Abstract
The global oil markets have witnessed different episodes of oil price fluctuations at different intervals. The effect of the fluctuations differs across nations and partly depending on the direction of the shocks. Declining oil revenue also has both direct and indirect impact on the economic performance of the countries where the heavy dependency on crude oil prevails. This study is a comparative survey analysis of declining oil revenue implications on the economic performance of oil-exporting countries; the case of highly oil-dependent nations: Nigeria (West Africa), Venezuela (South America) and Norway (Europe). Purposive sampling was used in selecting our samples, while the Survey Monkey cloud-based tool was employed to administer and collect the questionnaires from the targeted audience. Survey data analysis was carried out using SPSS Version 25 and the Survey Monkey platform. The results reveal that both increasing and decreasing oil price affect the oil revenues and the external reserves of Nigeria, Venezuela and Norway proportionately. The outcome also shows that during periods of declining oil revenues, Nigeria and Venezuela attain their budgetary needs through borrowing and seigniorage. On the other hand, Norway utilises its savings with the Sovereign Wealth Fund (SWF) and Pension Funds in financing its fiscal needs, thereby exonerating Norway from the resource curse syndrome. It is recommended that these nations explore other sources of revenue through diversification and the development of other natural resources. Nigeria and Venezuela should also restore security which would help in attracting further foreign investors. They should also ensure effective management of government funds and pay attention to its human capital development. However, an economic model is proposed to aid in closing the revenue gaps in these highly oil-dependent nations, given that the “power of oil” is gradually fizzling out as other alternative forms of energy that are assumed to be environmentally friendly are widely embraced. Keywords: Oil Revenue, Dwindling Oil Price, Comparative Analysis, Survey Data, Economic Model, Oil-Exporters DOI: 10.7176/JRDM/76-03 Publication date: June 30 th 2021
Highlights
Crude oil is an essential source of energy that propels global economic activities and one of the most dynamically transacted commodities all over the world
The results reveal that the three economies need to explore other sources of revenue as a supportive effort in meeting with the budgetary needs of the economies
The results further show that the Norwegian government makes adequate effort in exploring alternative sources of generating revenues during periods of declining oil price which enables the economy in meeting with its budgetary needs while Nigeria and Venezuela’s governments are not making adequate efforts in this exploration of alternative sources of revenue generation
Summary
Crude oil is an essential source of energy that propels global economic activities and one of the most dynamically transacted commodities all over the world. The trend in the oil price fluctuations and the instability in the global oil market over the years have been as a result of many factors; demand oriented, increasing or decreasing oil supply, speculations, covid-19 pandemic, war, global financial crisis, quest for paradigm shift from a hydrocarbon economy to the ones based on a more sustainable form of energy (Eze and Kouhy 2021; Peng et al, 2020) These uncertainties associated with the constant oil price fluctuation has diversely affected economic activities especially those of the oil exporting countries whose main source of revenues are derived from oil (Van Eyden et al, 2019). Oil price fluctuations are crucial to the global economy since oil serves as the main energy source and raw materials for several industries across the globe (Kitous et al, 2016)
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