The corona virus pandemic is affecting crude oil production around the world. The reason for this is people are no longer moving about wit there vehicle. There has been consistency in the production of crude oil in Nigeria and around the world.
The outbreak of corona virus has hit the global economy and small businesses are folding up. In U.S.A about 40% of small business owners have car to move up and down their normal business. But due to the lockdown, there is high drop rate in fuel consumption around the globe.
The price per barrel for crude oil production in the UNITED STATE OF AMERICA has dropped to -34 dollars per barrel; this is something that has never happened before. We all know that the crude oil production and sales is the mainstay of most of the economy of many countries in the world.
Developing country like Nigeria is not excluded from this discussion. The lockdown due to corona virus pandemic has forced the crude oil production to have negative effect on the economy.
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Mathematically we know that the determinant of crude oil production requires all expenses (cost of raw materials, fuel, oil revenue tax, company income tax etc) incurred during the production of crude oil. For a country to its economy through crude oil production, there must be able to make profit from crude oil sales. Now we see that all these independent variables are constant unless if there is change in policy.
We will have a function in this form:
GDP = F (OILP, OILTAX, CITAX, EXR, EXP)
GDP= B0 OILP+ B1 OILTAX+B2 CITAX+B3 EXR+ B4 EXP + …α0
The above is the normal function on how crude oil productions influence the economy of any country. But the closure of borders and inability of people to buy petroleum products have led to low sales of crude oil. That is to say that there are millions of barrels of unused crude oil.