PETROLUEM PRODUCTS PRICES AND INFLATION IN NIGERIA
PETROLUEM PRODUCTS PRICES AND INFLATION IN NIGERIA
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Date
2012-11
Authors
DANJUMA, BOBAI, FRANCIS.
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Abstract
ABSTRACT
In this work which is titled “Petroleum Product Prices and Inflation in Nigeria”, effort
was made to see if there was any relationship between petroleum products prices (PPP)
and inflation (INF) in the country. The study examines the impact of petroleum products
prices increases on the level of inflation in the Nigerian economy. The scope of the study
covers a period of eighteen years that is from 1990-2008, time series data on quarterly
basis were employed for this work. The methodology employed in this study includes;
ADF test, VAR model (Vector Autoregression Model), impulse response function and
variance decomposition. A stationary test was carried out using the Augmented Dickey-
Fuller (ADF) the variable were found to be stationary at difference order at 5% level of
significance. The VAR result indicates an increase in PPP leads to rise in the level of
inflation. The impulse response function and the variance decomposition also indicated a
positive relation existed between INF and PPP in Nigeria. This suggested that subsidy
removal from petroleum products lead to raise their prices and this also increase pressure
on domestic inflation in Nigeria. In addition, because of the roles of smuggling, hoarding
and other black market activities in raising the effective prices of these products serious
penalties should be placed on these activities to avoid shortage of the petroleum products
in the country. The major findings from this study is that increase in the prices of
petroleum products (PMS, AGO, and DPK) has a positive impact on the general price
level of goods and services in the Nigeria economy. Government should make sure that
our existing refineries are functioning at full capacity and also build new ones; by so
doing the existing refineries can meet Nigerians internal petroleum products needs and
some excess for export and strategic reserve of product demand. This can be made
possible when the nation refineries Turn-Around-Maintenance are consolidated with
transparency and accountability. In conclusion the CBN and policy makers in Nigeria
should also pay special attention to the supply management of petroleum products in the
country.
CHAPTER ONE
Description
A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE
REQUIREMENTS FOR THE AWARD OF MASTER OF SCIENCE (M.SC)
DEGREE IN ECONOMICS TO THE DEPARTMENT OF ECONOMICS,
AHMADU BELLO UNIVERSITY,
ZARIA – NIGERIA.
Keywords
PETROLUEM,, PRODUCTS,, PRICES,, INFLATION,, NIGERIA.