CHAPTER ONE
INTRODUCTION
1.1 THE BACKGROUND OF THE STUDY
The economy is the backbone of any nation. Nigeria, like other development countries of the world is paying more attention on how to accelerate the rate of development through the various sections of the economy.
Oil, a very versatile and flexible non-productive, depleting, natural (hydrocarbon) resource is a fundamental input to modern economic activities providing about 50% of the total energy demanded in the world excluding the former centrally planned economy. Oil exploiting countries of the world depend heavily on oil revenue for foreign exchange earnings and for the government budget, in most cases, reaching 90% or above.
Petroleum or crude oil is an oily bituminous liquid, consisting of a mixture of many substances mainly the elementsof carbon and hydrogen, and thus known as hydrocarbon. It also contains a very small amount of non-hydrocarbon element, chief amongst which are sulphur, nitrogen, and oxygen. Petroleum industry covers the exploration and production of crude oil as well as petroleum refining, marketing and servicing. Specific policy objectives with respect to petroleum and mining can be summed up us follows. Active government participation in mining operations, diversification of mineral products, the organization and regulation of the development of mineral resource so as to optimize their contribution to the overall national development effort, the conservation of the countries mineral resources, research into efficient extraction methods and wider application and use of mineral manpower development of internal self sufficiency in the supply and effective distribution of petrol industry products, commercialization of gas and the control of the environmental problems of oil production (Obudun 1987).
Though oil did not assume its present significant position in the natural economy until the early 1970s, it is not a novel revelation that it has since become the mainstay of contemporary Nigerian economy. Petroleum either as petrol, diesel,fuel, oil, lubricant or petro-chemical makes Nigeria’s economy wheel go round.
Petroleum has transformed poor nations into rich ones desert into watersheds and bankrupt nations into creditors. Specifically, with respect to Nigeria, there is no gain saying that the oil sector has undergone tremendous transformation over the years. (Anyanwa, et al 1997).
The industry has emerged from being merely the “supportive” economic sector it was in the 1960’s to the predominant source of foreign exchange and most viable access to international investment opportunities in the 80’s and 90’s, no other resources in Nigeria has played such a towering role over the national economy as crude oil. The government of Nigeria has used the revenue derived from oil through tax and royalties to carry out development projects in the country (Iyohu 2000).
This study therefore, aims to illustrate clearly the impact of oil industry on economic growth performance in Nigeria.