The Impact of Crude Oil Price Fluctuation on Revenue Generation in the Oil Dependent Economy: Nigeria

Augustine Adebayo Kutu and Abieyuwa Ohonba
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Augustine Adebayo Kutu: School of Economics, University of Johannesburg, South Africa

International Journal of Energy Economics and Policy, 2024, vol. 14, issue 5, 181-190

Abstract: This study explores the dynamic relationship between crude oil price volatility and revenue generation in Nigeria over a 41-year period from 1981 to 2021. It encompasses an analysis of key variables, including total revenue (REV), oil price (OPV), oil revenue (ORV), non-oil revenue (NRV), and exchange rate (EXCHR). The study employs the Auto Regressive Distributed Lags (ARDL) model to examine the long-term and short-term impacts of oil price volatility on revenue generation. This study reveals that crude oil price volatility (OPV) failed to exert strong impact on total revenue (REV) in Nigeria in the distance period. Oil revenue (ORV) exhibits a strong and positive influence on total revenue, highlighting its pivotal role in revenue generation. Non-oil revenue (NRV) also significantly contributes to total revenue, emphasizing the importance of diversifying revenue sources. Exchange rate (EXCHR) fluctuations do not significantly predict changes in total revenue. Based on the findings, policy recommendations include diversifying revenue sources, enhancing non-oil revenue collection, effective oil revenue management, promoting economic diversification, strengthening tax infrastructure, and adopting prudent budgeting practices.

Keywords: Crude Oil Price; Oil Revenue; Non-Oil Revenue; Exchange Rate; Auto Regressive Distributed Lags Approach (search for similar items in EconPapers)
JEL-codes: C22 E3 E61 (search for similar items in EconPapers)
Date: 2024
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