THE EFFECT OF PRICE INCREASE IN PETROLEUM PRODUCTS (PMS) ON COMMERCIAL VEHICLE TRANSPORTER IN LOKOJA METROPOLIS

THE EFFECT OF PRICE INCREASE IN PETROLEUM PRODUCTS (PMS) ON COMMERCIAL VEHICLE TRANSPORTER IN LOKOJA METROPOLIS

Abstract

Incessant price hike of petroleum products have led to crises and industrial action led by some pressure group in Nigeria. Base on this problem, the study examines its effect on the Nigerian environment because the welfare of the nation’s economy depend largely on the efficient and adequate movement of passengers which is dependent on constant supply of PMS. Questionnaire was used to collect the primary data from two branches of transport company i.e ABC and NURTW Lokoja branch which was used as the case study. Simple frequency and percentage in table were used to analyze data collected in as much as the questionnaire were designed using likert simple method. Chi-square as a statistical tool was used to test the three hypothesis developed whether to accept or reject a problem item as being a reflection for majority for taking a decision. Results from this study shows that price hike of PMS have increased transport fare, led to hoarding of PMS, encourage long queen and black market. Problems identified above have exerted a lot of hardship on the extent that the poor were the worst hit. The study suggested some measures that could be put in place by government to ensure constant supply of PMS and remove some of the bottlenecks to achieving effective and adequate public passenger transport services in Lokoja Metropolis.

CHAPTER ONE : INTRODUCTION

1.1     BACKGROUND OF THE STUDY

Oil is one of the natural resources that is considered significant to the socio-economic development of the entire citizen and all the sectors of the economy. Petroleum product (fuel) obtained from refinery processing of crude oil is significant to the transport sector as it serves as fuel for vehicles being used for the transportation of commuters and goods from one place to the other.

The manufacturing sector of the economy also make use of petroleum products (fuel) for the operation of machines and lubrication of the machineries. In the same vein, the petroleum product is significant to Agriculture sector, since it is used to operate the tractors and other agricultural machineries. Thus, the effects of scarcity or increase in price of the petroleum affects all the sectors of the economy. Attempt at increasing the price of petroleum product (fuel) is often accompanied by scarcity of the commodity in the society, this situation often bring about long queued in the filling stations which often result in stampedes sometimes causing commotion and fight among commercial drivers and other petroleum users in the society.

As a result of these negative effect on the lives of the citizenry, the people often prefer an increase in the pumping price of the product so much as the products shall be available than situations whereby there is no change in pumping price, but excavating due to hoarding which often stampedes commotion and sometimes avoidable loss of lives at the filling stations. However, experience has shown that the resultant increase in pumping price of petroleum products (fuel) bring about hardship to the society in the first instance, the commercial vehicle operators increase the fare price which effect often bring disaffection of the commuters, also the price of agricultural products will also skyrocket as a result of the increase in pump price which is shifted to the consumer by traders who transport these products from the rural areas to the metropolis. Prices of other goods such as vehicle spare parts also skyrocket for the same reason.

Thus, the effects of increase in price of petroleum products (fuel) affect the entire sector of the economy adversely.

The above scenario necessitated an investigation to this an all important issue of petroleum product (fuel) pricing and its distribution as it shall be focus of this research study.

1.2       STATEMENT OF THE PROBLEM

The study intends to investigate the effect of price increase in petroleum product (PMS) on commercial vehicle transporters in Lokoja metropolis. The increase in petroleum products (PMS) price often result in an increase in fare charged by commercial transporters, this situation leads to general increase in price of goods and services, noticeable effect on transporters is that many commuters reduce their movement only to important or essential journey, thereby reducing the total sum normally earned in the transportation industry. The resultant effect includes, friction between commercial drivers and their

employers which may result in loss of job for the drivers and other antecedent effect to transportation industry as a whole. Problems identified above have exerted a lot of hardship on the people and economy of the country to the extent that the poor were the worst hit. The study suggested some means that could be put in place by government to ensure constant supply of PMS (premium motor spirit) and remove some of the bottlenecks to achieve effective and adequate public passenger transport service in Lokoja Metropolis.

1.3     SIGNIFICANCE OF THE STUDY

The study is beneficial to employers of commercial vehicle to educate them on the problems faced by drivers in the course of getting fuel for their transport activities, and enable effective evaluation attitude of commuters when increasing fares. This will reduce fictions between employers and employees concerning money delivered at the end of the day’s work and normalize strained relation often encountered by drivers and commuters.

The study is also beneficial to the government on its strategies towards controlling vehicle fare and efforts towards controlling activities of black marketers often associated with price hike of petroleum products.

It is also useful to the management of NNPC toward effective management of fuel distribution to reduce bottle neck often associated with petroleum (fuel) distribution from depots and atimes when bridging is employed.

The study serves as a useful resource for students of petroleum technology and those already in the field in developing their knowledge. The material contents of the study serve as a useful bibliography tool for further research works.

1.4     PURPOSE OF THE STUDY

The main aim of these study is to investigate the effect of price increase in petroleum product (PMS) on commercial vehicle transporters in Lokoja Metropolis.

The study also sought to identify effect of the price increase of petroleum product on inflation and the distribution of price of other products, commuters vehicle fares, to identify its effect on un-employment which lead to less consumption by consumers and ultimately lead to low capacity utilization and stagnate growth of the economy, it increase crime rate lead to more friction at home which can precipitate more marriage breakups and can further widen the gap between the poor and the greedy rich in the society.

1.5     RESEARCH HYPOTHESIS

For the purpose of this study, it is important that working hypothesis be formulated. To this end the following hypothesis are hereby proposed:-

1.     Hi: The increase in fuel price affect commuters in Lokoja Metropolis

Ho: The increase in fuel price does not affect commuter in Lokoja metropolis.

2.     Hi: Fuel price hike have effect on price of goods and services in

Lokoja Metropolis.

Ho: Fuel price does not have any effect on the price of goods and

services.

3.     Hi: Fuel price affect daily earnings of transport operators in

Lokoja Metropolis.

Ho: Fuel price does not affect daily earning of transport operators.

1.6     SCOPE OR DELIMINTATION OF THE STUDY

From the topic of research study, the interest is principally limited to the effect of price increase in petroleum product (PMS) on commercial vehicle transporters in Lokoja Metropolis. The target of this research study is the ABC Transport Company Plc and National Union of Road Transport Workers (NURTW) Lokoja terminal.

The study review how increase of petroleum products prices affect the ABC Transport Company and National Union of Road Transport Workers and it’s antecedents effect on commuters.

1.7     LIMITATION AND CONSTRAINTS

The problems encountered which are obvious today is lack of enough information and documents from the library and ABC Transport Company Plc Lokoja Terminal due to the level of corruption in the nation.

There are also another problem as the period of the project work is becoming more injurious. To crown it all, finance of the project is yet a barrier.

1.8     DEFINATION OF KEY CONCEPTS OR TERMS

–        Commuter – those who patronize commercial vehicle

–        petroleum products – petrol (PMS), Kerosine (DPK) Diesel (AGO), Engine Oil.

–        Subsidy – Money paid by government to make price lower

–        NNPC – Nigerian National Petroleum Corporation

–        SAP structural adjustment programme

–        GDP Gross Domestic product

–        PTF- Petroleum Trust Fund

–        IMF – International monetary fund

–        NPDC – Nigeria petroleum development company

–        PPMC – Pipeline & product marketing company

–        NGO -Nigerian Gas company

–        PHRC -Port Harcourt Refinery Company

–        PTD -petroleum tanker driver

–        OPEC – organizational of petroleum exporting company

–        PPPRC – Petroleum product (fuel) price Regulatory Committee

–        PEF – Petroleum Equalization fund