Energy Demand and Cooking Energy Cost in an Oil-Rich Economy: A New Evidence from Nigeria

Stephen Obinozie Ogwu,Anthony Orji,Peter Nwachukwu Mba,Onyinye Imelda Anthony-Orji

doi:10.2478/sues-2021-0001

Stephen Obinozie Ogwu, Anthony Orji + Show 2 more

Open Access

https://doi.org/10.2478/sues-2021-0001

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Abstract

AbstractAccording to several recent studies, energy is seen as a commodity, due to the fact that energy sector markets are more like commodity markets. Essentially, it serves as an enabler of social and economic development and so cannot be neglected. This study, therefore, estimated the impact of cooking energy cost on energy demand in Nigeria using the ARDL model and quarterly data spanning from 1990-2018. The result from the study showed that in the long-run both liquefied petroleum gas (LPG) price and kerosene price has a negative impact on energy demand. In the short-run, the result remained the same for kerosene while it reversed for LPG. The study, therefore, recommended that government should enact policies that will moderate or minimize the cost of cooking energy and enhance the removal of all forms of barriers in making cooking energy affordable to users in the country.

Highlights

According to several recent studies, energy is seen as an essential commodity that serves as an enabler of social and economic development, and it cannot be neglected (Kroom, Brouwer and Beukering 2012)
Brouwer, and Beukering (2012) noted that about 90 percent of households in developing countries depend on biomass, and with Africa being the home continent of the majority of the developing countries where most of the world's poorest households come from, the impact of the crisis is strongly felt Though energy is reckoned as an essential good in all sectors of a country’s economy (Ogbuabor, Orji, Manasseh and Nwosu, 2018; Oyedepo, 2012), a peep into the Nigerian energy market reveals the prevailing crisis especially for cooking energy commodities
Based on the objective of this study, the cost has a negative and insignificant impact on cooking energy demand in Nigeria but, the case of liquefied petroleum gas (LPG) showed otherwise: with a positive and significant impact on cooking energy demand. This is in the short-run, the case of the long-run seems to be the opposite. This means that people still depend much on HHK compared to LPG, in Nigeria

Summary

Introduction

According to several recent studies, energy is seen as an essential commodity that serves as an enabler of social and economic development, and it cannot be neglected (Kroom, Brouwer and Beukering 2012). Brouwer, and Beukering (2012) noted that about 90 percent of households in developing countries depend on biomass, and with Africa being the home continent of the majority of the developing countries where most of the world's poorest households come from, the impact of the crisis is strongly felt Though energy is reckoned as an essential good in all sectors of a country’s economy (Ogbuabor, Orji, Manasseh and Nwosu, 2018; Oyedepo, 2012), a peep into the Nigerian energy market reveals the prevailing crisis especially for cooking energy commodities This may not be unconnected with the ever-increasing population which stands at about 198 million people presently, whereas the supply of cooking energy rises at a rate that is far below the demand.

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