PROJECT TOPIC

TIME SERIES ANALYSIS ON PRICE OF PETROLEUM THAT

AFFECT THE PRICE OF FOOD ITEMS IN NIGERIA FROM 2022 T0
2024
(A CASE STUDY OF NNPC BAUCHI STATE).

HND II

Khalid ABDULLAHI MUHAMMAD

21/5311/0010

SUPERVISED BY
HAJIYA HINDATU ABDULRAHIM

July, 2024
 CHAPTR ONE: INTRODUCTION
1.1 Background of the study
1.2 Statement of the study
1.3 Objectives of the study
1.4 Research Questions
1.5 Significance of the study
1.6 Scope of the study
1.7 Operational Definition of Terms
CHAPTER TWO: LITREATURE REVIEW
2.1 Conceptual Framework
2.2 Theoretical Framework
2.3 Empirical studies
CHAPTER THREE: METHODOLOGY
3.1 Research Design
3.2 Population of the Study
3.3 Sample Size and Sampling Techniques
3.4 Source of Data and Method of Data Collection
3.5 Data Collection Instrument
3.6 Method of Data analysis

CHAPTER FOUR: DATA PRESETATION AND ANALYSIS

4.1 Introduction
4.2 Data presentation
4.3Discussion of findings
CHAPTER FIVE: SUMMARY, CONCLMEION AND RECOMMENDATION
5.1 Summary
5.2 Conclusion
5.3 Recommendations
References
Appendix
 CHAPTER ONE

INTRODUCTION

1.1 Background of the study

The search of oil in Nigeria started as early as 1937, but the discovery was not until 1956. The

sole of petroleum products began in December 1957, managed by a consortium of Royal Dutch

Shell and British Petroleum BP Now known as Shell Petroleum Development Company SPDC.

G.A, Aga (1993) stated that Nigeria was the second oil producing nation in Africa after Libya and

sixth in the world. In May 1971, the Nigeria National Oil Company was established under the

company and Allied matter Act of 1958 as applicable then. NNOC was the government Agency

Mandated by law to engage in all phases of oil production and sales, NNOC was later in 1977

amalgamated into a full flex ministry of petroleum to form the Nigeria National Petroleum

Corporation (NNPC), which is in partnership with several oil company from different countries

operating in Nigeria. Before October 1965, Nigeria Crude Oil was refined overseas and all the

processed oil needs were imported. The first refinery plant came into operation in 1965 located at

Alesa Eleme near Port-Harcourt. Later Warri and Kaduna Petro-chemical refineries were

established in 1978 and 1980 respectively. Similarly, Pipeline and Products Marketing Company

Ltd (PPMC) Enugu Depot was commissioned in 25 August 1975 by the then military Governor of

the old Anambra State; Colonel D.S. Abubakar.

The last was the second refinery in Port-Harcourt. It is however worthy to note that NNPC has

several subsidiary companies e.g. Pipeline and Product Marketing Company (PPMC). The

NNPC‟s role in OilnnotIndustryhandleditalone.Thisisthereason Muchmore that establishment of

subsidiary company like pipeline and Products Marketing Company Ltd (PPMC). The Nigerian

National Petroleum Corporation manages the affairs of the oil industry in Nigeria, while the
PPMC under the corporation is in charge of sales of petroleum products.

Government policy on oil matter such sales is been conveyed by the Petroleum Products Price

Regulatory Agency (PPPRA) currently headed by Alhaji Gbalamosi. NNPC therefore, works in

conjunction with PPPRA to implement government policy such as prices of petroleum products.

Nigerian National Petroleum Corporation carries out its function as such in both local and

international.

Time series is the name given to the values of some statistical variables measured over a

uniform set of time points which may represent the historical performance of some economic or

business variable. Examples of time series are total monthly sales receipts in a departmental

store, total monthly sales of petroleum products, total monthly production by company, and

consumption of electricity in kilowatts data on population motor registration. This research

work is focused on investigating the monthly sales of petroleum products by Nigerian National

Petroleum Corporation for the past eight years (1996 to 2003) and to construct an autoregressive

model of a suitable order for the process.

Oil is a major source of energy in Nigeria and the world in general. Oil being the mainstay of

the Nigerian economy plays a vital role in shaping the economic and political destiny of the

country. Although Nigeria’s oil industry was founded at the beginning of the century, it was not

until the end of the Nigeria civil war (1967 - 1970) that the oil industry began to play a

prominent role in the economic life of the country (Gbadebo Odularu, 2009). Nigeria can be

categorized as a country that is primarily rural, which depends on primary product exports

(especially oil products). Since the attainment of independence in 1960 it has experienced

ethnic, regional and religious tensions, magnified by the significant disparities in economic,

educational and environmental development in the south and the north. These could be partly
attributed to the major discovery of oil in the country which affects and is affected by economic

and social components.

Crude oil discovery has had certain impacts on the Nigeria economy both positively and

adversely. On the negative side, this can be considered with respect to the surrounding

communities within which the oil wells are exploited. Some of these communities still suffer

environmental degradation, which leads to deprivation of means of livelihood and other

economic and social factors. Although large proceeds are obtained from the domestic sales and

export of petroleum products, its effect on the growth of the Nigerian economy as regards

returns and productivity is still questionable, hence, the need to evaluate the relative impacts of

crude oil on the economy (Kehinde, 2010).

The effect of prices of petroleum products on food items and the economy of Nigeria cannot be

over emphasized.Petroleum products range from aviation fuel to kerosene just to mention a few,

this is solely due to the lack of diversification of the economy. 85% of Nigeria gross domestic

product (GDP) is being accounted for by the petroleum sector (Mahmud 2009). Before the

discovery of crude oil in the early 70’s, agriculture was the main driver of the economy which

has helped in the country’s development in these periods, there was hardly any incident to hike

of products and services. The price stability of food items is of utmost importance to every

nation that wants to witness growth; this is because it is only a healthy workforce that can give

out their best in terms of work and productivity. Overtime there may have been some arguments

about the relationship between petroleum prices and price index of food items. Some school of

thought opined that prices of petroleum prices has nothing to do with prices of food items,

questioning the agricultural stakeholders and traders for massive exploitation during price

instability of petroleum products while the other school of thoughts are of the opinion that
petroleum products does affect the prices of food items. Petroleum is believed to have an

enormous bad wagon effect on the economy and even agricultural products this normally occurs

in the economies of the West Africa sub-region which isn’t often diversified. For any oil

producing nation that doesn’t want to know poverty of its masses then they must have to

diversify their economy so as to prevent crises in one sector of the economy spilling over to the

other sectors.

Food items are an essential commodity for a healthy nation, the supply of food to any nation

must be done without anyform of compromise as anything less than an adequate planning will

lead to shortage in food supply which could affect the economy of the nation. Every meaningful

government should always ensure that adequate food supply remains untouched as such

shouldn’t be affected by either petroleum.

1.2 Statement Of Problem

Over the years, the frequent review of prices of petroleum products has gain a space in

the heart of Nigerians, and most of the time, the out of stock of petroleum products at depot for

sales is also rampart. In view of the above statement, the project examines time series analysis

on price of affected food items in Nigeria monthly sales of petroleum products in Nigeria

National Petroleum Corporation in Enugu State and build a stochastic model for the data

obtained.

The fluctuation of agricultural food items in Nigeria has been a concern for some time

now which is not good for a growing economy like ours. A nation that plays with its agricultural

sector is a nation that would encounter shortage of food supply which may not pan out for a

populous country like Nigeria. The problem of hike of food items each time there is a little

change in the prices of petroleum items has led us to this study.

1.3 Objectives Of Study

1. To determine the stationary of sales of petroleum products.

2. To construct an autoregressive model of a suitable order for the process.

3. To forecast the series for sales in 2004 quarters.

4. To make recommendation based on the findings of the research

1.5. Research Questions

1 Is there a relationship between the prices of petroleum prices and the prices of food items?

2 What nature of relationship exists between petroleum and food items prices?

3 What are the ways one can ensure food security in Nigeria.

4 Do the prices of petroleum prices and prices of food items affect the economy?

1.6. Research hypothesis

H0: there is no significant relationship between the prices of petroleum products and the prices

of food items.

H1: there is a significant relationship between the prices of petroleum products and the prices of

food items.

1.7. Scope of the study

This study is on the analysis on the prices of petroleum on the price of the food items from 2020

to 2024

1.8. Limitations of the study

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in

sourcing for the relevant materials, literature or information and in the process of data

collection.

Time constraint- The researcher will simultaneously engage in this study with other academic
work. This consequently will cut down on the time devoted for the research work.

1.9. Definition of terms

Petroleum: Crude oil, commonly known as petroleum, is a liquid found within the Earth

comprised of hydrocarbons, organic compounds and small amounts of metal. While

hydrocarbons are usually the primary component of crude oil, their composition can vary from

50%-97% depending on the type of crude oil and how it is extracted.

Economy: economy encompasses all activity related to production, consumption and trade of

goods and services in an area. The economy applies to everyone from individuals to entities

such as corporations and governments. The economy of a particular region or country is

governed by its culture, laws, history, and geography, among other factors, and it evolves due to

necessity.