Economic Effect Of Fuel Scarcity
(A Case Study Of Enugu Metropolis)
Fuel scarcity has profound economic ramifications, impacting various sectors and facets of a nation’s economy. In transportation, it disrupts the smooth flow of goods and people, leading to increased costs and delays in supply chains. Industries reliant on fuel for operations face higher production costs, potentially leading to decreased output and competitiveness in both domestic and international markets. Additionally, the agricultural sector, heavily reliant on fuel for machinery and transportation, experiences decreased productivity and increased costs, affecting food prices and overall food security. Furthermore, fuel scarcity often triggers inflationary pressures as energy prices surge, leading to reduced consumer purchasing power and dampened economic activity. In essence, the economic effects of fuel scarcity reverberate across multiple sectors, exacerbating existing challenges and impeding growth prospects.
This research is based on the economic effects of fuel scarcity in Nigeria. The research was carried out to find out the extent to which the entire population in Enugu metropolis has suffered due to fuel scarcity.
The population used for this study is the workers of NNPPC, car owners, businessmen and women and the entire population of Enugu metropolis.
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 became 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:
i. The government should hurry up with the maintenance of the broken down refineries in order to ease the problem of fuel scarcity.
ii. Pipelines that led to the various depots should be checked regularly for any possibility of leakage.
iii. In order to avoid fuel scarcity, escorts should be assigned to each tanker driver to avoid diverting of fuel to unapproved areas.
iv. they should provide storage facilities so that even if brake down occur, there will still be available fuel to distribute to their various consumers.
v. If fuel are being supplied to filling station owners, they should be checked to make sure that the fuel are sold to the consumers to avoid hoarding.
vi. There should be a check by government to the seller of fuel to make sure that fuel are been soled to consumer at a government pump price.
Title page
Approval
Dedication
Acknowledgement
Abstract
Table of contents
List of Table
CHAPTER ONE
1.0 introduction
1.1 An Overview of the study
1.2 statement of problem
1.3 Objectives of study
1.4 Statement of hypotheses
1.5 Significant of the study
1.6 Scope of study
1.7 Limitation of study
1.8 Definition of terms
References
CHAPTER TWO
2.0 Review of related literature
2.1 History of oil industry in Nigeria (NNPC)
2.2 Nigerian’s Development and oil industry
2.3 Contribution of the petroleum industry to Nigerian’s economic development (positive and Negative effect).
2.4 Function/Role of Nigerian national petroleum corporations (NNPC)
2.5 NNPC and distribution of fuel in Nigeria
2.6 Problems of fuel distribution in Nigeria
2.7 Economic effect of fuel scarcity in Nigeria
2.8 The role of task-force on the management of fuel scarcity
2.9 Scarcity of other essential commodities and its effect.
Reference
CHAPTER THREE
3.0 Research design and methodology
3.1 Source of data collection
– Primary source
– Secondary source
3.2 Area of study
3.3 Population of study
3.4 Sample size determination
3.5 Instrument of data collection
3.6 Distribution of data collection Instrument
3.7 Method of Analyses of data
Reference
CHAPTER FOUR
4.0 Data presentation and Analyses
4.1 Presentation and analyses
4.2 Data analyses
4.3 Test of hypotheses
4.4 Questionnaires
CHAPTER FIVE
5.0 Summary of findings, conclusion and recommendation
5.1 findings’
Conclusion
Recommendation
Reference
Bibliography
Appendix (Questionnaires)
1.0 INTRODUCTION
1.1 AN OVERVIEW 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 presences of the presence of oil in our country, especially in part Harcourt. This made them (Nigerians) to divert form Agriculture to the exportation of oil to other countries, which was actually fetching them 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 it is called the Nigerian 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 Enugu, Eif oil Company, Warri Pipeline are directed towards these oil companies to facilitate distribution. Tanker drivers and other dealers will load form the depot and distribute to filling stations, then the consumers will buy form the filling stations.
Fuel supply has been moving smoothly in the country before the announcement of 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 I 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 services 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 filing station and buy fuel at a normal price of N22.00 per liter and with much ease.
Things were moving smoothly in the country and in this part f Enugu metropolis until 1994 when we had one case of fuel scarcity not until on up till this movement of this study.
Because of fuel scarcity, people are so desperate to by 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 que -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 exhobitant price. Some people use big gallons to buy fuel that will serve 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 tem will start jumping the que, thereby causing fights among themselves. Because of this reason, the filling station owners invite soldiers so that there will be peace and orderly que 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 a high price.
1.3 OBJECTIVES OF THE STUDY
This study has the following objectives:
– To find out the causes of fuel scarcity
– To recommend what can be done to solve the problem of fuel scarcity.
– To find out how the fuel scarcity has affected the business men and women civil servant etc. (the total population of Enugu metropolis).
1.4 STATEMENT OF HYPOTHESES
Ho: The middle men have not been contributing to fuel scarcity.
Hi: The middle men have been contributing to fuel scarcity
Ho: Fuel scarcity is not the cause of high cost of transportation
Hi: Fuel scarcity is the cause of high cost of transportation
1.5 SIGNIFICANCE OF THE STUDY
This study will be of great benefit to the Nigeria National Petroleum Company (NNPC) who is not the sole cause of fuel scarcity. This study will help them to find out those 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, it 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 businesses because if the fuel scarcity is rectified and resolved all business will start improving and progressing.
From this 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, it 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 also to low price of commodity been transported.
1.6 SCOPE OF THE STUDY
This study is carried out in Enugu metropolis to study the operation of the Nigerian national petroleum Company (NNPC) and the middlemen. The study is only based on petrol alone and not for kerosene or gas- generally.
1.7 LIMITATION OF STUDY
The research work is limited to fuel scarcity in Nigeria with a case study of Enugu metropolis. This study was carried out purely as an academic exercise and therefore could neither receive any financial support form the government or any private enterprise. The limited financial resources of the researcher is thus a major handicap and thereby resulted in limiting the study only to Enugu metropolis. Time factor also proved a major constraint.
1.8 DEFINITION OF TERMS
Economic – Punishment of another country by reducing or stopping trade with it.
Effect – Change produced by a action or cause
Fuel – Mineral resources that provide nuclear or internal energy requirement.
Scarcity – Something not been enough, that is difficult to obtain and much less then is needed.
Depot – A place where fuel or oil is being store. Or A warehouse of anything.
Middlemen – Trader who passes goods form the producers or form place where they are produce to the final consumer or final buyer.
Economic Effect Of Fuel Scarcity:
Fuel scarcity can have significant economic effects on a country or region. These effects can vary in magnitude depending on the duration and severity of the shortage, the underlying causes, and the measures taken to address it. Here are some of the key economic effects of fuel scarcity:
- Increased Fuel Prices: When fuel is in short supply, the basic economic principle of supply and demand comes into play. As the supply of fuel decreases and demand remains constant or even increases, prices tend to rise. Higher fuel prices can lead to increased transportation costs for businesses and consumers, driving up the cost of living and the cost of doing business.
- Inflation: Rising fuel prices can contribute to overall inflation in the economy. When the cost of transportation and energy increases, it often leads to higher prices for goods and services throughout the economy. This can erode purchasing power and reduce the standard of living for many people.
- Reduced Economic Activity: Fuel scarcity can disrupt economic activities that rely heavily on transportation, such as manufacturing, agriculture, and tourism. Reduced mobility and higher transportation costs can lead to decreased production and economic growth.
- Supply Chain Disruptions: The shortage of fuel can disrupt supply chains, causing delays in the delivery of goods and materials. This can lead to production bottlenecks, reduced inventory turnover, and increased costs for businesses.
- Job Losses: Industries that are highly dependent on fuel, such as airlines, shipping, and long-haul trucking, may be forced to cut jobs or reduce operations during fuel shortages. This can lead to unemployment and reduced income for affected workers.
- Impact on Small Businesses: Small businesses, which often have limited resources and less flexibility to absorb increased costs, can be particularly vulnerable during fuel shortages. Many may struggle to survive or may be forced to pass on higher costs to consumers.
- Foreign Exchange Pressure: If a country relies heavily on fuel imports and experiences a prolonged fuel scarcity, it may need to spend more foreign currency to import fuel at higher prices. This can put pressure on a country’s foreign exchange reserves and its balance of payments.
- Investor Uncertainty: Fuel scarcity can create uncertainty in financial markets and among investors. Investors may become cautious about investing in regions or countries experiencing prolonged fuel shortages, which can affect foreign direct investment and capital flows.
- Government Budget Implications: Governments may face increased pressure to subsidize fuel prices to mitigate the impact on consumers, which can strain government budgets. Alternatively, they may choose to impose fuel rationing or price controls, which can create inefficiencies in the market.
- Shift Toward Alternative Energy: Prolonged fuel scarcity can incentivize businesses and individuals to seek alternative energy sources, such as electric vehicles or renewable energy. While this may promote long-term sustainability, it can disrupt traditional energy markets and industries.
In conclusion, fuel scarcity can have a range of negative economic effects, including higher prices, inflation, reduced economic activity, job losses, and disruptions to supply chains. The severity and duration of these effects depend on various factors, including the underlying causes of the fuel scarcity and the government’s response to the crisis.