THE EFFECT OF FUEL PRICE HIKE ON HOUSEHOLDS IN GOMBE STATE METROPOLIS

TOPIC IS SUITABLE FOR:
1-Department of Economics

2-Department of Sociology

3-Department of Business Administration

4-Department of Public Administration

TOPIC: THE EFFECT OF FUEL PRICE HIKE ON HOUSEHOLDS IN GOMBE STATE METROPOLIS

TABLE OF CONTENT

Abstract

CHAPTER ONE: INTRODUCTION

1.1 Background of the study

1.2 Statement of the problem

1.3 Research Objectives

1.4 Research Questions

1.5 Research Hypotheses

1.6 Scope of the study

1.7 Significance of the Study

1.8 Definition of Terms

CHAPTER TWO: LITERATURE REVIEW

2.0 Introduction

2.1 Conceptual Framework

2.2 Empirical Review

2.3 Theoretical Framework

CHAPTER THREE: RESEARCH METHODOLOGY

3.1  Research Design

3.2  Population, Sample and Sampling Techniques

3.3  Method of Data Collection 

3.4  Technique for Data Analysis 

3.5   Justification for Method

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.0 Introduction

4.1 Presentation of Data

4.2 Analysis of Research Questions

4.3 Test of Hypotheses

4.4 Discussion of Findings

CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.1 Introduction

5.2 Summary of the Study

5.3 Conclusion

5.4 Recommendations

5.5 Limitations of the Study

5.6 Suggestions for Further Studies

Reference

Appendix

ABSTRACT
This study assessed The Effect of Fuel Price Hike on Households in Gombe State Metropolis”. The study was guided by four objectives: to assess the impact of fuel price hikes on household expenditure, examine how fuel price increases affect household income levels, evaluate the effects of fuel price hikes on changes in household energy consumption, and explore the relationship between fuel price hikes and household standard of living. A descriptive survey design was employed to achieve these objectives. The target population consisted of residents of Gombe metropolis, which has an estimated population of about 596,000. Using Taro Yamane’s formula at a 95% confidence level, a sample size of 400 respondents was determined, with stratified and convenience sampling techniques adopted to ensure fair representation across communities. A structured questionnaire was the primary instrument for data collection, and 380 valid responses were retrieved and analyzed. Descriptive statistics such as frequencies, means, and standard deviations, along with inferential statistics including multiple regression analysis, were used for data analysis via SPSS. The results showed significant impacts with R² values of 0.422, 0.395, 0.381, and 0.433 for the effects on household expenditure, income levels, energy consumption, and standard of living respectively, all with p-values of 0.000, indicating strong statistical significance at 5% level. The study concludes that fuel price hikes substantially burden households by increasing expenditure, suppressing real income, shifting energy usage to less sustainable options, and lowering overall living standards. It is therefore recommended that government should implement targeted subsidies, employers should adjust wages in line with inflation, investments should be made in affordable public transportation, and renewable energy alternatives should be promoted to cushion the adverse effects on household welfare.

CHAPTER ONE

INTRODUCTION (Preview)

1.1 Background of the Study

The impact of increases in fuel prices on households in Nigeria has garnered considerable attention in both scholarly and policy circles, especially in light of the nation's substantial dependence on petroleum products for energy and transportation (Uche, & Onyeka, 2021). Nigeria, recognised for its significant oil production, has a longstanding practice of subsidising fuel prices to alleviate the economic pressures faced by its populace. Nonetheless, variations in international oil prices and local economic strategies frequently result in abrupt hikes in fuel costs, which have significant implications for families (Okafor & Nwosu 2023).

Increases in fuel prices have a direct effect on household finances, leading to higher transportation costs and subsequently raising the prices of goods and services due to elevated production and distribution expenses. Nwosu and Okonkwo (2024) emphasise that fluctuations in pump prices have a considerable impact on petrol consumption trends, subsequently affecting household expenditures on vital goods. The research carried out in Owerri Municipal, Imo State, indicates that households frequently opt to cut back on non-essential spending in response to the rising fuel costs. In a similar vein, Ajayi (2023) highlights that urban households in Southwest Nigeria face significant vulnerability to fuel price increases, largely because of their dependence on petrol for transportation and generator operation amid inconsistent electricity supply. This reliance intensifies the economic pressure on families, compelling them to redistribute their scarce resources.

The implications of rising fuel prices on welfare are significant, especially for households with limited income. Maku et al. (2023) contend that there is a direct relationship between the prices of petroleum products and human welfare, noting that increased fuel costs diminish disposable income and restrict access to essential needs like food, healthcare, and education. This is further supported by Nkang (2023), who observes that fluctuations in oil prices have a disproportionate impact on agricultural households, which make up a considerable segment of Nigeria's population. The consequences of rising fuel prices are far-reaching, impacting food prices as the costs associated with transporting agricultural products increase. This situation contributes to heightened food insecurity and a decline in household welfare.

Furthermore, the removal of fuel subsidies, which frequently precedes increases in fuel prices, has sparked considerable debate in Nigeria. Inegbedion et al. (2024) examine the implications of subsidy removal, highlighting its role in intensifying the economic strain on households, especially in a nation where a significant portion of the populace resides beneath the poverty threshold. Their findings indicate that increases in fuel prices due to the removal of subsidies result in a decrease in household consumption expenditures, as families focus on essential needs rather than discretionary spending. This supports Ogede's (2024) claim that fluctuations in oil prices lead to considerable alterations in household consumption behaviours, carrying long-term consequences for economic stability.

The relationship between fuel prices and household welfare is further nuanced by Nigeria's socio-economic dynamics. Ani et al. (2021) investigate the implications of partially removing fuel subsidies on household welfare, highlighting that such policy actions frequently result in significant discontent and economic challenges. Omotosho (2024) notes that fluctuations in fuel prices lead to macroeconomic instability, which subsequently affects households through inflation and diminished purchasing power. Agboje (2023) emphasises the consequences of eliminating fuel subsidies on household welfare, contending that it has a disproportionate impact on low-income families, who allocate a greater share of their income to transportation and energy expenses.

The repercussions of rising fuel prices on Nigerian households extend beyond mere financial strain, influencing consumption behaviours, welfare levels, and contributing to broader economic instability, all of which are intricately woven into the nation's socio-economic landscape. The current body of research, featuring contributions from Nwosu and Okonkwo (2024), Ajayi (2023), and Maku et al. (2023), establishes a strong basis for comprehending the complexities of this matter. Nonetheless, the ongoing difficulties encountered by households in adjusting to variations in fuel prices underscore the necessity for ongoing investigation and policy measures to alleviate the negative impacts on at-risk communities, hence the need for this study.

1.2 Statement of the problem

The ongoing variability and regular increases in fuel prices in Nigeria have consistently posed a significant challenge for families throughout the nation. Considering the importance of petroleum products in everyday use and transportation, any rise in fuel prices inevitably leads to a chain reaction affecting household spending, economic stability, and general well-being (Okafor & Nwosu 2023). In recent years, the elimination of fuel subsidies and the resulting hikes in pump prices have intensified financial strains on households in Nigeria, compelling many to adjust their already limited resources to manage escalating energy expenses. This issue is especially troubling in a nation where a large segment of the population exists beneath the poverty threshold and where available income is constrained (Ajayi 2023).

The increasing price of fuel has a direct effect on household spending in various aspects. To begin with, elevated fuel prices result in higher transportation expenses, which in turn impacts daily commuting as well as the costs of goods and services (Ogede, 2024). The rising costs of public transport, which serves as a crucial mode of mobility for many Nigerians, restrict access to employment, education, and vital services. Households dependent on private vehicles face heightened fuel expenses, which in turn limits their disposable income (Nkang 2023). The impact reaches food prices and other vital goods, as companies and suppliers transfer elevated transportation expenses to consumers, resulting in heightened inflation and diminished purchasing capacity.

Eze et al. (2023) indicate that, in addition to transportation, increases in fuel prices have considerable effects on household energy usage. A significant number of households in Nigeria, especially in urban regions, depend on generators powered by petrol and diesel because of the inconsistent electricity supply from the national grid (Eze et al., 2023). The rise in fuel prices escalates the operational costs of these generators, consequently rendering alternative energy sources less economically viable. This leads to a decrease in electricity consumption, impacting essential household functions like lighting, refrigeration, and electronic communication access (Agboje, 2023). In rural and semi-urban areas, where alternative sources such as firewood and charcoal are already limited or costly, the economic strain on households becomes increasingly evident.

Furthermore, the unequal effects of rising fuel prices on households with lower and middle incomes highlight significant issues regarding socioeconomic disparities (Akinyemi & Adepoju, 2023). While affluent households may manage the increased expenses with little alteration to their lifestyle, families with limited financial resources frequently face challenging decisions, such as reducing spending on vital needs like healthcare, education, and healthy food. This intensifies pre-existing economic weaknesses and broadens the divide among various socioeconomic groups, complicating the path for impacted households to attain financial stability (Ibrahim, & Mohammed, 2023).

The effects of rising fuel prices on households in Nigeria are further exacerbated by insufficient wage adjustments and a lack of effective social protection measures (Maku, Adetowubo-King, & OyeladeAduralere, 2023). In contrast to certain economies that routinely assess wage structures to align with inflationary trends, a significant number of workers in Nigeria, particularly those in the informal sector, face stagnant earnings. Consequently, household incomes fail to align with the escalating costs of living, resulting in heightened financial strain. This situation necessitates immediate academic scrutiny to explore the distinct impacts of rising fuel prices on various household types, the strategies employed to cope, and possible policy measures to alleviate negative consequences (Akinyemi, et al., 2023).

Despite thorough discussions regarding the economic implications of fuel price fluctuations, a significant gap persists in empirical research that specifically examines how households manage these challenges within Nigerian. While research like Nwosu and Okonkwo (2024) and Ajayi et al. (2024) investigates the wider economic impacts of fluctuations in fuel prices, it is essential to conduct more localised studies that focus on household-level reactions. Comprehending how fluctuations in fuel prices impact various household demographics will yield crucial insights for decision-makers, allowing them to formulate more precise interventions that cater to the actual circumstances of families in Nigeria. It is on this backdrop that this study will investigate the effect of fuel price hike on households in Nigeria.

1.3 Research Objectives

The primary objective of this study will be to critically assess the effect of fuel price hike on households in Gombe metropolis. Specific objectives of this study will be to:

i.Assess the impact of fuel price hikes on household expenditure in Gombe metropolis.

ii.Examine how fuel price increases affect household income level in Gombe metropolis.

iii.Evaluate the effects of fuel price hike on changes in household energy consumption in Gombe metropolis.

Iv.Explore the relationship between fuel price hikes and household standard of living in Gombe metropolis

Other parts of chapter one include:
1.4 Research Questions

1.5 Research Hypotheses

1.6 Scope of the study

1.7 Significance of the Study

1.8 Definition of Terms

CHAPTER TWO

LITERATURE REVIEW (Preview)
This chapter critically examines relevant literature that would assist in explaining the research problem and, furthermore, recognizes the efforts of scholars who had previously contributed immensely to similar research. The chapter intends to deepen the understanding of the study and close the perceived gaps. This chapter therefore, focuses on fuel and the nigerian petroleum sector, concept of price hike, trends of fuel price adjustment in Nigeria from 1973 – 2023, causes of fuel price hikes, etc. The chapter covers the following subheadings:

2.1 Conceptual Framework

2.2 Theoretical Framework

2.3 Empirical Studies

2.4 Appraisal of Literature

CHAPTER THREE

RESEARCH METHODOLOGY (Preview)
Research Design: The study adopted a descriptive research design.

Population of the Study: The population of the study comprises residents of Gombe metropolis, Gombe State, Nigeria.

Sample Size Determination: The study adopted the Taro Yamane formula to determine a sample size of 400 participants.

Sampling Technique: The study employed a stratified sampling technique to group respondents according to communities, while convenience sampling was used to select individual respondents.

Research Instrument: The study utilized a structured questionnaire as the instrument for data collection.

Methods of Data Analysis: The collected data were analyzed using frequencies, percentages, means, and standard deviations to summarize and present the demographic characteristics of the respondents and their responses. Inferential statistics, such as ANOVA and multiple regression, were used to test the hypotheses.

CHAPTER FOUR; DATA PRESENTATION, ANALYSIS AND INTERPRETATION

MAJOR FINDINGS (Preview)

The analysis results were presented in tables. Based on the results obtained from the analysis, the following findings are made:

i. The study found that fuel price hikes have significantly increased household expenditure in Gombe metropolis, as evidenced by mean scores ranging from 3.13 to 3.34, which are above the cutoff mean of 2.50. This was further confirmed by the result of the corresponding hypothesis test, which showed an R-value of 0.705, R-square of 0.497, F-value of 239.48, t-value of 15.48, and p-value of 0.000 (p < 0.05), leading to the rejection of the null hypothesis. This implies that rising fuel prices significantly increase household expenses, particularly transportation costs, food prices, and other essential expenditures, thereby placing considerable financial pressure on households.

ii. The study found that fuel price increases have significantly affected household income levels in Gombe metropolis, as evidenced by mean scores ranging from 3.16 to 3.32, which are above the cutoff mean of 2.50. This was further confirmed by the result of the corresponding hypothesis test, which showed an R-value of 0.682, R-square of 0.465, F-value of 205.42, t-value of 14.33, and p-value of 0.000 (p < 0.05), leading to the rejection of the null hypothesis. This implies that rising fuel prices contribute to household income pressure by reducing savings, increasing business and transportation costs, limiting profit margins, and making it more difficult for households to meet basic expenses.

iii. The study found that fuel price hikes have significantly affected household energy consumption patterns in Gombe metropolis, as evidenced by mean scores ranging from 3.00 to 3.21, which are above the cutoff mean of 2.50. This was further confirmed by the result of the corresponding hypothesis test, which showed an R-value of 0.658, R-square of 0.433, F-value of 185.03, t-value of 13.61, and p-value of 0.000 (p < 0.05), leading to the rejection of the null hypothesis. This implies that households have adjusted their energy consumption by reducing generator and electricity usage and switching to more affordable alternatives, such as firewood and charcoal, to cope with increased fuel costs.

iv. The study found that fuel price hikes have a significant relationship with household standard of living in Gombe metropolis, as evidenced by mean scores ranging from 3.11 to 3.34, which are above the cutoff mean of 2.50. This was further confirmed by the result of the corresponding hypothesis test, which showed an R-value of 0.694, R-square of 0.482, F-value of 219.26, t-value of 14.81, and p-value of 0.000 (p < 0.05), leading to the rejection of the null hypothesis. This implies that rising fuel prices have worsened household living conditions by reducing affordability of food, healthcare, education, savings, and leisure activities, thereby making it more difficult for families to maintain a decent standard of living.

CHAPTER FIVE:  SUMMARY, CONCLUSION AND RECOMMENDATIONS

This chapter covers the following outline:
5.1 Introduction

5.2 Summary of the Study

5.3 Conclusion

5.4 Recommendations

5.5 Limitations of the Study

5.6 Suggestions for Further Studies

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