Economic Impact Of Oil On The Nigerian Economy

Ezigbo, O. & Bassey, O. (2010) ‘Oil spill—environment practitioners want compensation from Shell’, Environmental Health Watch, [Online]. Availab

Discuss how rising oil prices might affect the macroeconomic performance of an economy. (25 marks)

The Nigerian economy has quite the surplus of natural resources they offer the potential for economic growth. “Crude oil accounted for over 95% of exports and over 65% of government revenue in 2004;” Nigeria is number eight in the world's exporter for oil. But agriculture still is a big part in the basic economic activity for the Nigerians.

2. Whenever a country's exports exceed imports, then it will add to the GDP but if imports are more than the exports it subtracts from the GDP. More exports by a country increases the foreign income flow to the country which has the effect of increasing the GDP while elevated levels of imports increases the country's foreign debts which has the effect of lowering the GDP. If we are able to increase our domestic energy production which allows us to import less oil from foreign countries, then it would positively impact the nation's GDP.

powerful group because it controls 80% of the world’s oil and therefore is extremely influential in country’s economic system. The policies developed by OPEC directly affect the production of oil globally. It was formed at the Baghdad Conference in 1960 by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Venezuela alone harbors 20% of the world’s oil. As OPEC memberships of countries were suspended other countries joined. Today, 13 member countries: Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela. These countries bare the unalienable right to manage their natural resources in the interest of their progress as a nation under the “Declaratory Statement of

Since the past few decades, owning a car has become a necessity in order to commute from one place to another. However, cars do not work automatically, they require fuel. Since the past decade, the petroleum industry has become one of the leading industries impacting the nation’s economy. Oil has become an essential commodity as it is utilized in transportation vehicles, serves as a raw material for manufacturing plastics, and is utilized in homes for cooking. America’s economy is greatly dependent on petroleum as it is the “black gold” of the nation. The considerable significance of oil has led to the drilling of it, which is not only limited to land, but also the oceans. Offshore drilling is a method in which petroleum is extracted from underneath the seabed. It is one of the significant technological advancements in the past few decades. However, the ones who are involved in the process of offshore oil production are humans, and humans tend to make mistakes. In 1969, due to a human error, an oil spill occurred and natural gas, oil, and mud shot up the well and oozed into the ocean (“Offshore Drilling”). The oil spilled led to an environmental disaster which killed thousands of marine animals and distorted the environment. In order to prevent the same error, the government passed a moratorium in 1981, banning more than 85 percent of the country’s oil drilling sites (“Offshore Drilling”). The moratorium restricted the United States to mass-produce its natural resource.

The diversity of the country’s export base has been eroded by focus on hydrocarbon activities, however limited growth in the non-oil sector has helped diversify the economy during the past decade. Agriculture remains relevant as main source of employment. In the 1990’s, uncontrolled debt levels, debt restructuring, failure to meet payment deadlines and write-offs damaged Nigeria’s a reputation. Nigeria returned to civilian rule in 1999, after independence from Great Britain in 1960 was followed by years of military rule. (Nigerian Government, 2015).

Crude oil is still a driving force of the world economy today. Changes in the price of oil have significant effects on economic growth, development and welfare in countries. Oil price volatility has had its ups and downs in the past year as well as the past decade. Oil prices fluctuate for a number of reasons. One reason why oil prices fluctuated is because of rising global economic activity. It can increase demand and push prices higher, while rising production can cause prices to decline. During the last financial crisis there was a grueling time for oil prices as they had fallen about 50% during that time. (Moors, 2011) Many studies have shown that economic effects of oil price can increase or decrease and they typically show that for oil importing developed economics (Moors, 2011). This paper that I have written thoroughly investigates the role of oil price volatility. My paper also focuses on the variability of positive and negative oil price shocks as seen in Germany, Japan and United sates.

The data collected factors that the authors thought would contribute to the price of oil. All 14 OPEC members monthly oil production is found on the US. Energy Information Administration. The United States of America monthly production is found on the U.S. Energy Information Administration. Data also collected on the prices of commodities including Gold, Coal, and Oil. This is collected from the Federal Reserve of Economic Data. The price of the Dow Jones Industrial Average and the Trade Weight United States of America Dollar Index: Broad also collected from the Federal Reserve of Economic Data.

Evidence suggests that Nigeria’s poor oil management is due to institutional and governance reasons rather than economic mismanagement alone, and corruption and the rentier nature of the state are important part of the issue; Watts (2008) categorizes Nigeria as a “rentier petrostate”. Sala-i-Martin and Subraiman (2016) main argument in their study is that the country’s mediocre long run economic performance are due to oil waste and corruption, rather than the Dutch disease effect. Natural resources lead to rent-seeking or what they call “the voracity effect”, and more than oil itself it is poor institutional quality in the country which contributed to poor economic performance with an estimation of 0.5 percent lower

While both Kenya and Nigeria are partly free, historically, Kenya 's freedom score is lower than Nigeria 's. High levels of corruption are prevalent in both Nigeria and Kenya, however, the oil curse in Nigeria further stimulates corruption which impairs their countries democracy. Nigeria’s economy is the second largest in Africa and it continues to grow by 6% a year. This growth is dominated by the production of oil. Oil accounts for more than 98% of export revenues. Oil wealth is the main source of corruption in Nigeria, it encompasses political violence, and repression (Nigeria Freedom House). Diamond accounts that among the 23 countries dominated by oil today, none of them are democracies, he claims that democracy can begin to mature only when oil declines in a

Non-oil exports are made up of the agricultural sector, manufacturing sector and the service sector of an economy. Nigeria, like many other developing economies has over the years pursued the objective of accelerating the rate of development in the economy in a bid to transform into a developed country. The economy held so much hope for attainment of such goals within a short period of time and this was even before the advent of oil as the main export commodity. These potentials were so much that Nigeria was seen to becoming the most industrialized African economy within a short period of time. The foundation of these potentials was laid by the agricultural sector which effectively and efficiently played its traditional role which economic theory predicts it should play in the path of economic development. According to Johnston and Mellor (1961), the roles are as follows; Product contribution (source of food), Market contribution (buying and selling to earn a living), Factor contribution (serves as raw materials for industries) and Foreign exchange contribution (through exportation). Despite the prominence of the oil sector in the past three decades, agriculture remains arguably the largest and most important sector as its contribution to the gross domestic product has remained stable between 30 and 42 percent, also it employs about 65 per cent

It is estimated that India’s dependence on crude oil import is expected to rise upto 94% by the end of 2030. As crude oil prices are rising/declining globally, this shockwave makes imports expensive, it is necessary to understand the consequences of crude oil price rise on the economy. The purpose of the study is to understand the impact of crude oil prices on the economic indicators like inflation,GDP

A rise in global oil prices by $ 10 per barrel would reduce India's economic growth by 0.2 percentage points and also affect the country's current account deficit, Goldman Sach said.

A FIELD ATTACHEMENT REPORT SUBMITTED TO KAMPALA INTERNATIONAL UNIVERSITY IN PARTIAL FULLFILMENT OF THE REQUIREMENT OF DEGEREE OF BACHELOR OF ECONOMICS AND APPLIED STASISTICS