The Paradox of Oil Abundance and Fuel Scarcity in Nigeria: An Empirical Investigation

Authors

  • Kagarura Willy Rwamparagi Kabale University, Plot 364 Block 3 Kikungiri Hill, Kabale Municipality, P.O Box 317, Kabale, Uganda
  • Nahabwe Patrick Kagambo John Kabale University, Plot 364 Block 3 Kikungiri Hill, Kabale Municipality, P.O Box 317, Kabale, Uganda
  • Byaruhanga Stephen Rwaheru School of Science and Engineering, Atlantic International University, Pioneer Plaza, 900 Fort Street Mall 905, Honolulu, Hawaii 96813, USA and Kabale University, Plot 364 Block 3 Kikungiri Hill, Kabale Municipality, P.O Box 317, Kabale, Uganda

DOI:

https://doi.org/10.63002/asrp.304.1021

Keywords:

ARIMA, oil abundance, fuel scarcity, Nigeria

Abstract

We empirically investigate the paradox of oil abundance and fuel scarcity in Nigeria, a nation that ranks among the world’s leading oil producers. Despite its vast hydrocarbon reserves, Nigeria faces chronic fuel shortages, raising fundamental questions about efficiency and sustainability of its energy consumption patterns. Using quarterly time-series data from the World Bank spanning 1990 to 2024, we apply Autoregressive Integrated Moving Average (ARIMA) modeling approach to analyze and forecast fossil fuel energy consumption (% of total), the study’s dependent variable. Autoregressive and moving average components are the independent variables. Model estimation via conditional least squares (CLS) reveals a statistically significant negative coefficient for MA(4) at -0.999984, suggesting a near-complete dampening effect of past shocks in the fourth lag period. AR(1) coefficient of 0.870696 indicates that approximately 87% of the current consumption levels are explained by the immediate past, underscoring a high degree of persistence in fossil fuel usage. Diagnostic checks confirm robustness of the model, exhibiting covariance stationarity, invertibility, and absence of serial correlation. Forecasts from 2025 to 2050 show a sustained increase in fossil fuel energy consumption, projected to rise from 55.7% in 2025 to 63.2% by 2050. Our findings highlight structural inefficiencies and policy disconnects in Nigeria’s energy sector. We recommend urgent reforms in energy governance, enhanced domestic refining capacity, and a phased transition toward sustainable energy sources to resolve the paradox of abundance amidst scarcity.

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Published

26-07-2025