Asymmetric Crude Oil Pass-Through and Retail Fuel Pricing Dynamics in Nigeria
DOI:
https://doi.org/10.64229/nc4a8746Keywords:
Asymmetric crude pass-through, Retail fuel pricing, Dynamic non-linear autoregressive distributed lagAbstract
The Nigerian fuel market dynamics are unique; with high percentage of crude oil export yet lacks the refining capacity to meet its domestic requirements, and therefore exposed to the intricacies of the global oil supply shocks. This study interrogates asymmetric crude oil pass-through and retail fuel pricing dynamics in Nigeria, between 1992 to 2025. Yearly data were used and the following variables were employed: Domestic retail fuel price, Brent crude price, real effective exchange rate, inflation rate and interest rate. Exploring the dynamic non-linear autoregressive distributed lag model approach. The following outcomes emerged: increase in global crude price pushes domestic retail fuel price up, while when there is reduction in global crude price the retail fuel marketers do not respond to the adjustment in price to reflect consumers expectations. Additionally, when the Naira depreciates it automatically increases cost of procurement and landing for refined fuel in the domestic market. The following policy suggestions were made: to dismantle the asymmetric pricing weight on the consumers, the authorities should implement fiscal and regulatory policies directed towards calming the foreign exchange market to regulate landing cost, implement stern competition rules through the relevant regulatory agencies to discourage retail price fixing and put local public refineries in good state to decouple logistics from foreign freight and exchange rate volatility.
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Copyright (c) 2026 Anthony Gabriel Pocho, Ilemona Adofu, Obadiah Jonathan Gimba (Author)
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