Table of Contents
This paper examines the question as to whether crude oil resource is a blessing or curse to Nigeria. Since the discovery of crude oil in Nigeria the economy of Nigeria has improved, increasing the GDP through the sales of oil barrels abroad. The paper observes that the blessings from crude oil resource in Nigeria at large takes the form of increased government revenues, increased export earnings, the attendant improvement, opportunities and linkage effects in the economy. However the paper is majorly going to focus on the variables between the increased GDP and the increase poverty level. This paper is of the view that crude oil resource is more of curse than a blessing to the Nigerian economy.
The origin of oil exploration and exploitation started in 1859, where the first oil well was drilled by Edwin L. Darke. This was the first time crude oil was discovered in commercial quantity at Oloibiri in the present day Bayelsa State in Nigeria (Tamuno, 2006). However, serious and sustained efforts did not happen until Shell Darcy Petroleum Company commenced operation in 1956. As the local demand for these products increased, two major oil companies - Shell and British Petroleum - formed a 50/50 joint venture refining company in Nigeria: The Nigerian Petroleum Refining Company (NPRC) in 1960. The NPRC built a 38,000b/d refinery at Alesa-Eleme near Port-Harcourt to refine local crude (Tamuno, 2006).The impact of crude oil in the Nigerian economy has a paradoxical effect in the sense that it should have only positive impact on the economy and the population, but this is not the case. Wealth generated by oil revenues has not passed down to the citizens of Nigeria: around 70% of the population still lives below the poverty line. For many years Nigeria’s oil industry has been plagued by corruption and mismanagement. The United Nations has estimated that as a result of corruption, 80% of energy revenues in the country only benefit 1% of the population (United Nations, 2003). This topic was chosen specifically to analyze the changes the economy has had from the time the crude oil was found till now and why the economy is not growing and developing as it should. From the graphs below one can see the increase in the GDP of the economy and would expect that the poverty level should decrease as a result but that is not the case because as the GDP increases so does the poverty level. This paper is going to analyze effect of crude oil on the Nigerian economy. We examine the correlation between fuel exports and GDP per capita growth, and poverty headcount ratio between 1960 and 2012. The central-question is: How did crude oil affect the economic growth and the poverty of Nigeria?
- Quote paper
- Bachelor of Arts Nico Grünewälder (Author), 2013, The Impact of Crude Oil in Nigeria. A Blessing or a Curse?, Munich, GRIN Verlag, https://www.grin.com/document/314354