Why Cheap Petrol Is a Myth in Nigeria: Ex-AfDB Adviser Exposes the Real Cost of Fuel
- Economist Banji Oyelaran-Oyeyinka has challenged the notion of affordable petrol in Nigeria as a misleading economic fallacy
- He argues that true fuel affordability should factor in wages, productivity, and living costs in Nigeria
- Structural economic weaknesses hinder Nigeria's ability to cope with global price changes, says Oyelaran-Oyeyinka
Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
An economist and former adviser at the African Development Bank, Banji Oyelaran-Oyeyinka, has challenged the widespread belief that petrol is cheap in Nigeria, calling such comparisons misleading and economically flawed.
In a recent statement, Oyelaran-Oyeyinka described the idea as a “fallacy of one price petrol comparison,” arguing that simply comparing pump prices across countries ignores deeper economic realities.
Source: Getty Images
According to him, many Nigerians are not as insulated from global economic shocks as commonly assumed.
Global crisis, local impact
Oyelaran-Oyeyinka noted that the global economy is currently undergoing a major shock, worsened by geopolitical tensions.
He cited data from the S&P 500 Index, which showed that about $5 trillion had been wiped off market value within just two weeks of the recent global conflict.
Despite these global disruptions, he said it is incorrect to assume Nigerians are shielded simply because petrol prices appear lower in naira terms.
“The backdrop here is that Nigerians are somehow insulated because we enjoy some of the ‘cheapest’ petrol in the world. That assumption is flawed,” he explained.
Comparing prices across borders
Drawing from his experience living in Abidjan, Oyelaran-Oyeyinka noted that petrol prices in parts of French West Africa range between $1.4 and $1.8 per litre.
While Nigeria may seem cheaper on paper, he stressed that such nominal comparisons fail to capture the real picture.
Instead, he argued that affordability must be measured relative to income and economic conditions, not just currency conversion.
The true cost: Time and labour
A more accurate way to assess fuel affordability, according to the economist, is by measuring how long a worker must labour to earn enough to buy petrol.
He illustrated that a Nigerian minimum-wage worker needs about 460 minutes, nearly 7.7 hours, to earn just $2.
In contrast, a worker in the United States earns the same amount in roughly 16.5 minutes, while in the United Kingdom, it takes about seven minutes.
“This metric directly links global commodity prices to the daily reality of workers,” he said, highlighting how low wages and weak purchasing power worsen the burden on Nigerians.
Structural weaknesses at play
Oyelaran-Oyeyinka attributed the disparity to Nigeria’s structural economic challenges, including low productivity, high inflation, and limited industrialisation.
He described the country as a fragile, resource-dependent economy that is particularly vulnerable to external shocks.
According to him, nearly 70 per cent of Nigerians are engaged in subsistence agriculture, while infrastructure deficits, especially in power supply, continue to limit economic growth.
These factors combine to create what he called a “low-level income equilibrium,” where incomes remain stagnant, and living costs continue to rise.
Source: Getty Images
Why direct comparisons mislead
The economist warned against comparing Nigeria with advanced economies like the United States or the United Kingdom, noting that such comparisons ignore vast differences in productivity and income levels.
He emphasised that petrol priced at around N1,300 per litre may appear affordable globally, but for many Nigerians living on low incomes, it has effectively become a luxury item.
“The effective cost of petrol is higher for a Nigerian worker than for a worker in industrialised nations,” he said.
The way forward
Oyelaran-Oyeyinka concluded that the solution lies in structural transformation — particularly building a strong manufacturing base, improving productivity, and diversifying exports.
Until then, he warned, relying on currency conversion alone will continue to paint a false picture of affordability.
“When you convert naira to dollars directly, it creates an economic fallacy. It misleads people,” he said.
Ultimately, he stressed that true affordability can only be measured by the realities of everyday Nigerians — not just the numbers at the pump.
Nigeria records highest petrol price increase globally
Legit.ng earlier reported that Nigeria has recorded the sharpest increase in petrol pump prices globally following the escalation of tensions in the Middle East involving the United States, Israel and Iran, according to data from Global Petrol Prices.
The analysis shows that Nigeria’s petrol prices rose by 39.5% between February 23 and March 16, the highest increase among all countries tracked during the period.
The Cable reports that the surge places Nigeria ahead of Laos, which recorded a 32.9% increase, while Australia and Vietnam each posted 31.8%. The United States recorded a 23.6% rise.
Source: Legit.ng
