Oil Price and Energy Intensity Dynamics in Nigeria: Does Technical Change Matter?

Abstract

It is critical to understand the mechanism needed to control energy intensity especially in an oilexporting
country like Nigeria, because of its consequential effect on carbon dioxide emissions
and environmental pollution. Increases in energy prices can lead to promotion of better technology
and consequently, a reduction in energy intensity through a reduction in energy demand
(consumption). This paper explores the dynamics between energy price and energy intensity to
reveal the role of technical change in the equation. The study utilizes an autoregressive distributed
lag (ARDL) and Toda-Yamamoto approaches. The study sample covers the period 1980 through
2021. The key contribution of this study to the literature is rooted in an understanding of the
dynamics of energy intensity and its interplay with technical change in a country study as a critical
piece of information for policymakers. The results indicate a change in oil price significantly
affects technical innovation. However, there is no link between technical innovation and energy
intensity. The plausible justification for the results is the enormity of oil subsidy policy of the
Nigerian government.