Economics Project Topics

Impact of Fuel Scarcity on Nigeria’s Economy

Impact of Fuel Scarcity on Nigeria’s Economy

Impact of Fuel Scarcity on Nigeria’s Economy

Chapter One 


The main aim of this study is to examine impact of fuel scarcity on Nigeria’s economy. Specifically, this study seeks to:

  1. Determine whether hoarding and smuggling if stopped or curtailed especially in Enugu, can prevent fuel scarcity equally.
  2. Determine whether presidential involvement can help to stop fuel scarcity in Enugu State.\
  3. Determine whether none payment of salaries to the distributors of fuel can lead to fuel scarcity.
  4. Find out whether government’s reduction of fuel prices, will affect fuel scarcity.





Our focus in this chapter is to critically examine relevant literature that would assist in explaining the research problem and furthermore recognize the efforts of scholars who had previously contributed immensely to similar research. The chapter intends to deepen the understanding of the study and close the perceived gaps.

Precisely, the chapter will be considered in three sub-headings:

  • Conceptual Framework
  • Theoretical Framework and
  • Empirical Review of Related Literature


Oil exploration in Nigeria could be traced back to 1908 when a German company [Nigerian bitumen corporation started chilling of cretaceous sands of Niger Delta. Shell Darchy , the pioneer oil exploration and producing company was incorporated and granted concession right to prospect for oil in 1936.production and export of crude oil took effect in 1959 at a rate of 5100 barrels per day (Ovaga, 2012).

The success of shell spurred many other multinational oil company to join in the scumble for Nigeria crude oil. Among these were MOBIL, NIGERIA AGIP OL COMPANY , NIGERIA GULF OIL COMPANY SATRAP [ NOW ELF].others are TEXACO,PAN OCEAN, PHILP OIL ESSO AAND ASHLAND.

Major activities of these oil companies are centered in Delta , Rivers , Cross Rivers , and Imo state .

These include the off shore and on shore locations. Some of the on shore fields which produce most Nigeria crude oil are located at Bonu, Obigbo north , and east , elenwa ,umuechem, in rivers state , oguta and izombe in Imo state . off shore are located in aqua- Ibom in cross rivers rennington , forcados and escravos in Delta state.

The Nigeria economy can largely be described as one with a strong petroleum industry superimposed over an underdeveloped industrial base. Presently Nigeria is growing into a more economic country by depending Marjory on oil revenue. The dominance of oil in the Nigeria economy because a reality after the resumption of oil production at the end of the civil war, [1967-1970] it virtually because predominant after the fuel price increase of 1973 /74. Most recently is the one about to struck the nation now , take from Daily Champion News Paper. Monday march 17, 2003, “fuel price         like :NLC threatens showdown with FG” was the capital. I wounded were we are leading to, I wounded if the federal government understands that the comfort of new citizen is the price of a government revenue of about 90% of the federal government revenue (Ovaga, 2012).

Fuel scarcity that struck the nation in recent times appears to be continuing without end. Disturbing as the picture might be the situation on the ground shows that a petroleum endowed nation which is one world’s major producers and a member of the organization of petroleum exporting countries [OPEC] with a daily quota of 1.865 million barrels and also one whose four vetira have combined production of 445,000 barrels per day is in the throes of a domestic oil shortage. Petroleum scarcity is usually characterized by the emergency of long queue of vehicle queue for about four days to obtain fuel at exorbitant price. Taking a critical view of this problem one would discover that ‘there is a long list of players from the supply of petroleum product through the refineries to the end users. Some of the participant in this chain of distribution have acquired the role of middlemen adults. Mr Chamberlin oyibo , the managing director of the Nigeria National Petroleum Corporation [NNPC] (Ovaga, 2012).

These middlemen operate from a sewing lack of control. The cause of petroleum scarcity could be trace to a complex process where many people and actions contribute, from crude oil through refining to the PPMC [pipeline and product market company ] the tanker drivers and owners. Independent marketers, retailers and consumers all collectively contribute knowingly or unknowingly to petroleum scarcity by their acts of omission or commission.

Petrol Genealogy, Causes of Scarcity and Crisis Situation in Nigeria

Petrol (otherwise called gasoline) is a byproduct of petroleum or say crude oil. The word was borrowed from French pétrole, which in turn came from Latin petroleum (itself taken over directly into English in the 16th century). This means ‘rock-oil’. Carless Capel, a German wholesaler was the first company to register ‘petrol’ as a trade name in year 1892. It is also called Benzin in Germany which is derived from a chemical named Benzene (Energy Bulletin, 2011). Other byproducts of petroleum are Liquefied Petroleum Gas (LPG), diesel, kerosene, etc. All are energy rich fuels. Initially, petrol was used as cleaning liquid to remove strains. It was available in cans. Petrol is also used for lighting in the form of white gas which is highly purified petrol. By 1950′s oil took over as major fuel from the reigning coal and so started evolution of filling stations. Petrol has been the main reasons for the developments in car engines since last 100 years. Most of the car engines are designed according to the kind of petrol available at that time.

Scarcity happens when there is low supply of something that is in a high demand. When this happens, people are prone to paying more for a product. If all of our products and resources are scarce, then we may see inflation. Petrol scarcity situation in Nigeria is very discerning and ugly. The situation is such that has plagued the nation and caused a lot of pains, anguish and dislocation to economic and sundry activi- ties. There are hardly any individual industries, institutions and organization in Nigeria today that is not severely affected.

On the causes of petrol scarcity in Nige- ria, government circles attributed it largely to bottlenecks in the distribution system. This conjectured belief was substantiated by the re- sults of the study conducted by the Departments of Petroleum Resources (DPR, 2012) as well as by Furtado and Suslick (1993). The results indicated that petrol scarcity or crisis in Nigeria is caused by fraudulent marketers who, despite the effort of DPR, encourage and sell adulterated products. The crisis situation worsening day after day when some fuel stations sell petrol in the night to the black markets in which they increase the rate far above the approved price depending on the level of adulteration. Other causes of petrol scarcity were found to include product hoarding, diversion, smuggling, under- delivery of products at retail outlets, conflicting activities of multifarious government agen- cies, manpower shortage, inadequate funding, lack of materials, legal limitation and, safety of personnel also cause petrol scarcity. In the opinion of Vincent (2013), the petrol shortage is a reflection of bad management.

In all, it may be safer to say hypothetically that the presence or absence of good governance account for the presence or absence petrol scarcity. According to Onwuka (2010), the big- gest problem, which we have here, is pipeline vandalism. The issue of oil pipeline vandalism as a major cause of fuel crisis could be looked at from the angle of frustration – aggression theory. According aggression, vandalism of oil pipe- lines is the outcome of frustration. Gurr (1970) opined that where expectation does not meet attainment, the tendency is for people to confront those they hold responsible for frustrating their ambitions. He further stated, “the greater the discrepancy, however marginal, between what is sought and what seem attainable, the greater will be the chances that anger and violence will result”. In other words, crisis or conflict occurs when the governed are frustrated by the way they are governed especially with respect to deprivations of the basic needs of life.






In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.


Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.


According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitute of individuals or elements that are homogeneous in description.

This study was carried out to examine the impact of fuel scarcity on Nigeria’s economy. Selected residents in Enugu metropolis, Enugu State form the population of the study.




This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of one hundred and forty-seven (147) questionnaires were administered to respondents of which only one hundred and forty-one (141) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 141 was validated for the analysis.




In this study, our focus was to examine the impact of fuel scarcity on Nigeria’s economy. The study specifically aimed at determining whether hoarding and smuggling if stopped or curtailed especially in Enugu, can prevent fuel scarcity equally, determining whether presidential involvement can help to stop fuel scarcity in Enugu State, determining  whether none payment of salaries to the distributors of fuel can lead to fuel scarcity and finding out whether government’s reduction of fuel prices, will affect fuel scarcity. This study was anchored on the frustration–aggression hypothesis propounded by Dollard, Miller, Doob,  Mowrer, and Sears in 1939.

The study adopted the survey research design and conveniently enrolled participants in the study. A total of 141 responses were validated from the enrolled participants, who where all selected residents of Enugu city.


This study has systematically inquired and analyzed on why technology in the accounting profession is a must. Based on the findings of this study, the following conclusions were made:

  1. Hoarding and smuggling if stopped or curtailed especially in Enugu, can prevent fuel scarcity equally.
  2. Presidential involvement can help to stop fuel scarcity in Enugu State.
  • None payment of salaries to the distributors of fuel leads to fuel scarcity and
  • Government’s reduction of fuel prices can affect fuel scarcity.


In the light of the findings and conclusions, the following recommendations are hereby proposed:

  • PEST analysis or STEEP analysis or approach should be employed by the man- agers of petroleum sector. This approach would allow for the examination of the macro-economic environmental factors such as politics, economics, social factors and, government regulations in which case issues that concern the populace would be addressed properly.
  • Management of NNPC and associated agencies should work against the found causative factors of petrol scarcity by applying an appropriate strategic management.
  • Government should look into the problem of smuggling of fuel and help to stop it


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