The implication of Energy on Nigeria’s Economy: Case Study of Crude Oil Energy Source

Abstract

The shortfall in crude oil production, the major source of energy supply and revenue generation in Nigeria, affects all spheres of activities in the country. Activities like politics, economic, budgeting, infrastructural development, the standard of living, and foreign exchange reserve. Therefore, it is imperative to address the implication of energy (crude oil source) on the economy of Nigeria. Hence, a linear regression analysis was used and by first creating a link between oil production (main energy source) and oil earnings (economy) to establish a relationship upon which social-political factors such as the organization of petroleum exporting countries (OPEC), civil disturbance, flexible regulating framework, infrastructural services, community inclusion for equitable sharing of benefit, and Niger Delta development commission are used as check and balance on oil production and oil earning and their implications on the Nigeria economy. By way of calibration, the paper examines the amount of oil per barrel needed to be produced in a year that would guarantee an increase in oil earnings in Nigeria. The data used for this analysis were collected from the central bank of Nigeria (CBN) statistic bulletin on crude oil production and total earning in Nigeria between 1980 to 1999. The paper also suggests measures that would enhance the increase in the production of oil from which the country would be able to earn more revenue. The result shows that increasing oil production will simultaneously increase earnings from oil and, consequently, overhaul the various activities such as economy, infrastructural development, health, education sectors, and living standard of the citizen.