeconomics, 18 (2), 1 - 26. [in English].
Gisser, P. (1985). Oil price changes and government revenue effect. Bangladesh Journal of Economics, 3(6), 2 - 4. [in English].
Glewwe, D. (1991). Investigating the determinants of household welfare in Cote d’Ivoire. Journal of Development Economics, 35, 307 - 337. [in English].
Gokmenoglua, K., Azina, V. & Taspinar, N. (2015). The Relationship between Industrial Production, GDP, Inflation and Oil Price: The Case of Turkey. Procedia Economics and Finance, 25, 497 – 503. [in English].
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Hassana, K. & Abdullah, A. (2015). Effect of Oil Revenue and the Sudan Economy: Econometric Model for Services Sector GDP. Procedia - Social and Behavioral Sciences, 172, 223 – 229. [in English].
Hooker, C. (1986). Effects of oil price and exchange rate variations on government revenue in china. Journal of Economics, 2 (1), 2 - 3. [in English].
Hooker, M. (2002). Are oil shocks inflationary? Asymmetric and non-linear specifications versus changes in regime. Journal of Money, Credit and Banking, 34 (2), 540 - 561. [in English].
Inyiama, O. I. & Ikechukwu, O. I. (2015). Crude Oil Production, Prices, Export and Foreign Exchange Rate, do they Interact? Evidence from Nigeria (2006 - 2014). International Journal of Developing and Emerging Economies, 3, 24 - 37. [in English].
Ishola, S. A., Olaleye, S. O., Olajide, A. R. & Abikoye, O. A. (2015). Government Expenditure, Oil Revenue and Economic Growth in Nigeria. International Journal of Economics, Commerce and Management, 3, 180 – 202. [in English].
Laser, Y. (1987). Interest, Inflation, Growth and the Direction of the Hong-Kong Economy. Chinese Economic Reviews, 120. [in English].
Mark, G., Olsen, T. & Mysen, Y. (1994). Impact of Oil Price Variation on the Growth Prospects of African Economies. African economic writer‘s publication, 2 (5), 80 - 83. [in English].
McConnel, M. (2008). Macroeconomic Dynamics in the Oil Exporting Countries: A Panel VAR study. International Journal of Business and Social Science, 2 (21), 288 - 295. [in English].
Obadan, M. I. (2014). Overview of Exchange Rate Management in Nigeria from 1986 to Date. CBN statistical bulletin, 3. [in English].
Ogundipe, O. M., Ojeaga, P. & Ogundipe, A. A. (2014). Oil Price and Exchange Rate Volatility in Nigeria. Journal of Economics and Finance, 5(4), 1 - 09. [Electronic resource]. Retrieved from www.iosrjournals.org. [in English].
Oriakhi, D. E. & Iyoha, D. O. (2013). Oil Price Volatility and Its Consequences on the Growth of the Nigerian Economy: An Examination (1970 - 2010). Asian Economic and Financial Review, 3 (5), 683 - 702. [Electronic resource]. Retrieved from http://aessweb.com/journal-detailed.php?id=5002. [in English].
Qianqian, Z. (2011). The Impact of International Oil Price Fluctuation on China’s Economy. Energy Procedia, 5, 1360 – 1364. [in English].
Rolle, R. & Uffie, A. (2015). Macroeconomics of Oil Price Volatility. Jorind 13 (1), 253 – 263. [in English].
Seka, S. K., Teoa, X. Q. & Wong, Y. N. (2015). A Comparative Study on the Effects of Oil Price Changes on Inflation. Procedia Economics and Finance, 26, 630 – 636. [in English].
Yazdana, G. F., Ehsanb, A. G. & Sadr, S. M. H. (2012). Is cointegration between oil price and economic growth? Case study Iran. Procedia - Social and Behavioral Sciences, 62, 1215 – 1219. [in English].
Ahmad, A. H. & Saleh, M. (2015). Dynamic Relationships between Oil Revenue, Government Spending and Economic Growth in Oman. International Journal of Business and Economic Development, 3, 93 – 115. [in English].
Akinlo, T. & Apanisile, O. T. (2015). The Impact of Volatility of Oil Price on the Economic Growth in Sub-Saharan Africa. British Journal of Economics, Management & Trade, 5(3), 338 - 349. [in English].
Akpan, E. (2012). Oil Price Shocks and Nigeria’s Macro Economy. Journal of Economics, Ibadan, 4(2), 12 - 19. [in English].
Alhassan, A. & Kilishi, A. A. (2016). Analysing Oil Price-Macroeconomic Volatility in Nigeria. CBN Journal of Applied Statistics, 7, 1 – 22. [in English].
Alley, I., Asekomeh, A., Mobolaji, H. & Adeniran, A. (2014). Oil price shocks and Nigerian economic growth. European Scientific Journal, 10 (19), 1857 – 7881. [in English].
Alom, F. (2015). An Investigation into the Crude Oil Price Pass-Through to the Macroeconomic Activities of Malaysia. Energy Procedia, 79, 42 – 548. [in English].
Anyadike, N. (2013). Assessment of the Implication of Full Scale Deregulation of the Downstream Oil Sector on the Nigerian Economy: The Neoliberalism Approach. Global Journal of Political Science and Administration, 1, 23 – 48. [in English].
Aregbeyen, O. & Kolawole, B. O. (2015). Oil Revenue, Public Spending and Economic Growth Relationships in Nigeria. Journal of Sustainable Development, 8, 113 – 123. [in English].
Aremo, A. G., Orisadare, M. A. & Ekperiware, M. C. (2012). Oil price Shocks and Fiscal Policy Management: Implications for Nigerian Economic Planning (1980 – 2009). International Journal of Development and sustainability, 1(3), 1121 – 1139. [Electronic resource]. Retrieved from www.isdsnets.com/ijds. [in English].
Balke, Y. (1996). Determinants of Economic Growth and Stagnation in Oil Rich Venezuela. Dutch Journal of Economics, 3(1), 3 - 6. [in English].
Becker G., (1976). The Economic Approach to Human Behavior. Chicago and London. The University of Chicago Press, 3-14. [in English].
Bildiricia, M. & Ersin, O. (2015). An Investigation of the Relationship between the Biomass Energy Consumption, Economic Growth and Oil Prices. Procedia - Social and Behavioral Sciences, 210, 203 – 212. [in English].
Binger, B. (1998). Economic growth: Determinants, issues and lessons. Bangladesh: Chukizak printings. [in English].
Bondzie, E. A., Bartolomeo, G. D. & Fosu, G. O. (2014). Oil Price Fluctuations and it Impact on Economic Growth: A Dsge Approach. International Journal of Academic Research in Business and Social Sciences, 4, 217 – 242. [in English].
Difiglio, C. (2014). Oil, economic growth and strategic petroleum stocks. Energy Strategy Reviews, 5, 48 – 58. [in English].
Dogah, K. E. (2015). The Impact of Oil Price Shocks on the Macroeconomy of Ghana. Journal of Poverty, Investment and Development, 9, 37 – 54. [in English].
Ebele, E. (2015). Oil Price Volatility and Economic Growth in Nigeria: An Empirical Investigation. European Journal of Humanities and Social Sciences, 34, 1900 – 1918. [in English].
Elster, E. (1989). Issues from the Second World Energy Crisis and Its Fall out on the Global Economy. Economic Peer Review Group publications, 5, 91 -97. [in English].
Ferderer, J. (1996). Oil price volatility and the macro economy. Journal of Macroeconomics, 18 (2), 1 - 26. [in English].
Gisser, P. (1985). Oil price changes and government revenue effect. Bangladesh Journal of Economics, 3(6), 2 - 4. [in English].
Glewwe, D. (1991). Investigating the determinants of household welfare in Cote d’Ivoire. Journal of Development Economics, 35, 307 - 337. [in English].
Gokmenoglua, K., Azina, V. & Taspinar, N. (2015). The Relationship between Industrial Production, GDP, Inflation and Oil Price: The Case of Turkey. Procedia Economics and Finance, 25, 497 – 503. [in English].
Goodwin, H. (1985). Oil price changes and its economic and social reactionary effect: An appraisal. Switz Journal of Social Economics, 4(2), 50 - 53. [in English].
Gunu, U. & Kilishi, A. A. (2010). Oil Price Shocks and the Nigerian Economy: A Variance Autoregressive (VAR) Model. International Journal of Business and Management, 5(8). [in English].
Hamilton, J. D. (1983). Causes and consequences of the oil shock of 2007- 2008. Brookings Papers on Economic Activity. [Electronic resource]. Retrieved from www.brookings.edu/economics/bpea/bpea.aspx. [in English].
Hassan, S. & Zahid, M. (2011). The real exchange rate of exporting economy: Empirical evidence from Nigeria, FIW working paper 72. [in English].
Hassana, K. & Abdullah, A. (2015). Effect of Oil Revenue and the Sudan Economy: Econometric Model for Services Sector GDP. Procedia - Social and Behavioral Sciences, 172, 223 – 229. [in English].
Hooker, C. (1986). Effects of oil price and exchange rate variations on government revenue in china. Journal of Economics, 2 (1), 2 - 3. [in English].
Hooker, M. (2002). Are oil shocks inflationary? Asymmetric and non-linear specifications versus changes in regime. Journal of Money, Credit and Banking, 34 (2), 540 - 561. [in English].
Inyiama, O. I. & Ikechukwu, O. I. (2015). Crude Oil Production, Prices, Export and Foreign Exchange Rate, do they Interact? Evidence from Nigeria (2006 - 2014). International Journal of Developing and Emerging Economies, 3, 24 - 37. [in English].
Ishola, S. A., Olaleye, S. O., Olajide, A. R. & Abikoye, O. A. (2015). Government Expenditure, Oil Revenue and Economic Growth in Nigeria. International Journal of Economics, Commerce and Management, 3, 180 – 202. [in English].
Laser, Y. (1987). Interest, Inflation, Growth and the Direction of the Hong-Kong Economy. Chinese Economic Reviews, 120. [in English].
Mark, G., Olsen, T. & Mysen, Y. (1994). Impact of Oil Price Variation on the Growth Prospects of African Economies. African economic writer‘s publication, 2 (5), 80 - 83. [in English].
McConnel, M. (2008). Macroeconomic Dynamics in the Oil Exporting Countries: A Panel VAR study. International Journal of Business and Social Science, 2 (21), 288 - 295. [in English].
Obadan, M. I. (2014). Overview of Exchange Rate Management in Nigeria from 1986 to Date. CBN statistical bulletin, 3. [in English].
Ogundipe, O. M., Ojeaga, P. & Ogundipe, A. A. (2014). Oil Price and Exchange Rate Volatility in Nigeria. Journal of Economics and Finance, 5(4), 1 - 09. [Electronic resource]. Retrieved from www.iosrjournals.org. [in English].
Oriakhi, D. E. & Iyoha, D. O. (2013). Oil Price Volatility and Its Consequences on the Growth of the Nigerian Economy: An Examination (1970 - 2010). Asian Economic and Financial Review, 3 (5), 683 - 702. [Electronic resource]. Retrieved from http://aessweb.com/journal-detailed.php?id=5002. [in English].
Qianqian, Z. (2011). The Impact of International Oil Price Fluctuation on China’s Economy. Energy Procedia, 5, 1360 – 1364. [in English].
Rolle, R. & Uffie, A. (2015). Macroeconomics of Oil Price Volatility. Jorind 13 (1), 253 – 263. [in English].
Seka, S. K., Teoa, X. Q. & Wong, Y. N. (2015). A Comparative Study on the Effects of Oil Price Changes on Inflation. Procedia Economics and Finance, 26, 630 – 636. [in English].
Yazdana, G. F., Ehsanb, A. G. & Sadr, S. M. H. (2012). Is cointegration between oil price and economic growth? Case study Iran. Procedia - Social and Behavioral Sciences, 62, 1215 – 1219. [in English].
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Published
2018-06-18
How to Cite
Maku, O. E., Adetowubo-King, S. A., & Aduralere, O. O. (2018). IMPACT OF PETROLEUM PRODUCT PRICE ON HUMAN WELFARE IN NIGERIA. Scientific Journal of Polonia University, 29(4), 27-42. https://doi.org/10.23856/2906
Section
Social Sciences
