INDEX NUMBER ANALYSIS ON THE PRICE OF PETROLEUM ON THE PRICE OF FOOD ITEMS (1999-2013)

INDEX NUMBER ANALYSIS ON THE PRICE OF PETROLEUM ON THE PRICE OF FOOD ITEMS (1999-2013)

ABSTRACT

Food items are an essential commodity for a healthy nation, the supply of food to any nation must be done without any form of compromise as anything less than an adequate planning will lead to shortage in food supply which could affect the economy of the nation.

This research project is thus a search part for the index number analysis of the price of petroleum on the price of food items between 1999-2013. Moreover in this period, a persistent rise in the price of food items was experienced.

Chapter one of the study lays a theoretical framework for subsequent chapters.  Following the general introduction, the problem statement and the objective of the study which provided basis for the significance of the study and the hypothesis were stated. The limitation of this study were also highlighted.

In the literature review as contained in chapter two, works of various authors, international and local journals were reviewed to elicit views on the index number analysis of the price of petroleum on the price of food items.

Chapter three, research methodology, description of population and sampling procedure for data collection were discussed. Methods of questionnaire design, determination of sampling size and questionnaire distribution were also highlighted.

Chapter four was based on analysis of data collected. This chapter was sub-divided into data analysis, hypothesis testing and summary. Percentage table, figure and narration were carefully employed for proper understanding and testing of hypothesis.

Finally, chapter five was divided into summary of findings, conclusion and recommendation.

TABLE OF CONTENTS

Title Page –        –        –        –        –        –        –        –        –        i

Approval Page   –        –        –        –        –        –        –        –        ii

Declaration        –        –        –        –        –        –        –        –        iii

Dedication          –        –        –        –        –        –        –        –        –        iv

Acknowledgement      –        –        –        –        –        –        –        v

Abstract    –        –        –        –        –        –        –        –        –        vi

Table of Contents       –        –        –        –        –        –        –        vii

CHAPTER ONE – INTRODUCTION

1.1    Background of the Study    –        –        –        –        –        1

1.2    Statement of General Problem   –        –        –        –        5

1.3    Objective of the Study         –        –        –        –        –        –        6

1.4    Research Questions   –        –        –        –        –        –        6

1.5    Significance of the Study    –        –        –        –        –        7

1.6    Scope of the Study      –        –        –        –        –        –        8

1.7    Definition of Terms    –        –        –        –        –        –        8

CHAPTER TWO – REVIEW OF RELATED LITERATURE

2.0    Introduction       –        –        –        –        –        –        –        10

2.1    Fuel Price –        –        –        –        –        –        –        –        11

2.2    Middle Income Group         –        –        –        –        –        –        14

2.3    Government Subsidies        –        –        –        –        –        16

2.4    Distribution of Rebate        –        –        –        –        –        16

2.5    Natural Gas       –        –        –        –        –        –        –        17

2.6    The impact of rising fuel price     –        –        –        –        20

2.7    Empirical Review       –        –        –        –        –        –        28

CHAPTER THREE – RESEARCH METHODOLOGY

3.1    Introduction       –        –        –        –        –        –        –        32

3.2    Research Design         –        –        –        –        –        –        32

3.3    Area of the Study       –        –        –        –        –        –        32

3.4    Population of Study   –        –        –        –        –        –        33

3.5    Sample size and Sampling Techniques        –        –        –        33

3.6    Instrument for Data Collection   –        –        –        –        33

3.7    Validity of the Instrument –        –        –        –        –        33

3.8    Reliability of the Instrument       –        –        –        –        34

3.9    Method of Data Collection  –        –        –        –        –        34

3.10  Method of Data Analysis    –        –        –        –        –        34

CHAPTER FOUR – DATA PRESENTATION AND ANALYSIS

4.0    Introduction       –        –        –        –        –        –        –        36

4.1    Data Presentation and Analysis –        –        –        –        36

4.2    Characteristics of the Respondents     –        –        –        36

4.3    Data Analysis    –        –        –        –        –        –        –        39

4.4    Testing Hypothesis    –        –        –        –        –        –        46

CHAPTER FIVE – SUMMARY, CONCLUSION AND RECOMMENDATION

5.0    Objective   –        –        –        –        –        –        –        –        54

5.1    Summary  –        –        –        –        –        –        –        –        54

5.2    Conclusion         –        –        –        –        –        –        –        –        57

5.3    Recommendations      –        –        –        –        –        –        58

References –       –        –        –        –        –        –        –        61

Appendix  –        –        –        –        –        –        –        –        62

CHAPTER ONE

INTRODUCTION

• Background of the study

The effect of prices of petroleum products on food items and the economy of Nigeria cannot be over emphasized. Petroleum products range from aviation fuel to kerosene just to mention a few, this is solely due to the lack of diversification of the economy. 85% of Nigeria gross domestic product (GDP) is being accounted for by the petroleum sector (Mahmud 2009). Before the discovery of crude oil in the early 70’s, agriculture was the main driver of the economy which has helped in the country’s development in these periods, there was hardly any incident to hike of products and services. The price stability of food items is of utmost importance to every nation that wants to witness growth; this is because it is only a healthy workforce that can give out their best in terms of work and productivity. Overtime there may have been some arguments about the relationship between petroleum prices and price index of food items. Some school of thought opined that prices of petroleum prices has nothing to do with prices of food items, questioning the agricultural stakeholders and traders for massive exploitation during price instability of petroleum products while the other school of thoughts are of the opinion that petroleum products does affect the prices of food items. Petroleum is believed to have an enormous bad wagon effect on the economy and even agricultural products this normally occurs in the economies of the West Africa sub-region which isn’t often diversified. For any oil producing nation that doesn’t want to know poverty of its masses then they must have to diversify their economy so as to prevent crises in one sector of the economy spilling over to the other sectors.