This situation of a diesel price hike provides Nigeria with pains and opportunities. The ‘pains’ are excruciating and biting hard. People, companies, and organisations are struggling with the crippling effect of high energy prices, from petrol and gas to diesel. The economy is in a meltdown. Something needs to be done fast.
The debate about the cause of this scourge is raging. Some claim that it is because of the global energy crisis occasioned by the Russia-Ukraine war. Others argue that although the war in Europe may influence diesel prices in Nigeria, the effect alone should not have such an impact.
With the increase in prices, demand for goods with high demand elasticity plummets, which has a devastating effect on small-scale businesses that produce these goods and services and sometimes put them out of business. Hotels, private schools, artisans, and small-scale producers are responding by reducing their staff strength, shortening their hours of operation, or shutting down outright because of the increase in the costs of production.
The government has to protect the economy and alleviate the pains from the high price of diesel. There is a vital strategic link between the diesel price hike and the movement of other variables in the economy. The Nigerian authorities assume that this problem is temporary and that diesel prices will return to a normal level soon, however this appears farfetched and unrealistic at best.
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