Diesel (AGO) Pump Price Increase and the Prices of Selected Building Materials in Nigeria 1990-2009

Abstract

This paper investigates the effect of increase in diesel pump price on the prices of selected building materials in Nigeria. The objective is to establish the statistical relationship existing between diesel pump price increase and the price of selected basic building materials. Using simple interactive polynomial method and working at 95% confidence limit a computation was made of the research variables. The result showed a significant relationship between the variables tested. Also, the result revealed different degrees of relationships of the variables analyzed. Price of cement, blocks and paint had linear, quadratic and cubic relationships respectively with increase in diesel price. Coefficient of determination of 96.04% for cement, 96.63% for blocks, 95.76% for iron rod, 94.52% for paints, 90.12% for sharp sand and 96.49% for timber were discovered for the tested variables. The results of the study indicate that the relationships were either linear or non-linear in the tested variables. This reveals that the diesel price increase will cause price of building materials to rise at various degrees, thereby exerting an enormous financial pressure on the building developers as a result of its multiplier effects on the haulage and production of building materials. Therefore government fuel price hike policies should be implemented with caution in order to prevent rise in prices of building materials.