Petroleum Product Prices and Human Development Index in Opec Countries

This study investigates the relationship between refined petroleum product prices—specifically, diesel and petrol—and the Human Development Index (HDI) across selected OPEC countries from 2010 to 2019. Employing a panel data regression framework, the study tested three models: pooled, fixed, and random effects, with diagnostic tests confirming the fixed effect as the most optimal. The fixed effect model revealed that both diesel and petrol prices have statistically insignificant short-run effects on HDI. However, cointegration and error correction analyses affirmed a long-run equilibrium relationship, with both diesel and petrol prices exhibiting statistically significant and positive impacts on HDI. The error correction coefficient (-0.2143) indicates that deviations from the long-run equilibrium are corrected at a rate of 21.43% annually. These findings imply that higher petroleum product prices positively influence human development in the long term. The study recommends that OPEC governments reinvest petroleum revenues into education, healthcare, and infrastructure to sustain improvements in HDI. Additionally, diversifying the economy, investing in a skilled workforce, and promoting cleaner energy alternatives are vital to reducing volatility and ensuring inclusive development. Finally, the study underscores the importance of long-term, strategic petroleum revenue utilization in advancing human development outcomes.