Contact Us

For Marketing, Sales and Subscriptions Inquiries
2637 E Atlantic Blvd #43110
Pompano Beach, FL 33062
USA

Conference List

Subsidies and the Demand for Petroleum Products in Nigeria

Brahim Idelhakkar

,

Eleanya K. Nduka

,

Jude O. Chukwu

Brahim Idelhakkar 1 Eleanya K. Nduka 1 Jude O. Chukwu 1 

  1. Department of Economics, University of Nigeria Nsukka 1


Abstract:

The study empirically examines the effect of subsidies on the consumption of petroleum products in Nigeria for the period of 1970 to 2007. The study employs Augmented-Dickey Fuller (ADF) test for unit root, Engle and Granger (1987) approach for cointegration and Error Correction Model (ECM) for correcting disequilibrium. The ADF test suggests that the variables are mean reverting series after first order difference. The results of the cointegration and ECM confirm that a stable, long-run relationship exists between the demand for petroleum products and their respective determinants: subsidies, real income, prices of the products, prices of substitutes and population. The empirical results show that the elasticity of own and substitutes’ prices are negative, while the own price of diesel, subsidy, real income and population coefficients are positive.  Meanwhile, the coefficient of subsidy on gas demand is negative. Hence, the removal of subsidy from petroleum products is not the problem, but the misapplication of the fund meant for the subsidy. This is due to the fact that the subsidy does not reflect in the prices of petroleum products in Nigeria. Therefore, the managers of the economy should ensure that subsidies are better used to achieve economic growth.
Contribution/ Originality

Keywords:


Reference:

  1. Abiodun, R., 2003. Fuel price hike spells doom for Nigeria’s forest. Health & Science Environment. Available from www.ens-newswire.com.
  2. Abutu, O.P., 2012. Causes of the January 2012 removal of oil subsidy in Nigeria: Panacea for sustainable development of Nigeria. Journal of Business and Organizational Development. Cenresin Publications, 4. Available from www.Cenresinpub.org.
  3. Adebimpe, R.A. and A.G. Ibraheen, 2008. A forcast of coal demand in Nigeria. Journal of Engineering and Applied Sciences, 3(4): 332-336.
  4. Adenikinju, A.F. and N. Falobi, 2006. Macroeconomic and distributional consequences of energy supply shocks in Nigeria. African Economic Research Consortium, Research Paper No. 162.
  5. Aigbedion, I. and S.E. Iyayi, 2007. Diversifying Nigeria’s petroleum industry. International Journal of Physical Sciences, 2(10): 263-270.
  6. Amegashie, J.A., 2006. The economics of subsidies. Crossroads, 6(2): 7-15.
  7. Bacon, R. and M. Kojima, 2006. Phasing out subsidies: Recent empirical experiences with fuel in developing countries. World Bank Public Policy for the Private Sector, Note No. 310.
  8. Baig, T., A. Mati, D. Coady and J. Ntamatungiro, 2007. Domestic petroleum product prices and subsidies: Recent developments and reforms strategies. International Monetary Fund WP/07/71. Working Paper No. 71. IMF Publishing.
  9. Central Bank of Nigeria, 2006. Annual statistical bulletin. Available from www.cenbank.org.
  10. Engle, R. and C. Granger, 1987. Cointegration and error correction representation, estimation, and testing. Econometrica, 55(2): 251-276.
  11. Hossain, S.M., 2003. Taxation and pricing of petroleum products in developing countries: A framework for analysis with application to Nigeria. International Monetary Fund WP/03/42: African Department, Working Paper No. 43. IMF Publishing.
  12. Isfahani, D.S., 1996. Government subsidies and demand for petroleum products in Iran. Oxford Institute for Energy Studies, WPM No. 22.
  13. Nwafor, M., K. Ogujiuba and R. Asogwa, 2006. Does subsidy removal hurt the poor. Secretariat for institutional support for economic research in Africa. Working Paper Series.
  14. Ogbuanu, U.C., 2008. Nigeria: Fuel subsidy to exceed  N 1.5 triilion in 2009. This Day News Paper. Available from www.thisdayonline.com [Accessed 8, October, 2008].
  15. Onwioduokit, E.A. and A.O. Adenuga, 2001. Empirical analysis of demand for petroleum products in Nigeria. International Economic Relations. Central Bank of Nigeria. Available from www.cenbang.org.
  16. Onyisi, A.O., O.I. Eme and I.E.J. Emeh, 2012. The domestic and international implications of fuel subsidy removal crisis in Nigeria. Kuwait Chapter of Arabian Journal of Business and Management Review, 1(6).
  17. Salisu, S. and A. Uduak, 2012. A roadmap for restructuring petroleum subsidies in Nigeria. Dundee: Centre for Energy, Petroleum and Mineral Law, and Policy (CEPMLP), University of Dundee, Dundee, DD14HN, Scotland, United Kingdom.
  18. Ukah, O.C., 2007. An empirical analysis of the impact of gradual withdrawal of subsidy on domestic consumption of premium motor spirit in Nigeria 1977 – 1999. African Research Review, 1(2): 98-117.
  19. World Fact Books, 2005; 2008. Available from www.worldfactbook.com.

Statistics:

Google Scholor ideas Microsoft Academic Search bing Google Scholor

Funding:

Competing Interests:

Acknowledgement:


Related Article

( 1 ) Subsidies and the Demand for Petroleum Products in Nigeria
( 2 ) Energy Demand and Financial Sector Performance in Sub-Saharan African Region
( 4 ) The Remote Sensing Imagery, New Challenges for Geological and Mining Mapping in the West African Craton - The Example of Cote D’ivoire
( 5 ) A Study of Stream Sediments from Soltan Meydan Basaltic Formation Area, Northern Iran
( 6 ) Resolving Optimum Magnetic Signatures for Drill-Hole Targeting in Gold Exploration – A Case Study for Mbudzane in Gwanda, Zimbabwe
( 8 ) Application of Response Surface Methodology (RSM) and Artificial Neural Network (ANN) for Achieving Desire BA in the Biotransformation of Benzaldehyde Using Free Cells of Saccharomyces Cerevisae and the Effect of Β-Cyclodextrin
( 9 ) Micro Biostratigraphy and Lithostratigraphy of the Upper Permian Dalan Formation (Zagros Basin, Southwest Iran)
( 10 ) Flood Hazard Assessment and Decisions Support Using Geographic Information System: A Case Study of Uyo Capital City, Akwa Ibom State, Nigeria
( 12 ) Inversion of Electrical Resistivity Data by VES Method for Water Exploring Case Study: South West of Iran
( 13 ) Geographic Information System (GIS) and Its Application in Urban Planning and Environment
( 14 ) Micro Level Geo-Resistivity Survey through V.E.S. Test for Groundwater Feasibility Study and Selection of Bore Well Sites in Pipili Block of Puri
( 15 ) Rayleigh Distribution-Based Model for Prediction of Wind Energy Potential of Cameroon
( 16 ) Thermodynamic Parameters for Solvation of Nano ZNO and Its Dopes In 50% DMSO - 50% DMF (V/V) Solutions at Different Temperatures
( 17 ) Energy Consumption and Thermal Comfort Analysis of Public Housing in Sao Paulo, Brazil
( 18 ) Carbon Sequestration Potential of Kpashimi Forest Reserve, Niger State, Nigeria
( 19 ) UPFC Integrated With Battery Energy Storage Systems for Stability Improvement
( 20 ) Eutrophication State Monitoring for Unhealthy Aquatic Ecosystem via Free-Floating Macrophytes Pattern and Behavioral
( 21 ) Aquatic Plants as Ecological Indicator for Urban Lakes Eutrophication Status and Indices
( 22 ) Well Log Sequence Stratigraphic and Palynological Analysis of Late Miocene to Pliocene Agbada Formation, Southwestern Niger Delta Basin, Nigeria
( 23 ) Effect of Active Mass in Electrode Disc on Performance of Li1.06ni0.313co0.313mn0.313o2cathode
( 24 ) Strategies for Tourism Development in National Parks with the Use of Swot Model (Case: Golestan National Park)
( 25 ) Laterite Sampling Preparation for Gold Exploration Survey at Western Burkina Faso, Northern Extension of the Lawra Belt
( 26 ) Phytoremediation Model System for Aquaculture Wastewater Using Glossostigma Elatinoides and Hemianthus Callitrichoides
( 27 ) Comparative Assessment of Co2 Emission Factors Estimated Using Stack Flue Gas Measurement Data for Two Types of Brick Kiln: A Case Study in Phu Tho Province, Vietnam
( 28 ) Expanded of Informal Jobs in Iranian Border Cities, Case: Zabol-Iran
( 29 ) Renewable Sources of Energy for Economic Development in Nigeria
( 30 ) Microbiostratigraphy and Lithostratigraphy of the Upper Permian Dalan Formation in Kuh-E-Surmeh (Zagros Basin, Southwest Iran)
( 31 ) Presentation of Empirical Equations for Estimating Internal Friction Angle of SP and SC Soils in Mashhad, Iran Using Standard Penetration and Direct Shear Tests and Comparison with Previous Equations
( 32 ) Governments Policy Reforms from 1970s Onward and It’s Implications on Land Use and Land Cover With the Help of GIS And RS Techniques In Eastern Tigray, Ethiopia
( 33 ) Characterization of Sedimentary Anzali Sand for Static and Seismic Studies Purposes
( 34 ) Chemical Composition and Facieses of Water from Vaskareh Village, Damavand: Implication for Industrial, Agricultural and Human Consumptions
( 35 ) Fuzzy Logic Based Energy Management System for Hybrid Electric Vehicle
( 36 ) Experimental Research Concerning the Energy Performance Determination of a New Type of Rotating Working Machine
( 37 ) Prioritization of Museums in Terms of Performance in Attracting Tourists (Case Study: Museum of North of Sistan and Baluchestan Province)
( 38 ) Reliability and Rationing Cost: Some Analytical Implications for a Power System
( 39 ) Runoff Prediction by Support Vector Machine for Chalous River Basin of Iran
( 40 ) Forest as a Redeemer: Experiences Drawn from Selected Rural Ejagham Communities in Etung Local Government Area of Cross River State, Nigeria
( 41 ) Preliminary Study of Activated Carbon Filters for Pollutants Removal in Diesel Engines
( 42 ) Experimental Investigation of Dynamic Behavior of Shallow Foundation Resting on the Reinforced Sand with Embedded Pipes
( 43 ) Assessing the Catalytic Influence of Modern Information System and Socio-Economic Status on Communities’ Attitude and Awareness to Forest Resource Sustainability in Boki Local Government Area, Nigeria
( 44 ) Microbiostratigraphy, Microfacies and Depositional Environment of the Sarvak Formation in Bi Bi Hakimeh Oil Field (Well No. 29), Southwest Iran
( 45 ) Technogenic Transformations of Sea Coasts on the Example of the Baltic Sea
( 46 ) Challenges of Enforcement of Forestry Legislation in Taraba State, Nigeria
( 47 ) Zoning of Natural and Man-Made Disasters for Relief and Rescue Centers Site Selection Using the Model Logic (Case Study: Guilan Rural Area)
( 48 ) Microfacies and Morphotectonic of the Tirgan Formation in Ghorogh Syncline (North of Chenaran)
( 49 ) Experimental Study on Overtopping Performance of a Circular Ramp Wave Energy Converter
( 50 ) Promoting Climate Change Adaptation Measures for Improving Productivity among Smallholder Farmers in Taraba State, Nigeria
( 51 ) Spatial Appraisal of Problems and Prospects of Fertilizer Use for Agriculture on the Environment in Mbieri, Mbaitoli Local Government Area, Imo State Nigeria
( 52 ) Using Rubber Aggregate Derived from Discarded Tires for Producing Cement Concrete towards Resource Recovery and Environmental Protection in Vietnam
( 53 ) Microbiostratigraphy and Sedimentary Environment of the Sarvak and Kazhdumi Formations in Bahregansar Oil Field
( 54 ) Reinforcing Kenya Power National Grid Using Statcom Devices
( 55 ) Analysis of the Factors Affecting Changes in Land Cover Patterns in Rural Districts in East of Guilan Province (Iran) for Foresight
( 56 ) The Impact of Human Activities on the Ndivana Forest Reserves, Kwaya Kusar Local Government Area, Borno State, Nigeria
( 57 ) Porous Carbon Materials for Clean and Sustainable Energy
( 58 ) Biostratigraphy and Paleoecology of Maastrichtian and Paleocene Sediments in the Northern Alborz, Iran, Using Foraminifera
( 59 ) Efficiency Enhancement in Plasmonic Dye-Sensitized Solar Cell Employing High Performance TiO2 Photoanode Doped with Silver Nanoparticles
( 60 ) Determination of Refractivity Gradient and Modified Refractivity Gradient for Cross River State
( 61 ) Impact of the Optimal Tilt Angle on the Solar Photovoltaic Array Size and Cost for a 100 kWh Solar Power System in Imo State
( 62 ) Community Management Plan for Sustainability of Mangrove Ecosystem in Nuxco Lagoon, Guerrero, Mexico
( 65 ) Agrochemicals and Personal Care Products: Occurrence, Effects, Analytical Determination and Treatment Processes
( 66 ) Trace Metal Distribution in Surface Water, Sediment, and Tissues of Freshwater Catfish (Clarias. Gariepinus), From Oke- Afa Canal, Lagos Nigeria
( 67 ) Energy Consumption and Economic Growth in Nigeria: A Causality Analysis
( 70 ) Sustainable Sources of Energy and the Expected Benefits to Nigerian Economy
( 71 ) Environmental and Health Impact of Solid Mineral Exploration and Exploitation in South-Northern Nigeria: A Case Study of Igarra in Edo State
( 72 ) Environmental Conservation and Use of Economic Incentives to Conserve Biological Resources in Nigeria
( 76 ) Analysis of Farmers’ Vulnerability, Perception and Adaptation to Climate Change in Kwara State, Nigeria
( 77 ) Climate Change and Flood Disaster Management in Nigerian Urban Centres: The Architects’ Perspective
( 78 ) Assessment of Physico-Chemical Quality of Water in Aliero Dam (Kebbi State, Nigeria)