Petroleum as nigerian’s major source of income.
On this article we are going to discuss what is petroleum and why it is Nigerians major source of income.
Table of content
- What is petroleum
- Major inportance of petroleum
- Uses of petroleum.
- Petroleum producing states.
What is petroleum?
Petroleum can be described as a dark,viscous liquid found naturally on beds of porous rocks beneath the earth surface. It is a very important natural mineral oil. Some of the produce of petroleum are diesel,fuel,grease and others.
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Brief explanation on how petroleum is formed.
Bitumen,consisting of petroleum,natural gas and asphalt I’d widely used around the world. Petroleum is said to have been formed from the decay of animals and plants,under very high pressure and extremely high temperature.
The petroleum rests on water,while on top of it is found natural gas. All three natural gas,petroleum and water finally got trapped between two layers of rock that would not let them escape,thereby forming the pool of petroleum known as an oil trap or oil reservoir.
Petroleum is pumped out when geologist and engineers drill oil wells into this, the flow being controlled by valves.
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Discovery of petroleum in Nigeria
In Nigeria,the petroleum industry began to develop at about the time of the second world war.
Oil prospecting efforts in the country began at about this time,although it was not until about twenty years later that the first barrel of oil was produced.
It is therefore not surprising that nobody expected petroleum to emerge later as a mineral upon which the Nigeria economy would become almost totally dependent for its foreign exchange earnings.
contribution of petroleum to the Nigeria economy.
The impact of petroleum on Nigeria can be seen in all sector of the economy. however while some impacts have been positive others have been negative, we shall now take a look at both sides of the coin.
Positive contribution of petroleum of the Nigeria economy
Petroleum has made the following positive contributions to the Nigeria economy.
- Increase in external trade.
- Greater employment opportunities
- Increase in government revenue
- Increase in foreign exchange reserves
- Greater capital formation.
- Benefit of linkage effects.
Greater employment opportunities
The development of the petroleum industry in Nigeria has led to the creation of lots of employment opportunities for the nationals. Although the industry is highly capital intensive and has a greater requirements for skilled managerial,administrative and professional labour.
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Increase in government revenue
The emergency of petroleum as a growth sector of the Nigerian economy has placed more revenue at the disposal of the countrys government for instance the greatest direct tax revenue of the government is contributed by petroleum profit tax.
Increase in government revenue
The emergency of petroleum as a growth sector of Nigeria economy has place more revenue at the disposal of the country governments. For instance in government in contributed by petroleum profit tax.
Increase in foreign exchange reserves
As the country largest export product by value petroleum is also the greatest earners of foreign exchange for nigeria. It is doubtful whether all the extension construction work that took place in the country.
Negative effects of petroleum on the Nigeria economy
- Destruction of the agriculture base.
- Advertise effect of oil spillage.
- Atmospheric pollution.
- Monocultural demonstration effects in creased propensity to consume imported goods.
- Culture of corruption.
- Lastly dept creation.
Destruction of the agriculture base
the most damaging effect of petroleum on the Nigeria economy is the destruction of the commercial production of oil began,Nigeria depends on for her foreign exchange earnings on exports of agricultural commodities like cocoa,palm oil and grains from the western ,eastern and northern regions respectively.
Adverse effect of oil spillage
Oil spillage means the overflowing of petroleum from oil wells or pipe lines into immediate vicinity,which could be water or land.
This is another adverse effect of petroleum production on the Nigeria economy. In oil production areas gas flaring is a common sight as a mere visit to port Harcourt will confirm.the burning causes pollution of the atmosphere by releasing causes pollution of the atmosphere by releasing hydrocarbon into the air.
Culture of corruption
Petroleum has also increased the list of social vices in the country. Consequent upon huge inflow of money is caused,contract awards were freely and carelessly made.
It is a paradox that petroleum production and exportation created huge debts for Nigeria. The oil money that flowed in the oil money that flowed in 1970s boosted the international credit worthiness of the country.
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