Impact of Energy Consumption on Economic Growth in Nigeria: An Approach of Time Series Econometric Model

Abstract

The study examined the impact of energy consumption on economic growth over a period of 1980 to 2017. The specific objectives are to: investigate to what extent does components of energy consumption effect Economic Growth in Nigeria and ascertain if there is long-term relationship between components of energy consumption and Economic Growth in Nigeria. The Expost-facto research method was the research design. The methods of data analysis were Augmented Dickey- Fuller Unit Root test statistic, Engle-Granger Co-integration test, error-correction mechanism, Heteroscedasticity White Test, Ramsey Reset and Durbin-watson test. The study concluded that there is impact of energy consumption on Economics growth in Nigeria. The empirical result shows that the coefficient of petroleum oil has 78% positive significant effect on Real Gross Domestic Product (RGDP), Liquidified natural gas (GAS) has 44% positive significant effect on Real Gross Domestic Product (RGDP) and the electricity (ELECT) has 20% positive insignificant effect on Real Gross Domestic Product (RGDP). The RGDP has no long-run relationship with PETRO, GAS, and ELECT. Hence, the energy consumption has no long-run relationship with economic growth. This study therefore recommends that companies in charge of oil refining and transportation should increase petroleum supply around the country by connecting the major towns with petroleum pipelines. Nigeria Government should formulate policy that encourages crude oil drilling companies to use sophisticated technology that will not cause crude oil spillage in the oil drilling environment.