Critical Analysis of Petroleum Subsidies Implications on Nigeria's Economic Performance

This work critically analyzes the influence of petroleum subsidies on Nigeria's economic performance between 2014 and 2023. The impact of fuel subsidies on key economic indicators, including government expenditure, inflation, gross domestic product (GDP), and consumer demand were evaluated using secondary data from the National Bureau of Statistics (NBS), Central Bank of Nigeria (CBN), and the Nigerian National Petroleum Corporation (NNPC). Quantitative methods, including price elasticity of demand, descriptive statistics, and regression analysis were utilized.The results indicate a complex relationship between subsidies and the Nigerian economy, with subsidies contributing to fiscal strain, inflation, and inefficiencies in fuel consumption, while having a minimal positive impact on economic growth. A negative correlation was found between petroleum subsidies and GDP, indicating that the resources allocated to subsidies would have been better utilized in other sectors to promote economic development. Furthermore, the analysis highlights that subsidy removal often leads to significant shifts in fuel prices and demand, creating both economic and social challenges. The study concludes by providing policy recommendations to mitigate the negative socio-economic effects of subsidy removal.