Drop in Price of Crude Oil: Implication on the Nigerian Economy

Niger Delta region, placing the Nigerian oil output down to a third of its capacity” (Klare 3).

This study is designed to examine the causes of exchange rate fluctuations and their impact on the Nigerian economy since there is scarcely any country that lives in absolute autarky in this globalised world. The economies of all the countries of the world are linked directly or indirectly through asset or/and goods markets. This linkage is made possible through trade and facilitated by foreign exchange. The price of foreign currencies in terms of a local currency (i.e. foreign exchange) is therefore important to the understanding of the growth trajectory of all countries of the world.

A group of researchers show that oil price fluctuation have significant impact on the economic activity. The significant are expected different from oil importing and exporting countries. (Soytas, Sari, Hammoudeh, & Hacihasanoglu, 2009). However, those countries exporting oil an increase in the oil price considered good news to them. When the price of oil increase the exporting, countries gain more money, but for importing countries when the oil price decreases, it’s going to have an impact on their real economy especial when the country relies on the oil as one of their main source of income. The monetary transmission mechanism which has the control on the interest rate which the oil price have has an impact on

In 1958, oil was first discovered in Nigeria. The discovery has led to the transition from agriculture-based economy to that of oil economy. One would believe that a country that produces a numerous amount of oil used to support the world with energy would have improved domestic infrastructures and economic development. Unfortunately, this is not the case in Nigeria. Nigeria has suffered since the discovery of oil and is still suffering till this day. Not only has it created conflicts between other nations and Nigeria but it has also divided the country into groups, which has fueled civil wars and tension between the government and the people. This is why the topic is a geopolitical event but before trying to understand how it is geopolitical, one should understand what geopolitics is.

The present study is intended to analyse the relationship between oil prices fluctuations and its role on GDP growth of United States economy. Oil crisis is prevailing in almost all developed and emerging nations for more than 40 years. Remarkable increase in oil prices have commenced from 2001 and decrease in prices was observed in 2008 during financial crisis. During decreased demand in Dec 2008, the crude oil prices dropped from 145 USD to 33 USD. However, soon prices started to rise sharply as then before. Oil caters 36% of US energy demand currently (Kilian, 2008). Oil is reported as main mover for US economy as 70% were consumed for transportation and rest 24% for industry and manufacturing and final 5% for commercial and residential sectors. The primary oil consumption rate continues to rise linearly and achieved its peak during 2008 and 2009.

Since 2014 crude oil prices fell dramatically by 50% to around $50 US a barrel. This significant price reduction is largely due to a global oversupply of oil and to a lesser degree a reduced demand for oil.

The author accurately stated throughout the article that the government is removing the subsidy as act of corruption. This was shown firstly, by moving the audience towards the direction that the promises deliberated during presidential campaign were not sincere. This therefore, allows the reader to understand that the Nigeria population was not adequately or not educated about this matter. Secondly, the authors provides figures of the refineries’ lack of capacity which showcases the years of mismanagement and corruption which has led to the incapacity to refine oil in the country. Thirdly, it emphasizes that the removal of such subsidy has taken place during the worst time ever given to all the instability in the North and moreover with the energy problems that Nigeria are currently facing. However, in my opinion despite all these facts stated by the author, I strongly believe this article has only one side of the story. In other articles which were investigated for the purpose of this analysis such as it talks about the massive problem they are with smuggling (Madukwe,2012), in addition, it explains how this massive amount of money which is being used to acquire

Who’s afraid of falling crude oil prices? Isn’t it something to celebrate from the consumers’ point of view, especially in the Asian region! The answer is perhaps “no”. Though the debate over the impact of plunge in crude oil price and its implications will continue for long, nothing can be said with fair amount of certainty as long as its link with the slowdown of Chinese economy.

The purpose of this paper is to explain the effects of oil prices on various parts of the economy. The Impact of Lower Oil Prices by Bruce Lantz and Contemplating Collapsing Oil by Leonard Melman assist in explaining the advantages and disadvantages of declining oil prices. Both articles address the issues of unemployment and changes in total spending caused by the price of oil. Taking into consideration the opinions of chief brokerage and wealth management companies, as well as the actions of various prominent oil and gas companies, Lantz and Melman share their predictions in regards to the outcome of the current oil situation. However, after considering the facts presented in these articles, it seems very likely that these low prices will ultimately become a serious problem. Before delving into the meat of the above mentioned articles, several vital economic concepts must be tackled.

Despite some contradictory signs, oil prices have been gaining steadily based on reports that U.S. oil inventories have dropped and concerns about production disruptions in both China and Nigeria. A report from cnbc.com speculates that economic weaknesses and contradictory signals about the dollar 's strength won’t significantly impact the trend of rising oil prices. Often linked to inflation and higher interest rates, oil prices have narrow windows for growth where they can exert positive influences on economic conditions but a wider range where economic instabilities occur. This is especially true in the current market where long-term prospects

As the narrative commonly begins, oil prices are way down. Way way down. In fact, since June 2014, the price of a barrel of oil has been cut in half reaching levels last seen during the bottom of the 2009 recession. The causes of such rapid declines are best attributed to a simple supply and demand model. On the supply side, domestic oil production has doubled in the last six years. As the world’s largest crude oil consumer in the world, the US was once a large and reliable buyer of foreign oil. But with domestic demand for foreign oil waning, exporting countries such as Saudi Arabia, Nigeria, and Algeria have had to find new

Multinational oil corporations such as ExxonMobil and Shell share a long history of oil extraction in Nigeria. Royal Dutch Shell and

During the 1950’s vast reserves of petroleum were discovered in Nigeria, making oil a crucial aspect of the Nigerian economy. Foreign oil companies have then since dominated the oil exploration, drilling, and shipping and 87% of the government’s revenue comes from oil production. Shell Oil decided to enter Nigeria in 1937 through a joint venture with the government owned Nigerian National Petroleum Corporation (55%), Total E&P Nigeria Ltd (10%), and Agip Oil Company Limited (5%). Shell Oil controls approximately 60% of the domestic oil market and operates majority of its facilities in the Delta region of Nigeria. The Ogoni region is a highly oil rich area in the Delta region that has been greatly affected by the environmental

Economy of many nations is currently at distress due to current plunge of oil price the international market. This sink in crude oil price produces an economic shock especially to the poor and developing Countries that depend on crude oil revenues to balance their budgets (Iwayemi, & Fowowe, 2011; also see Effiong, 2014). Nigeria, being one of those nations, is currently experiencing economic crisis. For instance, many states in the federation presently can no longer pay their employees’ salaries or provide basic services to their citizens. They are borrowing money or requesting for bailout from the Federal government to fulfill their obligations to their people. The shocking effects of this oil price drop extended

There has been a lot of growing interest and concern on the development of petroleum and its contribution to economic development. The objective of this study is to look into the economic impacts of petroleum on the Nigerian economy by using theoretical, empirical and non-economic components to find out the positive and the negative impacts of petroleum on the growth of the Nigerian economy. Giving possible solutions to policies and the non-economic factors. Empirical evidence samples will cover all the