Abstract
The single most important issue confronting a growing number of world economies today is the price of oil and its attendant consequences on economic output. Therefore the study investigated the impact of petroleum pump price on human welfare in Nigeria over the period 1990 to 2015. The study employed expost facto research design. Secondary time series data were used for the study and these were sourced from World Development Indicator (WDI, 2015) and Central Bank of Nigeria statistical bulletin, (CBN, 2015). The data collected were analyzed using autoregressive distributed lag. The inferences were drown at 1% and 5% significance level. The result showed that premium motor spirit price and dual purpose kerosene price exert a long-run negative and significant impact on human welfare in Nigeria (β = -0.15299, t = -5.31141 and β = -0.471399, t = -1.8838 respectively) while premium motor spirit price, dual purpose kerosene price and inflation rate exert a short-run negative and significant impact on human welfare in Nigeria (β = -0.71735, t= -4.3766; β = -0.62562, t = -2.9188 and β = -0.050310, t = -2.1829 respectively). The study concluded that as premium motor spirit price and dual purpose kerosene price and inflation rate increases, human welfare will fall and vice versa. Therefore for human welfare to increase, there must be a fall in premium motor spirit price and dual purpose kerosene price and inflation rate in Nigeria. The study recommended that Government and it agencies should ensure that petroleum pump prices should be regulated because they have a long way on the market. An increase in the price of petroleum products will lead to market failure because most products use either of these products. Since inflation rate worsen the welfare of people, the policy maker should find a way of control inflation in the system so that the welfare of the people will improve (better-off).
Highlights
Human welfare is the satisfaction of needs-food, drink, shelter and other things that contribute to ‘bodily flourishing.’ The presence or absence of such satisfaction is surely better measured by levels of health in the population than income
Premium motor spirit price, automotive gas oil, dual purpose kerosene price, inflation rate and interest ratevariables became stationary at 1st difference as their t* < Augmented Dickey Fuller test (ADF) statistics except human development index which was stationary at level and the generation of first difference data for the analysis
This explains that in the long run, if automotive gas oil increases by 1%, there will be a decrease of 0.073447% in human welfare and if inflation rate increases by 1%, there will be a decrease of 0.00877% in human welfare in Nigeria while a percentage increase in interest rate will lead to a decrease of 0.00528% in human welfare in Nigeria
Summary
Human welfare is the satisfaction of needs-food, drink, shelter and other things that contribute to ‘bodily flourishing.’ The presence or absence of such satisfaction is surely better measured by levels of health in the population than income. Once purchased, will certainly increase the wellbeing of a household for a certain period of time The prices of these determine the amount one can get and the major problem of increase in any of this is the increase in petroleum pump price. Several studies have investigated the effect of oil price shocks on levels of gross domestic product. OPEC review: 199-217 (Ayadi, 2005), oil price shock and macroeconomic activity in Nigeria (Olomola & Adejumo, 2006). The majority of these researches was not conducted in Nigeria and where it was conducted, the core areas of the economy were overlooked.
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