On Wednesday, 11th of May, 2015; our
change team announced a 68.60% increase in the price of PMS (Prime Motor
Spirit) also known as petrol across the country. Petrol is an essential commodity
with high inelastic demand due to the absence of constant energy supply and
popularity of cars that runs on PMS as opposed to other alternative cars. The
recent increase is bound to have a dynamic impact across all sectors of the
economy. There is already a 50% hike in the prices of transport fares in some
part while some part are experiencing up to 150% hike.
Trade is very popular in Nigeria
and one of the aids to trade is transportation. In Nigeria, internal transportation
is mostly through road. Aviation transportation is mainly used by persons while
cargo is transportation is mostly though the road. The rail system is underutilised
as well as the waterways and this could help to explain the high recurrent cost
that is expended on maintaining our road in this country. Also accident on the
road is almost accepted as normal while air transport accident or sea transport
accident or water accident could easily deter people from patronising, road
accident rarely deter people or at what we will change the path but there are
mainly one route path in this country and therefore changing route is mostly
not an option and that is why all Nigeria pray that: ‘as I am going out My God
please don’t push me to the mouth of death and as I am going to find what I
will eat don’t let me meet what will eat me’ because road accident is real and
is almost our reality.
The selling price of goods will sky
rocket because the finish cost of getting those goods to their final consumers
have been increased now due to increase in the cost of transportation due to
increase in petrol price.
Also the lack of constant and
continuous energy supply means we will rely on alternative and the mass
alternative we have in Nigeria is generators and most are powered petrol.
The increase in cost of energy and
transportation will affect the whole economy by affecting the service industry
and the trade industry. Inflation will also increase since much money will be
purchasing fewer things.
The final consumer real economic
power will be reduced which might leads to economic recession because once the
buyer cannot buy then producer will have to reduce production, lay off workers,
and where it is really bad the company might just close down and the cycle of
economic recession starts off until another policy comes to alter it.
