If Mr. XYZ who lives in Nigeria had negotiated a forward contract for the supply of diesel to his household for November 2016 around November 2015 period.
Is it safe to say that Mr. XYZ would have successfully hedge against the price risk relating to diesel???? .Well the answer is Mr. XYZ would have registered significant savings depending on his given location within the country.It is no secret that the purchase price of diesel in Nigeria has changed across various locations (i.e. States) there is exist some sort of price disparity.
The chart above tell us that the price of Diesel in Nigeria moved significantly across some states of the federal republic of Nigeria over a 3 month period.
From the table above we also carried out year over year analysis of the price of diesel paid by Nigerian households and business, Along with the various price differentials .
The location with the highest price differentials is Zamfara state within the north west geopolitical region of Nigeria with about N56.46k higher than Nov 2015 price of diesel.
From the chart above we can clearly observe that year over year purchase price of diesel by households in Nigerians at various geopolitical zones shows a significant movement in the price of diesel from Nov 2015 to Nov 2016.
In conclusion it safe to say that households in Nigeria are mostly like going to have to deal with more price fluctuations of diesel . Households and business may have to take more proactive measures towards preparing themselves for the challenges ahead.