ANALYSIS OF ELASTICITIES OF HOUSEHOLD FUEL TYPES IN THE NORTHEASTERN REGION OF NIGERIA

Abstract

Demand for fuel types relies on how low their prices are and the household income. This study used secondary data obtained from the Nigerian Bureau of Statistics General Household Survey (2021) to analyze household fuel demand sources in the North-East Zone of Nigeria. The study used the AIDS model. The results showed that all energy sources except kerosene were comfort goods (elasticities = 1). Kerosene was found to be a necessity (elasticity < 1). This means that households will demand more kerosene if its price falls, but they will demand significantly less kerosene if its price rises. All energy sources were also price elastic (elasticities = 1). This means that households will demand less energy if its price rises, and vice versa. Finally, the results showed that all energy sources had a complementary relationship (negative elasticities). This means that if the price of one fuel type rises households will demand more of other fuel sources. The study recommends that there should be Investment in grid expansion, LPG subsidies, and awareness campaigns for clean energy adoption by the relevant stakeholders which includes government, private, non-governmental organizations, development partners and civic society organizations.