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Abstract
Everybody appreciates the fact that when motorists pay more for fuel, the transport fare increases. This has been the case even when the increase is only marginal. In the particular case where the cost of fuel is expected to double, the increase in transport fare will be astronomical. This will in turn affect everything else – school fees, house rent, just name it. Therefore, this study took a critical look at the impact of Fuel price increase on the Nigerian economy(Whether negative or positive).The study adopted a survey research design approach to evaluate the level of effect the fuel price increase has on the Nigeria economy. The population of the study is made up of Civil Servants -CS, market men and women-MMW and staff in the private sectors-SPS concerned with petrol and gas affairs. A sample size of 120 persons was selected at random. It was distributed as follows: Civil Servants (18), market men and women (55) and staff in the private sectors (47). A pre test was conducted and outcome yield “r”= 0.92 indicating a high degree of consistency and reliability. The instrument was 8- term survey questionnaire with a - 5 Likert scale response options of Very Relevant (VR), Relevant (R), No Effect (NE) Irrelevant (I), and Very Irrelevant (VI). The questionnaire was structured in line with the research objectives, questions and hypothesis of the study. The Pearson product moment correlation coefficient was used to confirm formulated hypotheses. Finding revealed that there is a significant relationship between the recent increases in fuel prices and economic growth in Nigeria. It was also discovered that the Nigeria economy is not developing because of the effect of fuel price hike on purchasing power and finally the finding showed that there is significant relationship between increase in pump price of petroleum and food security. The paper therefore recommended that Government should retain fuel subsidy while expediting the construction of the three proposed refineries; Fuel subsidy should be removed as soon as these new refineries are commissioned; the proposed rehabilitation of the existing refineries should be expedited; Government should vigorously pursue the revitalization of the railways. If only Nigerians had alternative to road transport, all this noise about fuel subsidy removal would not have been there and Private companies should be encouraged to start building refineries now with the assurance that subsidy would be removed before they start production. DOI: 10.5901/mjss.2015.v6n1s1p560
Highlights
Until the early 70’s, the mainstay of Nigeria economy was agriculture
All other sectors seemed to have gone into oblivion and were abandoned thereby making the country to be totally dependent on oil for her foreign exchange earnings; not agriculture any more
The fall in the saving rate, will erode about half of Nigeria's present middle-class citizens and further dampen the negative effects that higher prices would ordinarily have had on the economy in the short run
Summary
Until the early 70’s, the mainstay of Nigeria economy was agriculture. All other sectors seemed to have gone into oblivion and were abandoned thereby making the country to be totally dependent on oil for her foreign exchange earnings; not agriculture any more. The narrowing of the economy to a monolithic export commodity has its attendant drawback as oil by virtue of its importance to the economics of nations has inevitably become a subject of political manipulation. The greater danger for Nigeria is that as a sole commodity of the nation and the inherent total dependency on oil has made the country’s economy revolve around it. Almost all other sectors of the economy depend on oil.Any contemplation of a possible scarcity or unavailability of the product will no doubt spell doom for the economy of the country (Sikkam, 2009)
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