Title:
CRUDE OIL PRICE FLUCTUATION AND THE NIGERIAN ECONOMY

Authors:
Apere ,T.O and Eniekezimene, A.F

Abstract:
Fluctuation in oil prices has been occurring since the end of the Second World War. These days, the rate of fluctuation in oil price is more pronounced. This has made serious impact on Nigeria as a country practicing a mono cultural economy. This work thus examines the Crude Oil Price Fluctuation and Nigerian Economy (1981-2013), a period of 32 years. Using the VAR Model (VAR) the impact of oil price fluctuation on the economy of Nigeria was examined. In the model, the results shows that changes in oil price has a significant impact on the Nigerian economy (gross domestic product) used in this study. From the regression result, oil prices show positive relationship with GDP. In order to explain the three key variables (crude oil price, exchange rate and gross domestic product) employed in this study, the researcher discovered that a decrease in oil prices have a negative impact on the GDP and also fluctuation in exchange rate has both negative and positive impact on crude oil price and the GDP. Thus, the need to diversify the economy is the paramount issue, so as to strengthen the economy even without oil. Nigerian policy makers are being advised to save more when oil price increases so as to assist developmental expenditures and also to encourage investment when oil price falls.