Statistical Analysis of Premium Motor Spirit after Subsidy Removal

Abstract

This study examined the impact of fuel subsidy on the Nigeria economy and her citizen. The impact of Premium Motor Spirit (PMS) popularly known as petro subsidy was felt virtually in every facet of the Nigerian society because the increment plays a significant role in the Nigerian economy. In this research work, we try to compare the current price, new price and the variation across the six geo-political zones. Also, this had led to inflation in the prices of every goods sold in the market including food stuffs as well as reduction in the number of vehicles plying our roads in Nigeria. In addition, the increase had led to demonstration by various groups including the Nigerian Labour Congress (NLC) demanding for better wages for their members to cushion the effect of the removal of fuel subsidy. It is interesting to know that the removal of petroleum subsidy has multiplier effect that is multifarious and multi-faceted on the citizenry including the political class once perceived as the untouchable. Looking at the differences, the least increment based on the State and geo-political is 63% which is an indication that the increase is on the higher side. This study tries to examine the increment, its consequences and possible recommendation.
Regression model is fitted to determine the effect of the changes in price of Premium Motor Spirit (PMS) from old price to the new price after the subsidy removal, and Variance Inflation factor (VIF) is applied to determine if there is correlation among the predictors variables in this case it is mild (accepted).