IMPACT OF FUEL PRICE ON TRANSPORTATION COST IN NIGERIA

Abstract

Transportation is a fundamental driver of economic development and social mobility in any country. Over the past two decades, fuel price fluctuations especially for Premium Motor Spirit (PMS), commonly known as petrol have remained a critical issue in the Nigerian economy, largely due to recurring fuel subsidy removals, This study, therefore, seeks to bridge that knowledge gap by applying statistical tools such as frequency analysis, regression, and chi-square testing to examine the actual impact of fuel price increases on transportation costs in Nigeria. The study uses secondary data of fuel price and transportation cost from 25 fuel stations and 13 transport companies also from the internet and employed a descriptive survey research design with statistical components. This design allows the use of inferential statistical methods such as chi-square, correlation, and regression analyses. The result revealed the trend of fuel prices in Nigeria from 2020 to 2024 shows gradual increase from 2020 to 2023, followed by a sharp surge in 2024, which can be attributed to the removal of fuel subsidies and market deregulation. Also the trend of fuel price, cost of transport (intra city and inter-city) has a strong upward trajectory for all three variables, with a notable spike in 2024. It was further discovered there exist a strong and positive relationship between fuel price and transportation cost across Nigeria. This was evident in the correlation coefficient (r = 0.81), indicating a high degree of association. Furthermore, regression analysis showed that a ₦1 increase in fuel price leads to an average increase of ₦9.50 in transportation fare. Analysis of respondents opinions on the impact of fuel price on daily cost of transportation revealed workers reported the strongest agreement (78%) with the highest mean of 3.9 that fuel price increases daily transport costs then followed by traders with agreement of (75%), then students had slightly lower agreement of (67%). On coping strategies adopting cheaper transport alternatives (e.g., buses instead of taxis, carpooling) was the most common strategy (66%), reducing non-essential trips was reported by 59.3% of respondents, trekking or carpooling was also common (55%), especially among students (65%). using motorcycles or bicycles was the least frequent coping strategy (29%), mainly in rural or semi-urban areas. The overall mean (M = 3.81, SD = 0.89) indicates that respondents generally agreed they actively adopt coping strategies when fuel prices increase. The study therefore concludes that fuel price is a dominant and statistically significant determinant of transportation cost in Nigeria