Evaluating the Nexus Between Crude Oil Price, Natural Gas Price and Electricity Tariff: Evidence From Nigeria

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Abstract Background The responsibility for transformation of Nigeria’s socioeconomic milieus is on the heels of required performance of her energy resources particularly the trio of crude oil, natural gas and electricity. However, the question is whether there is relationship between the market prices of these energy resources and whether the energy resources prices could have significant negative and or positive effects on each other thereby stimulating a new possible equilibrium. Methods It is therefore set out to achieve this objectives by adopting time series data of the trio resources between 1980 and 2021, analyzed using Bound test approach of Autoregressive Distributed Lag (ARDL), Vector Autoregressive (VAR) model and pairwise causality test to determine the variables’ cointegration, relationship and causal effects. Results The study found that the trio of crude oil price, natural gas price and electricity tariff as energy resources are cointegrated with long run relationship but with no significant causal effect amongst them. Conclusion The study concluded there is existence of relationship but disproportional effects between the trio of Natural Gas Price (NGP), Electricity Tariff (EET) and Crude oil Price (COBP) in Nigeria’s energy market. The study advocates government intervention in the energy market to reduce associated factors that attracts impact of increase energy resources prices on the citizens’ welfare outcomes.

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