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.

 

 

 

TABLE OF CONTENTS

 

Cover Page i

Title Page ii.

Declaration iii

Certification iv

Dedication v

Acknowledgement vi

Table of Content       vii-xi

List of Tables xii

List of Figures xiii

Abstract xiv

CHAPTER 1: INTRODUCTION 1

1.1 Background to the Study 1

1.2 Statement of the Problem 4

1.3 Objective of the Study 8

1.4 Research Questions 9

1.5 Hypothesis of the Study 10

1.6 Significance of the Study 11

1.7 Scope of the Study 12

1.8 Definition of Terms 13

CHAPTER 2: LITERATURE REVIEW 15

2.1 Conceptual Review 15

2.1.1 The Nigerian petroleum industry 16

2.1.2 Concept of prices 29

2.1.3    Organizational factors 33

2.2 Dimensions of Petroleum Product Prices 40

2.2.1    Prices of PMS 40

2.2.2    Prices of AGO 41

2.2.3 Prices of DPK 41

2.3 Sales Performance 42

2.4 Measures of Sales Performance 46

2.4.1 Sales revenue 46

2.4.2 Cost of sales 47

2.5 Organizational Factors 48

2.6 Empirical Review 50

2.6.1 PPMS and sales performance 50

2.6.2 PAGO and sales performance 51

2.6.3 Price of DPK and sales performance 52

2.6.4 PPP and sales performance 53

2.7 Theoretical Framework 61

2.7.1 Attribution theory 61

2.7.2 Self-perception theory 62

2.7.3 Theory of planned behaviour (TBP 62

2.7.4 Acquisition – transaction utility theory 64

2.7.5 Goal setting theory 67

2.7.7 Organization theory 67

2.8 Summary of, and Gap in, the Literature 69

CHAPTER 3: RESEARCH METHODS 70

3.1 Research Design 70

3.2 Population of the Study 71

3.3 Sample and Sampling Technique 72

3.4 Method of Data Collection 73

3.5 Method of Data Analysis 73

3.6 Model Specification 74

3.6.1 Model diagnostic tests 76

3.6.2 Model selection test 76

3.6.3 Apriori expectation 77

3.7 Method of Hypothesis Testing 79

CHAPTER 4:  DATA PRESENTATION AND ANALYSIS 81

4.1 Descriptive Analysis 81

4.1.1 Analysis of the independent variables 81

4.1.2 Analysis of the dependent variables 83

4.1.2.1 Total sales revenue 83

4.1.2.2 Total cost of sales 85

4.2 Empirical Analysis and Hypothesis Testing 87

4.2.1 Petroleum product prices and firm sales revenue 87

4.2.1.1 Petroleum product prices and firm sales revenue 87

4.2.1.2 Petroleum product prices and firm total cost of sales 90

4.2.2 Hypotheses testing 94

4.2.2.1 Hypothesis 1: price of premium motor spirit and total sales revenue 94

4.2.2.2 Hypothesis 2: price of automotive gas oil and total sales revenue 94

4.2.2.3 Hypothesis 3: price of dual- purpose kerosene and total sales revenue 95

4.2.2.4 Hypothesis 4: the joint effects of PPMS, PAGO, and PDPK on total sales revenue 96

4.2.2.5 Hypothesis 5: price of premium motor spirit and total cost of sales 96

4.2.2.6 Hypothesis 6: price of automotive gas oil and total cost of sales 97

4.2.2.7 Hypothesis 7: price of dual purpose kerosene and total cost of sales 98

4.2.2.8 Hypothesis 8: the joint effects of PPMS, PAGO and PDPK on total cost of sales 98

4.2.2.9 Hypothesis 9: The moderating role of organizational culture/management style

in the relationship between petroleum product prices and firm sales revenue 99

4.2.2.10 Hypothesis 10: The moderating role of organizational culture/management

style in the relationship between petroleum product prices and firm cost of sales 100

4.3 Discussion of Empirical Findings 100

4.3.1 Price of premium motor spirit and total sales revenue 100

4.3.2 Price of automotive gas oil and total sales revenue 102

4.3.3 Price of dual purpose kerosene and total sales revenue 103

4.3.4 The joint effects of PMS, AGO and PDK Prices on total sales revenue 104

4.3.5 Price of premium motor spirit and total cost of sales 105

4.3.6 Price of automotive gas oil and total cost of sales 106

4.3.7 Price of dual purpose kerosene and total cost of sales 107

4.3.8 The joint effects of PMS, AGO and DPK prices on total cost of sales 109

4.3.9 The influence firm-specific factors (e.g organizational culture) on the

relationship between petroleum prices and total sales revenue 110

4.3.10 The role of firm-specific factors in the relationship between petroleum product

 prices and total cost of sales 111

CHAPTER 5:  SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS 113

5.1 Summary of the Study 113

5.2 Conclusions 114

5.3 Recommendations 117

5.4 Limitations of the Study and Suggestions for Further Studies 118

5.5 Contribution to knowledge 120

Reference 121

Appendices 130

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIST OF TABLE

 

1.1 Nationwide retail outlets 2009 census- summary distribution by zone 18

1.2 Refining operations of Nigerian refineries 2010 23 Listed companies in the Nigerian stock exchange 72

4.1 Summary statistics for PPMS, PAGO and PPDK 82

4.2 Panel estimation results for Model 1, p-values in parenthesis 87

4.3 Estimated unobserved firm-specific fixed and random effects (mode l ) 88

4.4 Hausman Test (model 1) 88

4.5 Panel estimation results for model 2; p-valves in parenthesis 91

4.6 Estimated unobserved firm-specific fixed and random effects  (model 2) 91

4.7 Hausman Test (model 2) 92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIST OF FIGURES

1.1 Sector by sector performance of the Nigerian Economy 5

1.2 Industry sector performance 5

1.3 Federal Government revenue sources 6

2.1 Operational Framework 15

2.2 Port-Harcourt refinery (Alesa Eleme) 22

2.3 The physical flow of products: the retail route used by major and independent

companies in Nigeria 28

2.4 NNPC Mega retail outlet 28

2.5 PMS pricing template 35

2.6 PMS price per litre 36

2.7 Objective sales performance measures adopted for this study 46

2.8 A Model for sales revenue 47

2.9 Model for cost of sales and profitability 48

3.1 Causal link from petroleum product prices on sales performance and the

role of latent organizational factors. 70

4.1 Graph of PPMS, PAGO and PDPK 81

4.2 Mean and standard deviation of PPMS, PAGO and PPDK 82

4.3 Skewness and kurtosis of PPMS, PAGO and PPDK 83

4.4 Mean and standard deviation for TSREV 84

4.5 Skewness and Kurtosis for TSREV 84

4.6 Mean and standard deviation for TCOS 85

4.7 Skewness and Kurtosis for TSREV 86

5.1 Petroleum product prices and sales performance model 117

CHAPTER 1

INTRODUCTION

1.1   BACKGROUND TO THE STUDY

The performance of the salespeople has continued to be an issue of great concern for managers and other stakeholders of a firm, especially now that businesses are “becoming composites of loosely-coupled functional areas” (Plouffe & Barclay, 2007) while facing fierce competition in a dynamic business environment. According to Plouffe and Barclay (2006) and Weitz and Bradford (1999), changes in the external business environment require salespeople to be dynamic in their sales approach but should focus more on how they interact with others in their own organizations. The importance of salespeople performance has also received a considerable attention in the marketing literature, both theoretically and empirically.

Kane (1986) defined performance as an outcome of a specified job function. Campbell, McHenry and Wise (1990) defined performance as the observable behaviours of people that are relevant to organizational goals. Accordingly, salespeople performance is the aggregation of the individual performance of all salespeople in an organization. However, salespeople performance has been conceptualized and investigated from different views. For the purpose of our study, two broad views are worth highlighting; namely, internally-oriented view and externally-oriented view. While internally-oriented view focuses on the internal workings and conditions of the organization as determinants of salespeople performance, externally-oriented view focuses on market-based measures of performance (Zallocco, Pullins & Mallin, 2009).

Plouffe and Barclay (2006) considered salespeople performance from the perspective of inter organizational skills of the salesperson. They argue that differences in individual sales performance can be explained by the salesperson’s ability to navigate and interact within his own organization. Zallocco, Pullins and Mallin (2009) proposed a framework that integrates the two views with another set of dimensions; namely, effectiveness and efficiency, as a comprehensive model for salespeople performance using three theories; agency, organization and control theories. They argue that firms can use this framework as a tool to accurately measure and evaluate salespeople performance.  

The petroleum industry in Nigeria began as a result of the discovery of oil in Oloibiri, Bayelsa state (Odularu, 2008). Two years after the discovery by Shell D’ Arcy, oil was then discovered in other twelve states in Nigeria which also led to the establishment of the first crude oil pipelines from the Oloibiri Oil Field to Port Harcourt on the Bonny River with the aim of gaining quicker route for export facilities (NNPC, 2010).  Petroleum product marketing in Nigeria began in early year 1907 with the establishment of trade link in sunflower kerosene by Socony Vacuum Oil Company and is now part of Exxon Mobil (Agbonifoh, Ogwo, Nnolim, & Nkamnebe, 2007). Most of the big players in the oil and gas sector like Exxon Mobil combine both upstream (i.e. exploration and production) and downstream activities. Downstream operations are oil and gas process that take place after production phase to the point of sale. Downstream operations include refining crude oil and distributing it as by-products such as Premium Motor Spirit (PMS), Automotive Gas oil (AGO), Dual Purpose Kerosene (DPK) etc. Marketing services facilitate the movement of finished products from Nigeria National Petroleum Corporation (NNPC) refineries or pipeline Depots across the country to 10166 retail outlets or end users (Echinomen & Adeleke 2012).

Following the rising crude oil prices in the global oil market, the cost of fuel importation has sky rocked. According to this day newspaper report, (August,2018) government is likely to pay more subsidies on imported petroleum products. Between August 2018 to September 2018, average crude sales was $80, landing cost of a litre of petrol N196.3k. This day August 2018 report indicated that the level of subsidy Nigeria pays to keep the pump price of premium motor spirit at the current N145per litre against the market price is estimated at N65.6k. The paper also gathered that the summed up of N14.3 distribution margin approved by PPPRA (Petroleum Products Pricing Regulatory Agency) in the last pricing template for PMS is still being sustained summing N196.3k with N14.3k distribution margin. According to ministry of petroleum resources newsletter, the daily consumption of PMS in August was N3,053,024,000. Thus, the Nigerian government could have paid for about N94, 643,744,000 in subsidizing PMS for a period of 31 days from August 1 to August 31. High Oil prices leads to the increase in inflation, unemployment, reduced demand for products other than oil, and lower capital investments. Tax revenues decline and budget deficits increase, driving up interest rate International Energy Agency (IEA) 2006 World Energy Outlook.

Hence, Kojima (2013) revealed that issues bothering on price of petroleum products have remained a constant public debate in Nigeria and the world at large for a very good number of years. This has led to the establishment of different price modulating schemes. The study identified several petroleum price adjustment mechanisms such as deregulation of prices for higher-grade fuels, ration heavily subsidized fuels, setting different prices based on user category, use of rule-based pricing especially when there is world price low, flat price within a price band etc. Oil prices have been on a rapid increase since beginning of 2003 from $28.77 per barrel to $100.60 and averaged at $66.36 between January 2, 2019 to April 30, 2019 (CBN, 2019).

Given the above background, this study examines the changes in the prices of three main petroleum products; namely, premium motor spirit (PMS), automotive gas oil (AGO) and dual-purpose kerosene (DPK) over time and their effects on sales performance of quoted oil and gas companies in Nigeria.

1.2   STATEMENT OF THE PROBLEM

There is no doubt that Nigeria is among the most blessed African country with huge amount of oil deposits. Nigeria has assumed the world’s 13th largest oil producer and the 6th largest OPEC. Further, from 1970 to 1999, Nigeria has produced over $231 billion worth of oil which makes up 48% percent of her GDP with an estimated oil reserve of 32 billion barrels that is capable of being sufficient for 37 years at the current rate of production (Heymans & Pycroft, 2003).  Adagunodo (2014) noted that since the global energy crisis in the year 1972 and 1973, the petroleum sector of Nigerian economy has become the most contributing source of income, especially in the foreign exchange earnings.

The petroleum industry is also known for its high competition given the increased demand for oil, more entry of industry players such as Shell, Chevron, Statoil, Exxon Mobil, Nigerian Agip Oil Company Limited, Total, Nexen Inc. In downstream sector as well as some indigenized or enterprises, these include: Mobil Oil Nigeria Plc., Total Nigeria Plc., Oando Plc., MRS Oil Nigeria Plc., Forte Oil Plc., Conoil Plc., Afroil Plc., Eternal Oil and Gas Plc., Beco Petroleum Product Plc., and Zenon Oil Limited among others (Onigbinde, 2014). Moreover, the price of oil has not remained the same owing to the aforementioned circumstances and other factors as natural disasters, war and mismanagement in some countries like Nigeria.

Further, the oil and gas subsector is broadly categorised under the industry sector, which has been the third leading sector of the economy since 2010 when the Nigerian economy was officially rebased. As shown in Figure 1.1, the industry sector, which comes behind two other sectors; services and agricultural sectors, contributed an average of 20.17% of the national GDP on quarterly basis. However, from Figure 1.2, we can see that the oil and gas industry has contributed more than half of the industry sector performance, with average contribution being 56.16% of the total industry sector GDP between 2010 to 2017. Also, as shown in Figure 1.3, oil revenue has remained the main revenue source in Nigeria, contributing more than two-third of total government revenue over the same period. Thus, the oil and gas sector has been playing a leading role in the Nigerian economy.

 

Figure 1.1: Sector by Sector Performance of the Nigerian Economy

Source: Author using data from CBN statistical bulletin 2017

 

Figure 1.2: Industry Sector Performance

Source: Author using data from CBN statistical bulletin 2017

 

 

Figure 1.3: Federal Government Revenue Sources

Source: Author using data from CBN statistical bulletin 2017

Studies have shown that the fluctuations of oil prices are caused by higher domestic inflation and exchange rate deregulation (Meku, Adetayo, & Aduralere, 2018).  Difiglio (2014) studied price-inelastic demand and supply of oil, the factors that determine oil price shocks, and the reason behind why oil price shocks lower economic growth through dislocations of labour and capital. The study found that strategic oil stocks have not been fully utilized.

Bildiricia and Ersin (2015) focused on the causality analysis among biomass energy consumption, oil prices and economic growth in Austria, Canada, Germany, Great Britain, Finland, France, Italy, Mexico, Portugal and the U.S. The study adopted autoregressive distributed lag bounds testing (ARDL) method and result shows a significant relationship between biomass consumption and economic growth.

In addition, Yazdana, Ehsanb and Sadr (2012) revealed the causal link between oil prices and economic growth in Iran within 1980 to 2010. The result shows a neutral effect of oil prices on economic growth and recommends that monetary policies should be suspended when global oil shocks exist to avoid “stagflation”, a low economic growth and high inflationary effect. The effect of low economic growth strategically influences business and sales performance which cut across sales growth, demand rate, profits, sustainability and effectiveness. Ateke and Nwulu (2017) sales performance of businesses can be evaluated via sales growth as change in the sales of a firm’s product over a given time. Similarly, Cheptiram, Nzioki, and Njeje (2016) opined that sales performance is the measure of firms’ operations in relation to its objectives which includes sales, profits, cash flow, return on equity etc.  These imply that sales performance of oil and gas firms would be positive in a stable economic environment devoid of inflation and low economic growth.

Muthengi (2015) opined that firms need to measure their performance in order to understand, management and enhance their daily activities as well as reaching their specific objectives. Hence, studies on the price of petroleum products have been seen as a critical matter of discourse holding to its critical contribution towards economic activities.

Furthermore, Holditch and Chianelli (2008) hold that according to the United States National Petroleum Council (NPC) prediction, there will be a 50–60% growth in total global demand for energy by 2030.  The predictions of US’s NPC show that petroleum products will continue to be sold by oil and gas firms at a sustained period of time given its relevance in the global activities. It follows that a shift in prices of petroleum products could act positively or negatively on the level of both demand and sales performance of its products. Bondzie, Bartolomeo and Fosu (2014) investigated the oil price fluctuations and its effect on economic growth. Findings show that price of petroleum has a paradoxical effect on negative interest rate on total money supply, and there was positive relationship between output, consumption, investments, prices, and wages payable.

Similarly, Meku, Adetayo, and Aduralere (2018) opined that the fluctuation of oil price and its resultant effects have been among the biggest challenges faced nations in the world including their economic outputs. The removal of fuel subsidy in Nigeria led to increase in pump prices of petroleum products leaving Nigerians with doubt of whether it has a positive or negative implication (Singh & Gupta, 2012).  Huang and Yi-Heng (2010) opined that price of petroleum products plays a significant role in the economic wellbeing of any nation including gross domestic product, interest rates, exchange rates and government revenue. Arinze (2011) observed that changes in price of petroleum products relates with inflation rate in Nigeria. Olomola and Adejumo (2006) found that issues bothering on changes of petroleum products could lead to price shock which also significantly influences macroeconomic activities in Nigeria. These imply that petroleum price and activities surrounding its fluctuation also largely affect the sales and survival of business organizations especially oil and gas dealers.

However, it is obvious that despite these numerous studies and the observed positive industry trend, sales performance (to the best of our knowledge) has not been empirically examined from the perspective of the impact of petroleum product prices, focusing on the quoted oil and gas companies in Nigeria. Is it that companies in the oil and gas industry are immune to the unpredictable government policies regarding the oil and gas industry and the frequent changes in the prices of the main petroleum products resulting from these policies in Nigeria? Or that investors and creditors do not incorporate the effect of changes in the prices of petroleum products when evaluating the performance of oil and gas firms despite being the main driver of the industry sector in Nigeria? In this study, we attempted to provide dependable answers to these questions by examining the impact of petroleum product prices and performance of companies in the oil and gas industry in Nigeria from the perspective of panel data.

1.3   OBJECTIVES OF THE STUDY

The main objective of this study is to examine the impact of petroleum product prices on sales performance of oil and gas companies in Nigeria.

The specific objectives are as follows:

1. to determine whether sales performance of oil and gas sector companies can be influenced by the price of premium motor spirit in Nigeria

2. to determine whether sales performance of oil and gas sector companies can be influenced by the price of automotive gas oil in Nigeria

3. to determine whether sales performance of oil and gas sector companies can be influenced by the price of dual purpose kerosene in Nigeria

4. to examine the joint effect of prices of PMS, AGO and DPK on sales performance of firms in the Nigerian oil and gas sector

5. to examine the role of unobserved firm-specific factors such as organization’s culture, management style etc. in the relationship between petroleum product prices and sales performance of firms in Nigerian the oil and gas sector

1.4   RESEARCH QUESTIONS

The following research questions will guide this research.

1. How does price of premium motor spirit affect the sales performance of firms in the Nigerian oil and gas sector?

2. How does price of automotive gas oil affect the sales performance of firms in Nigerian the oil and gas sector?

3. How does price of dual purpose kerosene affect the sales performance of firms in Nigerian the oil and gas sector?

4. How do petroleum product prices (e.g. prices of premium motor spirit, automotive gas oil and dual purpose kerosene) affect the sales performance  of firms in Nigerian the oil and gas sector?

5. What is the role of unobserved firm-specific factors such as organization’s culture, management style and policies in the relationship between petroleum product prices and sales performance?

1.5   HYPOTHESES OF THE STUDY

: Price of premium motor spirit has no significant effect on the total sales revenue of quoted firms in the Nigerian oil and gas industry.

: Price of automotive gas oil has no significant effect on the total sales revenue of quoted firms in the Nigerian oil and gas industry.

: Price of dual purpose kerosene has no significant effect on the total sales revenue of quoted firms in the Nigerian oil and gas industry.

: Price of premium motor spirit has no significant effect on the total cost of sales of quoted firms in the Nigerian oil and gas industry.

: Price of automotive gas  oil has no significant effect on the total cost of sales of quoted firms in the Nigerian oil and gas industry.

: Price of dual purpose kerosene has no significant effect on the total cost of sales of quoted firms in the Nigerian oil and gas industry.

: Prices of premium motor spirit, automotive gas oil and dual purpose kerosene jointly have no significant effect on the total sales revenue of quoted firms in the Nigerian oil and gas industry.

: Prices of premium motor spirit, automotive gas oil and dual purpose kerosene jointly have no significant effect on the total cost of sales of quoted firms in the Nigerian oil and gas industry.

: Organization’s culture, management style and policies play no significant moderating role in the relationship between petroleum product prices and total sales revenue of quoted firms in the Nigerian oil and gas industry.

: Organization’s culture, management style and policies play no significant moderating role in the relationship between petroleum product prices and total cost of sales of quoted firms in the Nigerian oil and gas industry.

1.6   SIGNIFICANCE OF THE STUDY

This study is the most recent attempt to examine empirically the impact of changes in the prices of petroleum products on sales performance, focusing on oil and gas industry in Nigeria. Thus, the finding of the study is of great significance to sales managers, salespeople, and investors (creditors and shareholders) in the oil and gas industry. Other stakeholders that would benefit from the study are government and researchers.

For sales managers, the study provides insight on how to measure and evaluate firm-level sales performance in the light of fierce industry competition as well as business uncertainties associated with unpredictable government policies regarding petroleum product prices. The three major petroleum products considered (premium motor spirit, automotive gas oil and dual purpose kerosene) all are important exogenous factors from the firm external environment. Thus, understanding how changes in the prices of these products affect sales outcomes would help the sales manager to control their influence while measuring and evaluating aggregate sales performance towards achieving organizational goals.

The study would be resourceful to salespeople in the oil and gas industry because it sheds light on how to navigate within the organization and align their interests with those of their principals in achieving their specific and difficult sales targets. The study also sheds light on how salespeople could be rewarded individually even when achieving sales goals requires their collective efforts. Thus, after reading the study, salespeople would know how to meet their sales targets and what to expect when those sales targets are achieved.

For investors, evaluating sales performance of individual companies and understanding how organizational factors, which may not be directly observed, affect sales performance are prerequisites for sound investment decisions. First, because oil and gas industry is the most volatile and unpredictable industry, prospective investors, banks and other creditors, need reliable data and empirical results on company’s sales performance for risk assessment, company fundamental analysis and sound loan decisions. Thus, the empirical findings of the current study would be resourceful to investors and creditors.

For researchers, using market-based measures to evaluate the sale performance of oil and gas companies in the context of panel data is a significant contribution to both theoretical and empirical sales performance literature. The current study would deepen the literature by providing reliable empirical evidence on the outcome-based performance measures and evaluation. Therefore, the findings of the current study would bring more perspectives and serve as a reliable reference for future performance studies.

Finally, for government and policy makers, the study questions the existing policies regarding petroleum product prices and their impacts on oil and gas industry, in particular, and the economy as a whole. The recommendations of this study would also serve as a policy guide for stability in the oil and gas industry.

1.7   SCOPE OF THE STUDY

The study focused on the impact of petroleum product prices on sale performance of quoted companies in the oil and gas industry in Nigeria. Therefore, the study excluded non-quoted companies that operate and compete in the oil and gas industry.

Further, the study considered only three petroleum products; namely, premium motor spirit (PMS), automotive gas oil (AGO) and dual-purpose kerosene (DPK). This implies that other petroleum products such as lubricants, liquefied petroleum gas, hydraulic fluid, bearing grease etc. are not considered in the study. In addition, the study measures sales performance objectively using only two variables; namely, sales revenue and cost of sales. Thus, other objective; market share, profitability, number of new accounts, and behavioural performance measures; making sales contacts and calls, managing resources, time and territory, are not considered in the study.

In addition, the study is a panel data analysis of ten quoted oil and gas companies for a period of eight years from 2010 to 2017 so that the sample comprises a total of 80 observations. This implies that our empirical analysis was delimited to this period. Also, secondary data were used for empirical analysis. The petroleum product prices data were sourced from 2017 annual report of department of petroleum resource, the sales performance data were sourced from annual report and accounts of the ten selected companies for different years. These reports are audited and published documents and were downloaded from the relevant websites.

Finally, the study focused only on the contemporaneous relationships between petroleum product prices and sale performance, hence, it employed two conventional panel data methods; namely, fixed effects and random effects, which are static in nature. Therefore, the dynamic impact of petroleum product prices using dynamic panel data methods (e.g. dynamic panel GMM method) was not considered.

1.8   DEFINITION OF TERMS

Petroleum Product Prices: This refers to the retail pump prices of petroleum products such as premium motor spirit, automotive gas oil and dual purpose kerosene.

Price of Premium Motor Spirit: This refers to the retail pump price of premium motor spirit (PMS) or petrol at filling stations. 

Price of Automotive Gas Oil: This refers to the retail pump price of automotive gas oil (AGO) or diesel at filling stations.

Price of Dual Purpose Kerosene: This refers to the retail pump price of dual purpose kerosene (DPK) or kerosene at filling stations.

Firm Sales Performance: This refers to the aggregated or organizational sales outcomes that can be measured using objective or market-based metrics such as market share, sales revenue and profitability. It is the sum of all individual sales outcomes.

Total Sales Revenue: This refers to the total sales revenue at a particular financial year. It is determined by multiplying per unit prices by sales volume.

Total Cost of Sales: This refers to the total selling costs in terms of expense accounts, giving gifts, making promises.

Fixed Effects: This refers to the firm-specific factors such as organizational culture, management procedures and policies that are not directly measured or unobservable but are correlated with petroleum product prices in influencing firm sale performance.

Random Effects: This refers to the firm-specific factors such as organizational culture, management procedures and policies that are not directly unobservable but are random deviations from a common mean. Random effects are also uncorrelated with petroleum product prices in influencing firm sale performance. 

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