The Looming Petrol Price Hike as crude oil prices surge to $81.09 per barrel
The specter of rising petrol prices has once again reared its head, as crude oil prices surge to $81.09 per barrel. This marks a significant increase from last week’s $76 per barrel and exceeds the Nigerian government’s 2025 budget benchmark of $75. The inevitable consequence is a hike in the cost of premium motor spirit (PMS), which will ripple through every facet of the nation’s economy and further strain the pockets of ordinary Nigerians.
The Underlying Causes
The rise in crude oil prices is primarily attributed to geopolitical tensions, including sanctions on Russian oil exports, which have disrupted global supply chains. While these international developments are beyond Nigeria’s control, their effects are acutely felt at home. Brent crude, the global benchmark, dictates the landing costs of refined petroleum products, and the recent increase spells trouble for a nation that heavily depends on imported fuel.
Implications for Nigerians
The impending hike in petrol prices will exacerbate the economic challenges already faced by millions. With current pump prices ranging between N935 and N1,100 per litre, any further increase will drive up the cost of transportation, goods, and services. This comes at a time when inflation—already at a staggering 34.60 percent for November 2024—is eroding the purchasing power of households.
The effects are not theoretical; they are real and immediate. Data from Lagos depots reveal that the price of diesel, another critical energy source, has already increased by N70, now costing N1,120 per litre. This trend signals the likelihood of similar adjustments for petrol. For the average Nigerian, this means higher costs of living in an economy where wages remain stagnant and poverty levels are alarmingly high.
Promises vs. Reality
The Nigerian National Petroleum Company Limited (NNPCL) and Dangote Refinery’s recent announcements of ex-depot petrol price reductions brought temporary relief, with retail prices dropping to N935-N965 per litre from a peak of N1,040 per litre. However, this relief appears short-lived as global crude prices rebound. It raises the question: How sustainable are these price reductions in the face of volatile international markets?
The government’s reliance on market-based pricing for PMS has exposed the nation to the full brunt of global price fluctuations. While this policy aligns with economic reforms aimed at curbing subsidies, its timing and implementation have left citizens vulnerable to economic shocks without adequate safety nets.
A Call for Urgent Action
As the nation braces for another round of fuel price hikes, it is imperative for the government to take decisive steps to mitigate the impact on the populace. Short-term interventions could include targeted subsidies or cash transfers for the most vulnerable groups. In the long term, accelerating domestic refining capacity through projects like the Dangote Refinery and revamping existing refineries is critical to reducing reliance on imported fuel.
Additionally, the government must prioritize investments in public transportation and alternative energy sources to provide citizens with affordable and sustainable options. Without these measures, the cycle of petrol price increases and economic hardship will persist, undermining efforts to achieve inclusive growth and development.
The rise in crude oil prices and the resultant hike in petrol costs is yet another reminder of Nigeria’s precarious economic position. For a nation blessed with abundant oil resources, the irony of importing refined products at exorbitant costs is glaring. As Nigerians prepare to shoulder the burden of higher fuel prices, the government’s resolve to implement meaningful and sustainable reforms will be put to the test. The time for action is now—before the weight becomes unbearable for the average citizen.
Reference
Petrol price may rise as crude hits $81 per barrel