Impact Of De-Regulation Of The Down-Stream Oil Sector On Economy

INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Petroleum products supplied have always been an acid test that is, a way of deciding whether something is successful to successive government in
Nigeria. With the new democratic dispensation, the supply and distribution of petroleum products improved but this was without a price- frequent increase in petroleum products prices. Few months to end the regime, the ugly incidence of petroleum scarcity surface again and one begin to wonder if there is any solution to this problem.
The combined impact of erratic and inadequate supply and unending price increases have brought untold hardship to the citizen and worse too, prevented economic recovery as promised by the present democratically elected government, given that capacity utilization in the manufacturing sector nose-dives, due to shortage of individual products. Indeed many industries have been compelled to close, due to non availability of some these product.
In a bid to solve the problem in many developing countries, structural reform of petroleum markets has become a critical component of macroeconomic liberalization policies. Unexpectedly, the outcome of the deregulation would give room for competition which would transform to price reduction and excellent supply and distribution of the deregulation exercise, critically appraising its impact on petroleum pricing, consumption and the general living standard of the people.

1.2 STATEMENT OF THE PROBLEM
Historically, the major petroleum marketing companies were the main sources of petroleum products supply. The companies transported and distributed the produced relying on their distribution and retail outlets.
This was an era of deregulation To which Nigeria paid market determined prices for products.
The Nigerian economic activities expanded the seventies such that private companies could not be able to cope with increase demand for products. The storage was endemic on regularly found among a particular group and create social and economic dislocation in the country. The market failure made government to venture into petroleum product marketing a-d distribution.

1.3 OBJECTIVE OF THE STUDY
The purpose of this study is to appraise, the deregulation exercise that was carried out in the Nigerian downstream oil sector. The specific objectives of this study are:
1. To evaluate the pattern of petroleum prices in Nigeria.
2. To examine the consumption pattern of petroleum products before and after the deregulation.
3. To examine the impact of the deregulation of downstream oil sector on petroleum products pricing in Nigeria.
4. To explore the reasons why deregulation has not yielded the desired result in terms of price and supply.

1.4 RESEARCH QUESTION
The following questions were designed for this study?
1. Is there any relationship between product prices and de-regulations?
2. To what extent has the de-regulation of the downstream oil sector impacted on petroleum products pricing in Nigeria?
3. How has the de-regulation exercise impacted on the consumption pattern of petroleum products in Nigeria?
4. What is the pattern of petroleum products pricing in Nigeria over the year?
5. How does the regulated downstream sector differ from the de-regulated era?
1.5 THE SIGNIFICANCE OF THE STUDY
This study shall be found useful by all citizens of the country as well as policy makers and individuals affected by the scourge of de-regulation.
It shall also be found valuable by ideologists and government agencies as well as NGOS saddled with the responsibility of national citizens orientations, ethnic nationalities, and scholars with interest in similar areas of study will equally find this report very useful.
The study will also serve as a point of reference to students in higher institutions and as a point of reference for further studies.

1.6 SCOPE OF THE STUDY
The study seeks to investigate the effect of the deregulation on the prices and consumption of petroleum products as well as its impact on the living standard of Nigerians. The empirical analysis restricted to the period between 1986 and 2010 because, it was during that period that policy was implemented.

1.7 LIMITATIONS OF THE STUDY
The limitations of this study lie in the under listed constraints:
a. There were insufficient journals and textbooks on this topic which led to scanty information that subsequently affected the literature review. However, the researcher made’ use of the available ones.
b. There was non-existence of already made research work on this topic hence the researcher encountered difficulties in the course of carrying out this research work.
C. Time and duration of this project work was too short and this adversely affected the research work.
d. Lack of finance was also one of the limitations faced by the researcher during the time of conducting this research work.
e. Lastly, another major constraint was inadequate co-operation by the respondents which reduced the amount of data collected.

1.8 DEFINITION OF THE TERM
DE-REGULATION: this is a process of freeing a trade, a business activity e.t.c from rules and controls.
OIL: A thick liquid that is found in rock under ground
SECTOR: A part of an area of activity, especially of a country economy.
ECONOMY: The relationship between production, trade and the supply of money in a particular country or region.
OIL SUBSIDY: Money that is paid by a government to reduce the cost of services or of producing oil so that their prices can be kept low.

1.8 OPERATIONAL DEFINITION OF TERMS
De-regulation is described as the process of government limiting its control in a sector or means of economical production.
De-regulation is refers to as system in which government lackens (not putting adequate attention laws of control in business or outright withdrawal from it.
Deregulation is characterized by privatization and government selling off her shares in major companies and government bodies are then set to regulate, supervise and control private participation.

2.9 HISTORY OF ORGANIZATION OF STUDY
Nigeria National petroleum corporation (NNPC) was established on April 1,1977 as a merger of the Nigerian National oil corporation and the Federal ministry of mines and steel. NNPC by law manager the joint venture between the Nigeria federal government and a number of foreign multinational corporations, which include Royal Dutch shell, Agip, Exxonmobil, chevron, and Texaco (now merged with chevron). Through collaboration with these companies, the Nigerian government conducts petroleum exploration and production.
In 2007, the need of the Nigerian wing of transparency, international said salaries for NNPC workers were too low to prevent graft.
The Nigerian national petroleum corporation (NNPC) lowers in Abuja is the headquarters of NNPC. Consisting for four identical towers, the complex is located on Herbert Macaulay way, central business district Abuja. NNPC also has zonal offices in Lagos, Kaduna, portharcourt and warri. It has an international office located in London, united kingdom.