ABSTRACT

The aim of this study was to investigate the impact of petroleum product prices on sale performance of companies in the Nigerian oil and gas industry using the panel data framework. While three petroleum products; Premium Motor Spirit (PMS), Automotive Gas Oil (AGO) and Dual Purpose Kerosene (DPK), were considered, two outcome-based externally-oriented performance measures; total sales revenue and total cost of sales, were used. We also considered the moderating role of unobserved firm-specific factors such as organization’s culture, policies and procedures etc. in the relationship between petroleum product prices and sales performance. The study covered a period of 8years and included ten quoted companies from the oil and gas industry. The sample selection was based on data availability and consistency of financial reports. Empirical analysis was based on quantitative data obtained from secondary sources. Two panel data methods; fixed effects and random effects, were used to estimate our specified sales performance models. The empirical analysis was done using EViews software package version 9. The results showed that an increase in the price of PMS has a beneficial effect on the sales performance while an increase in the prices of AGO and DPK both have a negative effect on sales performance. The results further revealed that prices of the three petroleum products jointly have a highly significant effect on sales performance and that organizational culture and other firm-specific variables play highly significant moderating role in the relationship between petroleum product prices and sales performance. Therefore, we recommended that firms in the oil and gas should focus more on selling PMS and less on both AGO and DPK since changes in price of PMS have positive effects on their sales performance. We also recommended that government should adopt the guided deregulation policy (a deregulation that is also regulated) for both DPK and AGO but maintain the current regulated policy for PMS.

Key words: Petroleum product prices, sales performance, unobserved organizational factors.