Abstract: A key policy objective of sustainable economic development, especially in any developing country like Nigeria, is to establish energy development paths that are both economically efficient and sustainable. However, this depends significantly on full utilization of such resources. Distributed Lag (DL) model, dummy variable regression model and co-integration analyses were used in this paper to evaluate the impact and sustainability of Gas utilization in the Nigerian economy. The structure of gas flaring in Nigeria in relation to the imposition of fine on flared gas was also examined. The regression results and the co-integration analysis show that utilization of Nigerian natural gas impacts positively on the economy given three-year time lag; it is also sustainable. On the other hand, although the imposition of fine on flared gas has the potential to end or reduce flares; it has not significantly led to any structural change (sliding slope) on the level of flares since its imposition in 1984. Hence there is need for government to always employ Regulatory Impact Analysis (RIA) to evaluate its policy implementations.