THE EFFECT OF FUEL SCARCITY ON NIGERIAN ECONOMY

CHAPTER ONE

1.0   Introduction

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 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.

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.

1.1   Background of Subject Matter

Just like water and air are important to the living human being for daily duties and hitch-free survival, the importance of fuel to automobile cannot be over looked. A typical situation is in the case halts because of the fact that there is shortage of fuel. The importance of fuel in this our developing and technically inclined economy is fast like the mixture of oil and salt as far as the economy forgets growth as one of its goals. Fuel is used in a variety of activities ranging from production, mobility, cooking, electricity supply, sources of foreign exchange, to mention but a few. To this extent one would accept that fuel plays a great role in the life of every citizen of the country and the country as a whole.

However, in recent times, there has been a rampant shortage in the availability of the commodity. It is on this basis that the researcher intends to evaluate the causes and effects of fuel scarcity in the Nigerian economy, but shall concentrate on Enugu urban as a case study due to time and financial constraints.

Effects of Fuel Scarcity

Fuel is a form of energy, according to Longman English Dictionary; fuel is a form of energy used for the energizing of the machine used for production. In that case, its scarcity will affect the living standard of the people in various ways.

a.           It increases the cost of transportation

b.          Electrical faults

c.           The cost of food items and living

d.          Social unrest

e.           Adulteration of fuel and so on.

The effects of fuel scarcity in Enugu metropolis cannot be over emphasized for it is one of the very prayers for the entire economic attribute to move about.

During 1998 February 12, business activities in Enugu State was brought to a light because there was no fuel. In the state, vehicles were seen in long queues in the filling stations even when there is fuel at the filling station or not. Commuters were stranded in the various bus stops with no hope of motor coming to take them to their various destinations

Consignment upon this prices of commodities skyrocketed so much beyond the reach of the buyers “News watch publisher Vol.12 November in 1996”. The perennial fuel scarcity in Enugu State has fired production companies to produce at a low capacity, with high price, since the fuel which is used as a nourishing material to the machine which is suppose to be used in production is scarce to get and when gotten the price is 300% (three hundred percent) increase more than the former price. This is why most companies’ products are costly and these tend to scare customers away from the products. Also from the statistics available transportation costs have gone up considerably, making it difficult for customers to get to their various destinations.

A journey that normally costs ten Naira (N10) a drop now costs twenty Naira (N20) to forty Naira (40) a drop, which represents a total increase of 200 percent. Conversely the daily spending of the average citizen has increased due to the sky rocketed increases in foodstuff, which was occasioned by the fuel scarcity.

Furthermore, lateness to duty or offices has been heightened as a result of lack of commuter buses and taxis to take them to their various destinations.

To this end, the effect of fuel scarcity is so great that most indigenes of Enugu State and non-indigenes of Enugu State metropolis are suffering untold hardship.

1.2      Problems of Subject Matter

Problems associated with the effect of fuel scarcity in Nigerian are as follows:

Lack of Qualified Personnel

Poor Management and Maintenance

Hoarding of Fuel

Inconsistent and Poor Government Responses

All these draw a set back on the smooth running of fueling supply. Hoarding fuel is a big problem because it makes some drivers to pack their cars at home and break to where they are going or enter transport. It is also a problem to students because sometimes student don’t go to school simply because there is no fuel in the filling stations because vehicles cannot move without fuel.

1.3      Objective of this Study

The objective of this study is to provide solutions to the above problems the following hypothesis will be looked into.

Good management and maintenance

Consistent and good government response

Government should enact embark on policies

       that will facilitate easy flow

Government should try and reduce the price of

       fuel to be affordable by everybody.

1.4      The Importance of this Study

Fuel scarcity is a big problem now in Nigeria and it has caused so many things in our country Nigerian. The importance of studying the area is:

To know how to organize things in other to achieve the set down goals or objectives.

The fuel industry is not a place to exhibit favoritism.

There was a case of a young daughter of a    Minister, a graduate of English in one of the Nigerian Universities. She was employed in the fuel industry to head a department tagged with the allocation of fuel to different parts of the country. Is she supposed to be there? No is the answer. She messed up the economy by not allocating purely on the basis but on a system no one can explain. “Tell on 24 Nov. 17, 1996”.

Moreover, the important is to know how to handle the facilities used for production of fuel;

to avoid the increasing breakdown of facilities and consequently going up in flames like Kaduna refinery. The fuel is very important product to the country’s economy and for its economic attributes to work out well, it must be readily available anytime it is needed.

Another importance of studying the areas is to know knowledge of does and don’t of the fuel industry not to be interested on how to make our own quick money by all available means.

To stop hoarding of fuel so that there will be easy flow of fuel, because this hoarding of fuel contributes in punishing the innocent citizens by creating artificial scarcity.

To stop struggling of fuel because it is now a common thing in the society. The news is not new to the people.

In 1992 Nigerian lost about N54.8 million out of N22.1 million due to smuggling of fuel.

1.5   Research Question

This study will be guided with some basic research question which will be administered to the respondents.

1.  If hoarding and smuggling of fuel should stop especially in Enugu, can fuel scarcity stop equally.

2.  Can any of our President’s contribution in Nigerian especially in Enugu help to stop fuel scarcity?

3.  Can none payment of salaries to the distributors of fuel lead to fuel scarcity?

4.  If the government should reduce prices of fuel, will fuel scarcity continue?

1.6   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.

1.7   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

It is a person who makes a regular journey of some distance between home and work especially by trains.

Rocketed

It is the rising quickly and suddenly of the price.

Consignment

It is the act of sending something to person or place for sale

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.

Metropolis

It is a chief city or the capital city to a country

Rampant

Widespread and impossible to control.

Constraints

It is the threat or use of force to direct the action of others.

Hitch

It is to fasten by looking a rope or metal part over another object.

Mobility

It is the state or quality of being movable or able to move quickly and easily. Not fixed on one position.

Smuggling

It is the act of taking from one country to another unlawfully especially goods without paying the necessary tax.

Hoarding

It is the act of storing secretly especially more than is allowed.