Cheap Petrol Price Claim In Nigeria Misleading – Economist Warns

An economist and former Senior Special Adviser to the President of the African Development Bank on Industrialisation, Banji Oyelaran-Oyeyinka, has faulted claims that petrol is cheap in Nigeria, describing such comparisons as misleading and based on what he termed a “fallacy of one price petrol comparison.”

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Naija News reports that in a statement on Saturday, Oyelaran-Oyeyinka argued that focusing solely on nominal fuel prices without considering purchasing power gives a distorted picture of economic reality.

The economist noted that the global economy is currently undergoing significant disruption.

“The world is experiencing a huge macroeconomic shock,” he said, adding that “according to the S&P 500 Index, $5 trillion has been lost in these two weeks of the war,” excluding “other measurable and unmeasurable factors.”

Oyelaran-Oyeyinka dismissed the notion that Nigerians are shielded from global shocks because of relatively low petrol prices.

“The backdrop here is that Nigerians are somehow insulated from this crisis because we do or should enjoy, likely the ‘cheapest’ petrol in the world. The price of petrol is $1.4–$1.8 per litre across French West Africa. I lived in Abidjan for seven years so I know,” he said.

He stressed, however, that low nominal prices do not equate to affordability.

“Low nominal petrol prices in Nigeria do not translate to affordability,” he stated, adding that “a resource-dependent non-manufacturing nation is as a rule severely punished by natural and economic disasters and shocks.”

Explaining further, the economist said purchasing power should be assessed based on how long it takes workers to earn income, rather than simple currency conversion.

“Purchasing power parity is made clearer not by direct currency conversion, but by how long a worker must labour to earn a given sum,” he said.

He noted that “for a Nigerian minimum-wage worker, earning $2 takes approximately 460 minutes, or nearly 7.7 hours,” compared to “about 16.5 minutes” in the United States and “roughly 7 minutes” in the United Kingdom.

“This metric directly links global commodity prices to the daily reality and experience of the workforce,” he added.

‘Fallacy Of Price Comparison’

Oyelaran-Oyeyinka described direct comparisons of petrol prices across countries as fundamentally flawed.

“A nominal comparison of petrol prices per litre shows Nigeria among the lowest globally, but this is a fallacy,” he said.

According to him, such analysis must account for labour productivity and income levels.

“This is the true measure of development and underemployment. We are a low-income fragile economy which fragility throws households into a tailspin once you have an external shock,” he said.

The economist highlighted Nigeria’s structural economic issues, including low wages, high inflation, and weak purchasing power, as factors that make citizens more vulnerable to global oil price shocks.

He added that economic resilience depends on strengthening domestic manufacturing and diversifying exports.

“Productivity or time-to-earn a wage is the metric that reveals the true cost of labour and exposes the fallacy of a single price comparison,” he noted.

Oyelaran-Oyeyinka further argued that petrol affordability should be measured relative to income, not just price.

“The price per litre in Nigeria of N1,300… is just one variable in a complex set of development equations,” he said.

He added, “Citizens of low-income nations earn low income and for the most part at subsistence levels, so petrol, to be realistic, becomes a luxury item.”

According to him, the “effective cost of petrol” is higher for Nigerian workers than for their counterparts in industrialised nations.

The economist maintained that Nigeria remains trapped in a low-income equilibrium, with a significant portion of the population engaged in subsistence agriculture and grappling with infrastructure deficits, particularly in power supply.

“To get a true picture, you must measure petrol cost in ‘hours of labour.’ With this measure, it will manifest among the most expensive in the world because a Nigerian wage earner operates in a low-productivity system,” he said.

He concluded that relying on currency conversion alone creates a misleading impression.

“When you do a direct conversion of this Naira to dollars/pounds, you generate an economic fallacy; it confuses and misleads folks,” he said.

“Done this way, yes, Nigeria’s petrol is relatively not cheap. Food and housing prices are also not low. We remain so until we achieve structural transformation of the Nigerian economy.”