Abstract

The petroleum industry in Nigeria has brought unprecedented changes to the Nigerian economy, particularly in the past five decades when it replaced agriculture as the cornerstone of the Nigeria economy. The oil industry has risen to the commanding heights of the Nigerian economy, contributing the lion share to gross domestic product and accounting for the bulk of federal government revenue and foreign exchange earnings since early 1970. However, Nigeria’s considerable endowment in fossil fuel has not translated into an enviable economic performance; rather, the nation’s mono-cultural has assumed a precarious dimension in the past decades susceptible to the vagaries of the international oil markets. Nigeria’s extreme reliance on the crude oil market has triggered structural difficulties for the economy, as earnings from crude oil fluctuate along with market trends which are exacerbated by the country’s neglect of other productive sectors of the economy. This negative trend has persisted despite various economic reforms embraced by successive Nigerian governments since 1980. Unless the country deepens its economic reform initiatives to include effective diversification of the petroleum sector, the performance of the economy will continue its unimpressive trend. Diversification of the economy should also extend beyond the Petroleum sector so that the country can become a major force in the emergent global economic order of the 21^st century. Policy makers should develop the nation’s vast resources in the agricultural and solid mineral sectors for the global markets and reap the benefits that accompany economic diversification.

Key words: Crude oil, natural gas reserve, minerals, environmental effect, export diversification