Does Petroleum Products Pricing Stimulate Economic Growth in Nigeria? An Empirical Investigation Applying ARDL Approach

Abstract

The rising prices of petroleum products and energy in Nigeria, coupled with a surge in poverty and a decline in living standards, necessitate an investigation into how the pricing of petroleum products has impacted Nigeria’s economic growth from 1990 – 2022. To achieve the purpose of the study, data on growth rate of gross domestic product, premium motor spirit price, automotive gas oil price, household kerosene price, compressed natural gas price and crude oil price were sourced from the World Bank and Petroleum Product Pricing and Regulatory Agency (PPPRA) and analysed by employing the Auto regressive Distributed lag (ARDL) method. Our results and findings revealed that: Prices of Premium Motor Spirit, automotive gas oil, dual purpose kerosene and crude oil were all negatively and marginally related to economic growth in the long run. Only price of compressed natural gas was positively but marginally related to economic growth. This implies that petroleum products prices had retarding effect on economic growth in Nigeria in the long run. In the short run, premium motor spirit and automotive gas oil had mixed effect on economic growth while price of household kerosene and price of crude oil were positively related to economic growth but price of compressed natural gas were negatively related to economic growth. Petroleum products prices proxied by prices of Premium Motor Spirit, Automotive Gas Oil, Household Kerosene, Compressed Natural Gas and Crude oil had less impact on economic growth in the long but had serious implications on economic growth in the short run in Nigeria over the period of the study. Based on this conclusion, the study recommended Increase investment in compressed natural gas, proper utilization of crude oil revenue and strengthening existing policies in the oil and gas sector as possible measures towards improving economic growth in Nigeria.