The Effect Of 2021 Fuel Price Hike On Transportation System In Nigeria (A Case Study Of Ascent Transport Company (Atm), Abuja)

The Effect Of 2021 Fuel Price Hike On Transportation System In Nigeria (A Case Study Of Ascent Transport Company (Atm), Abuja)

Chapter One

Preface

Background of the study

Price change in the request for energy has a constantly evolving effect on the logistics assiduity. Rapid increases in the price for energy can have a delayed and ruinous effect on freight operation companies, and a unforeseen fall could affect in short- term boosts in profit and a swell of competition within the request to give consumers with the smallest price.

One of the major factors of globalization is the transportation sector, which plays a veritably significant part in diurnal conditioning and the frugality. During the 20th century, trade scale changed from original to global and thus freight transport system came a global network. In particular, freight transportation is one of the most important profitable conditioning. Freight transport has been growing indeed more fleetly than passenger transport and is anticipated to continue to do so in the future( Ribeiro et al, 2007). Truck, train, and boat are the three common transport vehicles being used for movement of holders, which are characterized by a number of advantages and disadvantages. The cost of transportation is an important selection criterion among influential parameters on relating the applicable mode of transportation mode for freight payload. The main challenge of moment’s transport costs is oil painting price. Freight movement in utmost modes remains largely dependent on precious and finite reactionary energies, generally diesel energy( Russell et al, 2014). The foremost single factor affecting the retail price of diesel energy is the price of crude oil painting( Noordin et al, 2009). Crude oil painting as an energy source is a vital element that determines the condition of the world frugality( McSweeney et al, 2008). Its price oscillations impact on all artificial sectors whether directly or laterally, be it in banking, energy, merchandising or transportation diligence. The impact of oil painting prices on transport sector depends upon three issues, which are, the applicability of the oil painting price on the cost of the energy used for each transport mode, to what extent oil painting price is transferred to transport energy prices, and the relative weight of the energy cost on total operating costs for each mode( Casamassima et al, 2009). Energy prices are a cost to transportation diligence and a direct cost to consumers. Energy price is one of the most important factors affecting transport cost, which comprises further than 50 percent of the total operating cost for the transportation assiduity currently( Ribeiro et al, 2007). Since the perceptivity of transport operating cost to the oil painting price change varies significantly across payload modes, the oil painting price has come an important factor in freight mode choices. Casamassima et al. Noordin et al,( 2009) revealed that the perceptivity of energy costs of road mode and road crude oil painting price was 40, while maritime was 100 since marine energies are exempted from government taxation. In addition, they estimated the influence of doubling of crude oil painting price on transport cost of road and rail freight was 10, while for maritime was 50.

As the cost of energy rises, carriers are forced to raise prices or take losses. In turn, the cost of energy doesn’t only effect the logistics company, but also the shipper and the profit source of the shipper as well. It’s an outside domino effect If it costs further for the freight carrier to transport the freight, the shipper is going to be charged further to make up forthis.However, the receiver is going to be charged further to make up for their added costs, If the shipper is going to be charged further to transport the freight.

Statement of the problem

The Petroleum Products Pricing Regulatory Agency( PPPRA) blazoned on Thursday 11th March, 2021 that the Nigerian government has increased the pump price of petrol to N212.61 per litre. According to the agency, the wharf cost stands at N189.61 per litre while energy depot possessors will vend to marketers at N206.42,( Premium Times reports).

This advertisement comes days after Nigerians suspected there would be a hike in energy price as depot possessors were reportedly hoarding the product, and adding prices with prospects of energy price proliferation by the government, indeed though the NNPC responded to the enterprises via a statement by its Group General Manager, Group Public Affairs Division, Kennie Obateru.

As the price of energy increases, other introductory requirements of Nigerians including transportation and the cost of goods and services, to name a many, are also anticipated to increase in price, making it more delicate for the average citizen to go food and other introductory requirements, especially without any increase in their income.

Nigerians have since taken to social media with the hagtag#FuelPriceHike to object to the decision, with several people calling for a kick in Ojota, Lagos State. numerous Nigerians on there social media runners have been complaining that Nigeria no longer use coins and with the increase of energy price to N212.61 per litre, how would they be suitable to get their balance when ever they buy petrol. In 1978, energy price per liter was0.5 kobo. moment,#FuelPriceHike is a major problem to the Nigeria’s frugality especially for an average Nigerian. Hence, this study seeks to probe the effect of 2021 energy price hike on transportation system in Nigeria.

Ideal Of The Study

The main purpose of this study is to probe the effect of energy price hike on transportation system in Nigeria using Ascent Transport Company( ATM), Abuja as a case study. The study specifically aimed to

Examine the effect of energy price hike on passengers of ATM, Abuja.

probe the effect of energy price hike on the profitability of ATM, Abuja.

Exploration Questions

1. What’s the effect of energy price hike on passengers of ATM, Abuja?

2. What’s the effect of energy price hike on the profitability of ATM, Abuja?

Exploration Suppositions

The following null thesis will be tested in this study

Energy price hike doesn’t have any effect on passengers of ATM, Abuja

Energy price hike doesn’t have any effect on the profitability of ATM, Abuja

Significance of the study

This study will enable the government of Nigeria to see the need to put measures in place to subsidize energy in the country and avoid gratuitous hiking of the energy price. This study will also help transport companies to draft a good strategy and medium to always check the energy hike issues in the nearest future. This study will further serve as an eye- nature to the general public to know that when ever there’s a energy hike in the country, transportation tends to be precious. This study will also serve as a reference piece for unborn exploration on this or related sphere.

Compass Of The Study

This study will concentrate on probing the effect of energy price hike on passengers of ATM, Abuja. This study will also examine the effect of energy price hike on the profitability of ATM, Abuja. This study will be demarcated to only the staffs of ATM, Abuja.

Limitation of the study

Finance, vacuity of time and applicable accoutrements were the major constraints that the experimenter encountered while carrying out this study.

Description Of Terms

Effect a change which is a result or consequence of an action or other cause.

Price Hike a unforeseen or large increase in prices, rates, levies, or amounts.

Transportation transportation is the movement of humans, creatures and goods from one position to another.

References

Ribeiro,S.K., Kobayashi,S., Beuthe,M., Gasca,J., Greene,D., Lee,D., etal., Climate Change( 2007) Mitigation. The donation of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. In Transport and its structure, ed Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA, 2007.

Russell,D., Coyle,J.J., Ruamsook,K., Evelyn, A, The Real Impact of High Transportation Costs. Supply Chain Quarterly, Quarter 1.( 2014). recaptured from http//www.tandf.co.uk/journals/authors/style/reference/tf_APA.pdf.

Noordin,N.S.S., Oil Price Shock and Malaysian Sectoral Stock Market Return. Doctoral Discussion, University of Malaya.( 2009). recaptured from http//repository.um.edu. my/889/1/Syahira20-20MBA.pdf.

Energy Information Administration, Factors Affecting Diesel Prices.( 2017). recaptured from https//www.eia.gov/energy explained/index.cfm?page = diesel_factors_affecting_prices.

McSweeney,E.J., and Worthington,A.C., A relative Analysis of oil painting as a threat Factor in Australian Industry Stock Returns, 1980- 2006 ’( 2008), Studies in Economics and Finance,Vol. 25,pp.131- 145.

Casamassima,G., Fiorello,D., and Martino,A., The Impact of oil painting Prices oscillations on Transport and Its Affiliated Sectors. European Parliament.( 2009). recaptured from http//publications.europa.eu/ resource/ basement/ 5 9b332d0- 6bd2-4999-8fd6-6f939ab7d1f7. 0001. 02/DOC_1.

Transportation Economics and Management Systems( TEMS)Inc., Impact of High Oil Prices on Freight Transportation Modal Shift Implicit in Five Corridors.( 2008). recaptured from https//www.marad.dot.gov/wp-content/ uploads pdf/Modal_Shift_Study,-, Specialized,Report.pdf