The Economic Effects Of Fuel Scarcity In Nigeria

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The Economic Effects Of Fuel Scarcity In Nigeria

Abstract

This research is based on effects of fuel scarcity in Nigeria the research was carried out to find out the extent to which the entire population in Owerri metropolis has suffered due to fuel scarcity.

The population used for the study is the workers of NNPC , car owners, businessmen and women and the entire population. The researcher used primary and secondary data which comprised of interviews and questionnaire to get information.

From the data analysis the researcher came up with the following findings:

  1. The middlemen contribute to fuel scarcity
  2. Transportation become high because of fuel scarcity
  3. Fuel scarcity has led to rise in price of products in the market

Based on the findings, the researcher recommends that ;

  1. The government should hurry up with the maintenance of the broken down refineries in order to ease the problem of fuel scarcity.
  2. In order to avoid fuel scarcity, escorts should be assigned to each tanker driver to avoid diverting of fuel to unapproved areas.
  3. Pipeline that led to the various depot should be checked regularly for any possibility of leakage.
  4. They should provide storage facilities so that even if brake down occur, there will still available fuel to distribute to their various consumers.
  5. If fuel are being supplied to filling station owners, they should be checked to make sure that the fuel are sold to the consumer to avoid hoarding.

Chapter One

Introduction

1.1 Background of the Study

In the past Nigerians solely depended on the exportation of agricultural product for their source of income. This continued until the discovery of the presence of the presence of oil in our country especially in Port Harcourt. This made them (Nigerians) to divert from agriculture to the exportation of oil to other countries, which was actually fetching the much money even till this present time.

There are many subsidiary oil companies scattered all over the country but the biggest among them is in port Harcourt and is called the Nigeria National Petroleum Company (NNPC). It is from here that crude oil is extracted from the ground refined to get those components like fuel, kerosene and gas. There are depots scattered all over the country like shell port Harcourt, NNPC imo, E.P Oil company, Warri pipeline are directed towards these oil companies to facilities distribution. Tanker drivers and other dealers will load from the depot and distribute the filling stations, then the consumers will be from the filling stations.

Fuel supply has been moving smoothly in the country before the announcement of the budget by the budget by the head of state in January last four year 1999. it was in February 1999 that the whole issue of fuel scarcity started. This has made it difficult for the government to accomplish that which it proposed to do in the budget.

1.2 Statement of the Problem

The word “scarcity” means when there is insufficiency of something since there is insufficiency of fuel it is termed as fuel scarcity.

In the past, there has not been any service of fuel scarcity. Everything was moving smoothly, the industrialist both public and privates, does not have any problem. Economically the price of goods and services, were affordable by the people. Car owners can just go to filling station and buy fuel at a normal price of N22 per liter and with much ease. Things were moving smoothly in the country and in this part of Owerri metropolis until 1994 when we had one case of fuel scarcity not until on up till the movement of the study.

Because of fuel scarcity, people are so desperate to buy fuel for their business. For this reasons, whenever any information was passes concerning the presence of fuel in any filling station, car –owners will go there and queue up. Some of them will have to sleep in the filling stations a day or more than two days while waiting for their turn. People or car owners when they cannot buy fuel in any filling station, are forced to buy from the black market at an exorbitant price. Some people use big gallons to buy fuel that will serves them for some days.

For the reason that there is insufficient fuel in the filling station, makes people sell fuel in ration so that everybody present will buy. The car owners who think the fuel will not reach them will start jumping the queue thereby causing fights among themselves. Because of this reason, the filling station owners invite soldiers so that there will be peace and orderly queue in the filling stations. Fuel scarcity are sometimes artificial in the sense that during the Christmas period. Filling station owners will just hoard their fuel in order to sell at high price.

1.3 Objective of the Study

The study has the following objectives:

  1. To find out the causes of fuel scarcity
  2. To recommend what can be done to solve the problem of fuel scarcity
  3. To find out how the fuel scarcity has affected the businessmen and women, civil servant etc.

1.4 Significance of the Study

This study will be benefit to the Nigeria National Petroleum Company (NNPC) who is not the sole cause of fuel scarcity. The study will help them to find out these people or those things that contribute to fuel scarcity and take drastic measure to combat them.

This study or research will be of immense benefit to the government because if there is fuel scarcity, if then means that crude oil is also insufficient by this, the government will not have enough oil to transport in order to get foreign exchange.

This study will also be of great benefit to car owners and business because if the fuel scarcity is rectified ad resolved all business will start improving and progressing.

From the study, the rural drivers will find it easy to transport their farm product from the rural area to urban zones because the cost fuel will be on a lower side.

Also from those research work, I will be kind of encouragement. In that when the cost fuel is low, the cost of transportation will be also low, and these can lead to low price of commodity been transported.

1.5 Scope of the Study

The study is carried out to study the operation of the Nigeria National Petroleum company (NNPC) and the middlemen. The study is only based on petrol alone and not for kerosene or gas- generally.

1.6 Limitation of Study

The research work is limited to fuel scarcity in Nigeria with a case study which was carried out purely as an academic exercise and therefore could neither receive any financial support from the government or any private enterprise. The limited financial resource of the researcher is thus a major handicap and thereby resulted in limiting the study. Time factor also provide a major constraint.

1.7 Definition of Term

Economic:-

Change produced by an action or cause.

Fuel:-

Mineral resources that provide nuclear or internal energy requirement.

Scarcity:-

Something not bee enough that is difficult to obtain and much less than is needed.

Depot:-

A place where fuel or oil being stored or a warehouse of anything

Middlemen:-

Trader who passes goods from the produces or from the place where they are produce to the final consumer or final buyer.

Chapter Five

5.0 Summary Of Findings, Conclusion and Recommendation

5.1 Summary of Findings

From the research conducted, the researcher found out that there are a lot of things that contributed to fuel scarcity. The findings are thereby summarized below: based on the research made, the researcher dissolved that the middlemen contribute to fuel scarcity in the sense that when they were asked to supply fuel filling stations they diver the fuel to block market because they want more money. The fuel so diverted to the black market will be sold at a very high price. Consequently they will not be any fuel in the filling stations there by causing fuel scarcity.

The researcher also found out that fuel scarcity has led to increase in price of produced sold in market. This is because the transportation is high due to fuel scarcity, the businessmen pay more transportation fees than before. This makes the price of goods to rise in the market, thereby reduced the quantity demanded by the consumers.
The researcher also found out that 62% of the respondents buys from the black market while 58% buy from the filling stations. The result from the respondent showed that 100% of the respondent buys fuel at a higher price now as compared with what they bought before. The analysis of the questionnaire show that 100% of the respondents buy fuel at a higher price from the black market than buying from the filling station.
The researcher also found out that customers find it very hard to buy fuel the filling station.

5.2 Conclusion

After analyzing the data collected and summarizing the findings and making some recommendations the researchers concluded as follows:

  1. The middlemen contributes to fuel scarcity
  2. Because of fuel scarcity, the cost of transportation is high.
  3. Fuel scarcity has caused the prices of goods and services in the market to rise.

5.3 Recommendations

Based on the research carried out and from the findings made, the researcher would like to make the following recommendations on how to solve the problem of fuel scarcity.

  1. The government should hurry-up with the maintenance of the broken down refineries in order to stop the problem of fuel scarcity.
  2. Pipeline that lead to the various depots should be checked regularly for any possibility of leakage.
  3. In order to avoid fuel scarcity. Escorts should be assigned to each tanker driver’s to avoid diverting of fuel to unapproved areas.
  4. They should provide storage facilities so that even if break down occur, there will still be available fuel to distribute to the consumers.
  5. If fuel is being supplied to filling stations owner, they should be checked to make sure that the fuel is sold to the consumers to avoid hoarding.

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