Nigeria: March 11, 2001

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An example of how economics and corruption are intertwined can be seen in the way the gasoline market operates. The former dictator allowed local refineries to run down, thus creating the need to import refined petroleum products into a nation that was a major producer of oil. It was more lucrative to rig these import deals than to steal from local refineries. Because Nigeria is a major oil producer, people expect to pay little for fuel. Currently, gasoline sells for about 75 cents a gallon. But people in neighboring nations pay some two dollars a gallon, so there is a huge smuggling operation. This creates shortages for Nigerians and costs the government over a billion dollars a year to subsidize the low price. Raising the price would eliminate the smuggling, corruption and shortages. But this is a volatile proposal, if only because the many people (including politicians) involved in smuggling are making a lot of noise about the price increases. Keeping the prices low insures that the corruption continues, raising the prices means more unrest.

 

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