DOI: 10.36347/sjebm.2014.v01i08.001

Pages: 350-360

Since the discovery of oil in commercial quantity in Nigeria in 1956 and the oil boom of 1970s, oil has dominated the economy of the country. In Nigeria, oil accounts for more than 90 percent of the country‟s exports, 25 percent of the Gross Domestic Product (GDP), and 80 percent of government total revenues. Therefore, any volatility in the price or quantity of oil usually has grave and devastating consequences on the economy and government fiscal operations. For instance a US$1 increase in the oil price in the early 1990s increased Nigeria's foreign exchange earnings by about US$650 million (2 percent of GDP) and its public revenues by US$320 million a year. It is obvious that Nigeria‟s near-total reliance on oil production for income generation clearly has serious implications for the economy. Indeed of greater concern today is the concerted efforts of the western developed nations, the United States and China to sway their economies away from oil to other alternative energy sources. The United States and China – the two largest consumers of oil, have been particularly very aggressive in the quest to minimize their dependence on fossil fuel in the near term and to do away with fossil fuel generally in the long term. This aggressive search for alternative energy sources could have catastrophic consequences for the Nigeria economy unless the country prepares itself in advance. In this paper, we reviewed the possible implications of alternative energy sources on the Nigerian economy and the tactical options open to the country to insulate its economy from the backlash that will result in a world without fossil fuel.