Abstract:
Petroleum products constitute a major inputs in the production of various goods and services, consequently, changes in supply affects the cost of production and therefore price level. This has been the case even when the increase is only marginal. Therefore, the paper took a critical look at the impact of fuel price increase on the Nigeria economy. The source of Data for this paper were mainly secondary and the paper adopted the theory of price which is an economic theory whereby the price for any specific good or service is based on the relationship between supply and demand. Finding revealed that petroleum price increase result in higher transportation fare, and purchasing power, increase in cost of production and living standard of the citizens. It was also discovered that there is a significant relationship between increase in pump price of petroleum and food security. The paper therefore recommends among others that government should reduce the price of fuel to mitigate the risk associated with price hikes. There is need to vigorously pursue the revitalization of the rail ways. That government should strive to make the product available all times, monitor effectively the distribution channels to avoid disruption of distribution or scarcity, Consistency and efficiency of government pricing policy, the government to encourage more private participation and deregulation of the downstream sector and fight corruption as well as total market concept in the chain of petroleum product supply and distribution.
