Key Highlights
- Average price of diesel in May was ₦205.67.
- Average diesel price increased by 0.65% month on month in May.
- Average diesel price increased by 4.91% year on year in May.
- Taraba State recorded highest average diesel price of ₦253.33 in May.
- Nasarawa State recorded lowest average diesel price of ₦162.27 in May.
The Nigeria Bureau of Statistics (NBS) has released the Automotive Gas Oil (Diesel) Price Watch for the month of May 2018. The NBS report shows that average price paid by consumers for Automotive Gas Oil popularly known as diesel increased by 4.91% year-on-year and 0.65% month-on-month to ₦205.67 in May 2018 from ₦204.35 in April 2018.
According to the NBS report, the average diesel price across different zones in the country shows that the North-East zone recorded the highest price paid by consumers for Automotive Gas Oil (Diesel) in May with ₦218.04. It was closely followed by the North-West zone with ₦210.69, while South-West was the third zone with the highest diesel price in May with ₦202.73. Meanwhile, South-East and North-Central zones recorded the lowest diesel prices of ₦200.12 and ₦200.28 respectively during the month under review.
However, during the same month, Taraba State has the highest average price of Automotive Gas Oil (₦253.33). The second state is Gombe with an average price of ₦227.50 while Kebbi is third with an average price of ₦224.5 for diesel in the month of May, 2018.
The report also shows that Nasarawa State has the lowest average price of Automotive Gas Oil (Diesel) in April 2018 (₦162.27). Abuja closely followed with an average price of ₦183.00 and the third state is Adamawa where the average price of diesel sold for ₦186.67 in May 2018.
Meanwhile, the NBS report also shows that the 12 months average prices for Automotive Gas Oil (Diesel) was ₦216.30 in May, 2017, ₦201.96 in October, 2017, and ₦204.35 in April, 2018.
Implication
This little increase in the prices of Automotive Gas Oil (Diesel) could lead to a corresponding small rise in the operating costs for medium and large scale businesses since they rely on diesel to power their machinery and equipment. Hence, it may also negatively impact on their expected profit and revenue.
Effects on Stocks
Increase in the prices of Automotive Gas Oil (Diesel) could also have a positive effect on revenues (and by extension, on stock price) of companies in the downstream oil and gas space that are involved in the distribution and marketing of refined Automotive Gas Oil (Diesel). The downstream oil and gas companies that may be affected include the likes of Mobil, Total, Oando, Forte Oil, Conoil, Capital Oil, Japaul Oil and Eterna Oil.
These companies make money selling products such as diesel to corporate organisations around the country. Depending on their share of the volume of sales, their revenues and profits may also increase.
It is important to also add that downstream players equally have to deal with slimmer margins arising from competition and supply distribution challenges.
However, for the non-oil and gas companies, particularly manufacturing firms in the Industrial and FMCG space, the rising cost of Automotive Gas Oil (Diesel) may negatively affect their bottom-lines. These firms often rely on diesel as a backup for their power supply and report this as an expense.
