Measuring the Effect of Regime Change on Petroleum Price in Nigeria Using Moving Index

Abstract

The ongoing volatility of crude oil prices on the international market has harmed every sector of the Nigerian economy. Every Nigerian government regime experiences fluctuations in the price of petroleum. Thus, this research studied the effect of change in government regime on change in petroleum prices using a moving index with a constant and moving base year. Data on government regime and prices of petroleum were collected (1960 to 2021) from the Office of the Secretary to the Government of the Federation, Central Bank of Nigeria (CBN) Statistical Bulletin, and National Bureau of Statistics (NBS), spanning 62 years, and the changes in these prices over all the regime were observed via the time plot.  The results of the analysis showed that regime change in Nigeria has significantly impacted the price of petroleum. The trend of change in petroleum prices using 1960 as a constant base year showed that regime change has a significant effect on change in petroleum price, while the moving index with varying base years showed no significant effect on the change in the petroleum price. Therefore, it can be concluded that variations in the price of petroleum in Nigeria are caused by both changes in time and regime. The estimated trend of change in the prices of petroleum with the period under study showed an upward trend. The movement showed that the price of petroleum is not likely to reduce shortly but rather will increase if nothing is done to stabilize it.