a. Foreign Exchange Earnings:
Crude oil has been the greatest foreign exchange earner for the country. In 1970, oil contributed 58.1 percent of Nigeria’s foreign exchange earnings, 87. 2 per cent in 1972 and 95. 1 per cent in 1984. In 1983 alone, Nigeria realised 43.6, billion Naira from oil alone. Between 1996 and 1999 the contribution of the sector in terms of foreign exchange earnings was 87.6 and 87.7 respectively.
b. The Greatest Source of Internal Revenue for the Country:
Nigeria depends on oil for over 90 per cent of its revenue used for almost every item of expenditure, such as recurrent expenditures, capital votes, grants to states and local governments, etc.
c. increase in Infrastructural Facilities:
Petroleum has transformed the landscape of Nigeria, replacing the narrow colonial roads with express roads and highways; flyover, stadia, high rise buildings, new harbours, airports and the development of new Federal Capital Territory, increase in the number of universities across the country, etc.
d. Source of Employment:
The petroleum industry remains one of the leading sectors of the Nigerian economy in terms of employment opportunities. It absorbs different categories of labour in the various firms engaged in the production of one thing or the other in the oil and other industries in the country.
e. Source of Power:
Petroleum oil serves as a source of power and fuel for the existing industries, while petroleum products, like premium motor spirit (PMS), kerosene and diesel, serve as fuel to other sectors of the economy.
f. Skilled Manpower:
The oil industry has trained many Nigerians to be technically knowledgeable in fields such as drilling, exploration and refining, through the petroleum training institute in Warri, Delta State.
a. Decline in Agricultural Activities:
With the advent of oil, the agricultural industry has been relegated to the background. Before the advent of oil, Nigeria was an agro-based economy; earning all its foreign exchange revenue from cocoa, groundnuts, oil palm produce, cotton, rubber, hides and skins, etc. More than 80 per cent of the population was engaged in agriculture and also the sector accounted for about 87 per cent of her revenue. Oil has changed this situation, and Nigeria has become a net importer of food for domestic consumption.
b. Rural-urban Migration:
The oil boom led to massive urban drift. Many Nigerian cities like Lagos, Port Harcourt, Kaduna, Kano, etc., began to witness population explosion. Farmers left their farms and moved to the cities in search of other jobs and better living standards.
c. Dutch Disease:
In the last two decades, the Nigerian economy has had to contend with a number of problems and shocks. For instance the first, second and third oil price shocks of 1973-74, 1979 and 1981 respectively, resulted in a large transfer of wealth to Nigeria. Public expenditure increased greatly and the oil export boom led to a “Dutch Disease”. The excessive reliance on oil exports in the 1970s, coupled with the non-diversification of the economy (i.e. through the poor development of the non oil-sector), rendered the Nigerian economy vulnerable to external shocks and later dislocated it.
d. Inflation and Debt Crisis:
The windfall from oil led to a tremendous rise in wages, prices and imports and government expenditure. Following the collapse of oil prices in 1981/82, Nigeria experienced rising inflation, currency over-valuation, capital flight and debt crisis. It created a situation where domestic absorption exceeded the gross domestic product GDP i.e. the level of external reserve was too inadequate to meet import demand.
e. Distortion of Attitudes and Social Values:
The spending of oil revenue has distorted attitudes and values of our society, for example, the emergence of a get rich quick attitude among Nigerians. This has resulted in shady business deals and armed robbery in the country.